Roanoke Times
Copyright (c) 1995, Landmark Communications, Inc.
DATE: TUESDAY, July 11, 1995 TAG: 9507110080
SECTION: BUSINESS PAGE: B-6 EDITION: METRO
SOURCE: Associated Press
DATELINE: CHICAGO LENGTH: Medium
When Americans bite into a juicy steak, cut into a birthday cake or take a dose of vitamins, chances are Archer Daniels Midland Co. had a hand in bringing those products to the market.
The Decatur, Ill.-based agriculture company processes about a third of the nation's grain and soybeans.
News that a high-ranking official of the company went undercover for the FBI in a price-fixing investigation means the ``supermarket to the world'' will be getting more attention than its Sunday morning news show commercials ever intended.
The investigation started in 1992 when Mark E. Whitacre went to the FBI, The Wall Street Journal reported Monday. Using a briefcase rigged with a recorder, the president of one of ADM's most promising businesses taped meetings with other agribusiness companies in such locales as Hawaii, Tokyo and Los Angeles, the paper said.
News of the criminal antitrust investigation has shaken Wall Street's optimism about ADM, leading to a cumulative loss in just one week of about $2 billion worth of the company's stock. The company's stock fell another $1.871/2 per share Monday, closing at $15.871/2 on the New York Stock Exchange.
``Wall Street, as is its custom, is assuming guilty until proven innocent,'' said analyst John McMillin at Prudential Securities Research.
Whitacre's home telephone number wasn't listed, and he could not be reached for comment. Justice Department spokeswoman Gina Talamona declined to comment on the newspaper report and emphasized the agency has not even named the companies under review.
ADM and competitors Cargill Inc., A.E. Staley Manufacturing Co. and CPC International Inc. have said a federal grand jury in Chicago either subpoenaed their records or executives or was expected to.
Among other uses, ADM products feed livestock, make flour and provide the basics for dietary supplements. But it is new products and new opportunities for old standbys that have generated the most interest for investigators.
The investigation appears to be centered on new markets for high-fructose corn syrup and new additives with uses ranging from fattening pigs to holding together soy burgers.
Fructose syrup, a cheaper form of sugar, is used in soft drinks and gum. The syrup has also found new demand in beverages such as flavored iced teas and juices, where sales are rising quickly.
ADM's BioProducts Division has squeezed new uses out of corn and soybeans, using the distilled products for food and animal feed additives.
For instance, ADM soy protein helps hold together the vegetarian Harvest Burger sold by Pillsbury's Green Giant division. And animal feed additive lysine makes animal muscles grow faster.
The BioProducts Division actually has lost money in the last three or four years as the company rolled out new products, analyst McMillin said.
``It's ironic; one would expect that the investigation would be into divisions that are making obscene profits, but that doesn't appear to be the case,'' he said.
Some analysts speculated the investigation is looking at whether the companies wanted to hold down prices to keep out competitors.
``No one knows for sure,'' said analyst David Nelson at NatWest Securities Corp. ``We don't know yet how far it goes or how bad it's going to get.''
ADM Chairman Dwayne Andreas, 77, has built the company into a $12 billion giant during the past 25 years. He has kept a high profile as he rounds the world seeking business, but little is known about the man's strategies
by CNB