This article is written by Yogesh Palekar, here he has discussed a tale of a whistle-blower who was punished 4x than the dishonest people he exposed.
“The world is a dangerous place, not because of those who do evil, but because of those who look on and do nothing” –Albert Einstein
Whistle-blowers, however, are the ones who do not just look but speak up and take a stand against such evil. Worldwide they are considered as the agents of angels, the ones who help law enforcers in imposing punitive action against the dishonest. It is mostly due to the co-operation from the whistle-blowers that law enforcing institutions around the world have got their work cut and been able to investigate efficiently. Justly, whistle-blowers globally are duly recognized, either by paying them monetary rewards on successful prosecution or pardoning off their sentences and giving them immunity for their co-operation.
Today’s story is of an American whistle-blower, a gentleman named, Mark Edward Whitacre who was the president of the Decatur, an Illinois-based Bio Products Division at Archer Daniels Midland “ADM”.
In those times, ADM was a company in the big league having revenues of billions of dollars and employing over 30,000 people. It was a Fortune 500 company and also the largest food additive company in the world. Their products even today are incorporated as ingredients by large global companies’ like– Coca-Cola, Kraft Foods, Kellogg’s Cereal, and Pepsi.
Turning up against such a huge organization and reporting a dishonest act is no small deal, even for a high-level executive as Whitacre. Incidentally, Mr. Whitacre was also the highest level corporate executive in the US History to be a Whistle-blower.
So what was ADM actually up to?
ADM coordinated efforts amongst itself and its various competitors to artificially increase the price of a product they sold- Lysine. This price-fixing scheme was massive in proportions and is now famously known as the “Lysine Price-Fixing Conspiracy”. Fixing the price of the product meant that ADM was stealing millions of dollars each year from consumers in the form of higher product prices. Such conspiring efforts to hike prices is a violation of the US and global antitrust laws and also a criminal offense.
As Mark rose the positions in ADM, he started noticing some uncanny and unethical activities by ADM’s top executives in the form of conspiring with the competitors to rig the prices northwards. More than just noticing, he felt pressured to be a part of it. As a result of this psychological work pressure, he soon started behaving weird. Mark’s wife Ginger took notice of her husband’s worrisome behavior and suspected something was wrong. When she confronted him, Mark emotionally blurted out and told her all that was going on within the company.
After her hunch proved to be true, Ginger pushed her husband to come out and blow the whistle on the conspiracy and warned that otherwise, she would do it herself. On the same day, Whitacre landed himself in the Federal Bureau of Investigation’s “FBI” office and confessed to the white collar crime that he and his company were part of.
A recent photo of Mark and Ginger
Whitacre also agreed to help the FBI to gather evidence to assist them in the investigation and further prosecution, Later on for three years (1992–95), Whitacre wore a wire and taped the internal meetings of ADM’s executives and also those with their competitors, to provide FBI, the evidence of how the global conspiracy allegedly was hatched and maintained.
The investigation and prosecution of ADM and some of its executives have often been reported to be one of the “best documented corporate crimes in American history” all thanks to the undercover assistance of Whitacre
In October 1996, ADM pleaded guilty to fixing prices and paid $100 million in fine, the largest antitrust fine in U.S. history at the time. ADM also was fined almost $50 million by the antitrust authorities of Canada, Mexico, and the European Union.
Additionally, they also paid hundreds of millions of dollars more ($400 million alone on account of one class action suit) to the customer plaintiffs. The lysine cartel was the first successful prosecution of an international cartel by the U.S. Department of Justice “DOJ” in more than 40 years.
Three executives of ADM including the vice chairman got a prison sentence, the maximum amongst them being for 30 months (2 and a half years)
So what did Whitacre get after his heroics? A ten and a half years Federal Prison Sentence. Wait, WHATTTTTT?
Yes, it was learned that while Whitacre assisted the federal price-fixing investigation, he also at the same time embezzled $9.5 million from ADM. This act made him lose his whistle-blower immunity. The punishment, veritably was 4x longer than handed out to the ADM’s executives whom he exposed.
A prelude- Whitacre was scammed by a group in Nigeria in an advance fee fraud, and his losses in the scam may have been the initial reason behind his embezzlement activities.
Whitacre’s story is indeed a riveting one and deservedly has been widely told. It is a subject of 3 books, one Discovery Channel documentary and the movie “Informant” starring Matt Damon as Mark Whitacre.
Books on the life of Mr. Whitacre
In his book “Rats In The Grain” attorney James B. Lieber presents Whitacre as an American hero overpowered by ADM’s vast political clout. Rats In The Grain presents evidence that the DOJ often subjugated itself ADM’s political power and well-connected attorneys in prosecuting Whitacre.
Also, ADM’s CEO, Mr. Dwayne Andreas, told The Washington Post that he had known about Whitacre’s frauds for three years before it was made known.
It leads me to speculate whether Whitacre was fired and turned over to the Federal authorities by ADM only after they learned about him being an FBI mole? Also were the payments actually part of some shady dealings that the company engaged in and Whitacre was made a victim post he turned disloyal to the organization? A punishment for exposing their dishonest brethren.
Whitacre went through it all, from being scammed to being part of a global price-fixing conspiracy, to taking a risk to his life by being an undercover agent, to get a prison sentence, the pressure of all this was frightfully burdensome for him and took a toll on his psychological wellbeing, he was diagnosed to be suffering from bipolar disorder. (Whitacre even tried to commit suicide).
A question genuinely pops up, Was Whitacre’s prison sentence excessive and unjust, when one takes into account his cooperation in the much larger price-fixing case and the backdrop of events and the pressure on him?
P.S: While Whitacre was in prison, his family was financially supported by companies like Coca-Cola, Kraft, and Pepsi (the ones that got the millions of dollars on account of damages for their losses) as a gesture of showing their gratefulness for Whitacre’s courage.
And do watch “The Informant” while munching onto some lysine containing popcorn, to know more about the intriguing tale of Mr. Mark Edward Whitacre.
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