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Rocky times for ADM
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October 10, 1996: 4:58 p.m. ET
Archer Daniels Midland facing shareholder wrath, federal probe
From Correspondent Ceci Rodgers
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CHICAGO (CNNfn) - Archer Daniels Midland, the company known to consumers as "supermarket to the world," is facing possible indictments connected with the government's four-year long investigation into alleged price fixing.
The agricultural products giant is also preparing to face shareholders critical of its legal problems at its annual meeting in Decatur, Ill. next week.
The story began a year and a half ago when ADM made the stunning discovery that it had a mole in its executive suite -- Marc Whitacre, a division president and heir apparent to ADM President James Randall.
For nearly three years, Whitacre secretly taped hundreds of meetings between ADM executives and the company's competitors.
"Tape recordings can be devastating evidence," said former Federal Antitrust Prosecutor, Steven Kowal. "Certainly no defense lawyer wants to see tape recordings. But they can be ambiguous, and until you actually hear the tapes, you don't know how strong they are"
When Whitacre's involvement came to light, the company fired him, saying he embezzled millions of dollars. Whitacre, however, said he was told to transfer the money to overseas accounts.
In addition to Whitacre, executives of three Asian companies that compete with ADM have paid fines and agreed to testify in the government's case.
Sources close to the investigation say indictments will come soon for two ADM executives, corn-processing division head Terrance Wilson and Michael Andreas, heir-apparent to his father, ADM Chairman Dwayne Andreas.
Separately, ADM last month paid $65 million to settle two pending class-action lawsuits -- one filed over the price-fixing charges and another that alleged antitrust violations in the sale of citric acid. In both cases, ADM did not admit any wrongdoing. The company settled an earlier price-fixing suit in April for $25 million.
"I suspect this rush to settle the civil antitrust actions and the securities class action are the product of both an approaching deal with the government involving a plea of guilty to criminal price fixing, and also the approaching shareholders meeting." said John Coffee of Columbia University's School of Law.
It's unclear whether the company's legal problems jeopardize ADM's Chairman Dwayne Andreas, one of the most influential executives in American agriculture. Andreas, 78, is known for his international political ties and for making enormous contributions to candidates from both Democratic and Republican parties. (QuickTime Movie 972KB)
Because ADM does not sell its products directly to the public, it has been able to avoid the wrath of consumers. But it does have to answer to is shareholders, who are pressuring the company to make changes in how it is run. Those proposals will be voted on at next week's annual meeting.
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Archer Daniels Midland
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