ADM others may have rigged ethanol bids=Shame If Its True!

WASHINGTON, April 24 Julie Vorman reporting for Reuters said that internal ocuments indicate possible industry collusion by Archer Daniels Midland and other ethanol producers to set prices for the gasoline additive, a California Republican said on Wednesday.

The documents were made public by Rep. Doug Ose, who is among a group of California and New York lawmakers opposed to a Senate plan to triple the use of ethanol in making cleaner-burning gasoline.

Led by farm state lawmakers, the Senate endorsed the ethanol proposal on Tuesday as part of a broad U.S. energy bill. California and New York lawmakers opposed the plan, saying it would benefit companies like ADM rather than family farmers, and would boost gasoline prices.

Ethanol, which is made from corn, is an alternative to the gasoline additive MTBE, which was banned by some states due to groundwater contamination.

Ose released at a House hearing on Tuesday a set of internal corporate memos, which he said showed possible coordination of bids to buy and sell ethanol.

The documents, written by executives with Western Ethanol Co LLC, Regent International and E D & F Man Alcohols, discussed bidding procedures for shipments of alcohol to make ethanol.

One Regent document from 1995 said ADM would slightly ``underbid'' Man for a shipment of alcohol to make ethanol. ``This will serve as a safety net in the event Man's bid is rejected for any reason,'' the Regent memo said.

Larry Cunningham, ADM senior vice president of corporate affairs, said on Wednesday ADM was looking into the matter.

``We haven't seen any of those documents and until we do, and have a chance to examine them, there's not much that we can comment on other than to say that we're aware of the articles and we're looking into it,'' Cunningham told Reuters.

``We've got a lot of fact finding to do. Frankly, this stuff goes back to the early- to mid-1990s and we're really going to have to do a lot of digging,'' Cunningham said.

Spokesmen for Western Ethanol, Regent International and E D & F Man Alcohols were not available for comment.

ETHANOL HAS WIDE SUPPORT

ADM is the biggest U.S. maker of ethanol, accounting for 41 percent of the market, according to a General Accounting Office report.

The company has run afoul of government investigators probing price fixing in the past. Two ADM executives, including the son of former ADM Chairman Dwayne Andreas, were sentenced to two years in prison in 1999 for their roles in a scheme to fix prices for the feed additive lysine. The following year, the European Commission fined ADM and four Asian firms a total of $105 million for their parts in the lysine scheme.

``These memos show a disturbing trend of potential market manipulation by ethanol producers,'' Ose said in a statement.

Ose said he would ask the Federal Trade Commission to investigate possible unfair practices by U.S. ethanol makers.

``Whenever I see an industry as highly concentrated as ethanol, I get concerned that consumers will eventually have to pay the price,'' Ose said.

Legislation to boost the use of ethanol as a fuel additive is widely supported by U.S. farm groups, environmentalists, the oil industry and the Bush administration.

The Senate energy bill would set a renewable fuels standard requiring use of 2.3 billion gallons of ethanol by 2004 and 5 billion gallons by 2012.

Last year, the United States consumed about 1.7 billion gallons of ethanol, mostly in the Midwest.

The Senate is scheduled to complete work this week on its wide-ranging energy bill. The bill will have to be blended with legislation adopted last year by the Republican-controlled House.

ADM is the world's largest processor of soybeans, corn, wheat and cocoa.

On Tuesday, the company said its fiscal third quarter profits soared by 26 percent due in part to its soybean business. However, profits in the company's corn wet milling operations fell during the quarter as demand decreased for ethanol, ADM said.

``The energy bill really doesn't have an impact until 2004, so we won't see a real change,'' G. Allen Andreas, ADM's chairman and chief executive, told analysts on Tuesday during a conference call. ``But I think the overall commitment that will be made on behalf of the government to renewable fuels is a very positive development for the long term in this industry.''