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Adm Suit Against Mole May Backfire

When Archer Daniels Midland Co. learned top executive Mark Whitacre had made secret tapes for an FBI price-fixing probe, the company fought back: It fired Whitacre, accused him of embezzlement and eventually sued him.

But that lawsuit could end up doing more harm than good to the company that calls itself “Supermarket to the world.”

“Generally, employers retaliate against whistle-blowers by firing them or trying to blacklist them, rather than with lawsuits,” says Tom Devine of the Government Accountability Project, a Washington-based group that offers legal help to whistle-blowers.

“The reason is simple: The dirty laundry from the employer gets exposed in the lawsuit.”

In this case, ADM’s pile of dirty laundry is quite large. Thanks to Whitacre’s secret tapes of his fellow ADM executives, the company pleaded guilty in October and agreed to pay $100 million, the largest criminal antitrust fine in history, for its role in two international conspiracies to fix prices and divide up world markets for lysine and citric acid.

Whitacre can use the lawsuit to air other accusations against ADM, including his assertions that he was fired for his FBI work and that top company officials illegally salted away millions of dollars in overseas bank accounts.

ADM’s lawsuit accuses Whitacre of stealing about $9 million from the company in a bogus invoicing scheme. Even if ADM wins, it could suffer even more bad publicity in the process.

“If I represented them (ADM), I’d settle the case early,” said University of Illinois law professor Elaine Shoben. “As a matter of public policy, you shouldn’t allow suits against people who reveal illegality.”

But the lawsuit provides possible pitfalls for Whitacre as well. Whitacre, who pleaded innocent last week to a federal price-fixing indictment, could have problems swaying a jury by arguing the ADM payments were authorized.

“Even if what he says is true and this money is off-the-books compensation approved by management, that still doesn’t make it right,” Risser said. “It still sounds pretty sleazy.”

Tags: business