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Witness: ADM OK’d Lysine Sales Fix

August 4, 1998

CHICAGO (AP) _ A retired Japanese executive testified Monday that a senior official at Archer Daniels Midland gave personal approval to a plan made with competitors to fix sales volumes for the feed additive lysine.

Hirokazu Ikeda, formerly of the Tokyo-based Ajinomoto Co. Inc., said that Michael Andreas agreed to put a cap on the amount of lysine ADM would sell in 1994 during a meeting in Irvine, Calif., in October 1993.

Andreas, who is on leave as ADM’s executive vice president, is also the son of chairman Dwayne Andreas. He is the highest-ranking of three men accused in the price-fixing trial.

FBI agents, some of whom posed as hotel wait staff at the closed-door meeting, secretly videotaped the conversations with the help of codefendant Mark Whitacre, a former ADM biochemist who had been serving as a government informant since 1992.

Portions of the videotape, played Monday for the jury in U.S. District Court in Chicago, showed the executives estimating that the 1994 lysine market would grow by about 15,000 tons _ 5,000 tons of which Andreas said should be allocated to ADM. That would have given the company about a quarter of the 250,000-ton lysine market.

``Then we can agree on how we split the rest (among the other competitors),″ Andreas said.

Kazutoshi Yamada, who was Ikeda’s boss at the time, appeared to dislike the suggestion.

``ADM is trying to absorb all the growth. That is not fair,″ Yamada said on the videotape, adding that the other Asian lysine producers wouldn’t like it either.

Andreas responded, saying, ``If they don’t agree ... our numbers are liable to be a lot larger than 5,000 tons. ...They should just be satisfied with whatever part of that (remaining) 10,000 (tons) they want.″

Andreas’ attorney, John Bray, has said his client’s comments were simply the talk of a cagey competitor who was trying to figure out how big the worldwide lysine market was.

But Ikeda, who testified with the help of an interpreter, said it was his understanding that Andreas and Whitacre agreed to sell 67,000 tons of lysine, plus ``the greater amount of the demand″ in 1994, while Ajinomoto was allocated about 84,000 tons.

On the videotape of the Irvine meeting, Andreas said he realized that ADM’s entry into the $600 million lysine market in the early 1990s caused the U.S. price to drop. He then told the two Ajinomoto executives that decisions about lysine pricing are not left to the discretion of ADM’s salespeople, whom he called ``agents for the customer.″

``We pay them, but they’re not our friends,″ Andreas said, according to the videotape. ``They’re friends with the customer.″

He said he also ``wished″ that top-level Ajinomoto officials would develop a similar system, having top executives set prices and stick to them.

Still, during cross-examination by Bray, Ikeda testified that _ sales volumes aside _ he saw no evidence that Andreas had been personally involved in setting any prices for lysine. Conspiring with competitors to set sales volume levels and to fix prices are both illegal.

In addition to Andreas and Whitacre, Terrance Wilson, retired head of ADM’s corn-processing unit, is also on trial. Whitacre is currently serving time in a federal prison for embezzling $9 million from ADM.

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