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TIME Magazine October 28, 1996 Volume 148, No. 20

THE FIX WAS IN AT ADM

A RECORD $100 MILLION FINE FOR RIGGING PRICES MAY ADD UP TO THE END OF THE
ANDREAS FAMILY DYNASTY

JOHN GREENWALD

No one expects Archer-Daniels- Midland to change its advertising slogan from
"Supermarket to the World" to "Price Fixer to the World." But that sobriquet
would fit in the wake of the agribusiness giant's $100 million plea bargain last
week with the Justice Department.

After years of denying any wrongdoing, the company pleaded guilty to conspiring
to fix prices for the livestock feed-supplement lysine and for citric acid, an
additive found in products from cosmetics to soft drinks. The $100 million fine,
the largest ever levied in a criminal antitrust case, was more than six times the
amount of the previous record settlement. Further, ADM will pay an additional $90
million to settle civil suits. "In essence, greed, simple greed, replaced any
sense of corporate decency or integrity" at ADM, said Joel Klein, the acting
Assistant Attorney General for antitrust.

The plea bargain turned ADM (1995 sales: $12.7 billion) into an informer for the
government. In exchange for immunity, company officials agreed to become
witnesses against other firms under investigation for conspiring with ADM to rig
prices in the $1.2 billion citric-acid market.

ADM employees may also be called on to testify against their own, notably
executive vice president Michael Andreas, 47, longtime heir apparent to his
father, ADM chairman and CEO Dwayne Andreas, 78. Prosecutors are continuing their
investigation of both the younger Andreas and Terrance Wilson, 58, who heads the
ADM corn-processing division. Neither was granted immunity--meaning that both
could face indictment. ADM said last week that Andreas was taking a leave of
absence and that Wilson had decided to retire.

Importantly, the Justice Department will not pursue a potentially larger case
against ADM for fixing prices in the market for high-fructose corn syrup, a
ubiquitous soft-drink sweetener. This $4 billion industry is nearly four times
the size of citric acid, and some consumer advocates have charged that shoppers
pay higher prices for soda because of ADM's practices.

The Justice Department's case hinged on a company executive turned FBI informant,
Mark Whitacre, who secretly taped meetings that allegedly included the younger
Andreas, Wilson and executives of rival companies. "The competitor is our friend;
the customer is our enemy" was a favorite saying around ADM, according to
Whitacre. Such talk ended when the feds raided ADM's Decatur, Illinois,
headquarters in June 1995. Although the company fired Whitacre and charged him
with embezzlement, which he denies, and although Whitacre later attempted
suicide, the case was strong enough to force ADM's directors to capitulate.

The plea bargain was a public humiliation for Dwayne Andreas, a political insider
who has funneled millions in corporate contributions to Republican and Democratic
candidates. Andreas has particularly close ties to Bob Dole, who has used ADM
corporate planes for campaign trips and vacationed with Andreas in Bal Harbour,
Florida; Dole and his wife Elizabeth purchased an apartment there from Andreas.
Dole has championed myriad agricultural subsidies that have benefited ADM. With
Dole's support, Washington has paid out more than $6 billion in subsidies since
1980 for ethanol, the corn-based fuel that ADM makes; it holds a 65% share of the
$1.5 billion ethanol market.

Andreas had to face down a shareholder revolt last week at the ADM annual meeting
in Decatur. Declaring that "as Harry Truman said, 'The buck stops with me,'" the
chairman apologized for the scandals. Nevertheless, the settlement put paid to an
era at ADM, which Andreas and his family have dominated for 30 years. It appears
unlikely that Michael Andreas will ever succeed his father. "Even if this is not
the end of ADM," says a close business associate of Dwayne's, "this could well be
the end of the Andreas reign."

For the company, last week's penalty represented little more than peanuts--or
soybeans--and was a good deal, considering that ADM benefited financially in the
form of higher prices. The company has $1.3 billion on hand to pay inconveniences
like a $100 million fine. ADM's stock even rose $1.13 a share, to $21.75, on news
of the penalty--which Wall Street had expected to be much higher--and finished
the week at $21.50, raising the company's market value some $500 million. By that
accounting, it can't be said that crime doesn't pay, only that it is a cost of
doing business.

--Reported by Sally B. Donnelly/Washington and William A. McWhirter/Chicago