Texan Denies EDS Claim That He Violated Pact : GM Unit Sues to Close Perot’s Firm
The bitter, 2-year-old feud between Texas billionaire H. Ross Perot and General Motors erupted once more Tuesday, sparked this time by the legal efforts of a GM subsidiary founded by Perot to effectively shut down Perot’s newest venture.
The court challenge to Perot’s start-up company seemed to be GM’s most serious attack on Perot since his 1986 ouster from GM’s board and comes after long months of silence by GM in the face of Perot’s constant public criticism of the giant auto maker.
A furious Perot, apparently caught off guard by the action, vowed he would prevail and would go on to take business away from his erstwhile allies at GM.
“We are not going to be awe-struck or intimidated by this action,” Perot said in an interview.
“This has nothing to do with a legitimate lawsuit, and it has everything to do with stopping our new company,” he said. “They will fail. Their frustration is that we are getting business where GM’s power and influence can’t stop us. The only reason they did this is that they are getting their heads torn off in the marketplace.”
Perot, who acted as GM’s most spirited and visible in-house critic until his controversial ouster by GM Chairman Roger B. Smith in December, 1986, added that he was more than ready for a knockdown fight with GM.
“So here we go,” he vowed Tuesday.
Electronic Data Systems, the Dallas-based computer services company Perot started in 1962 with $1,000 and then sold to GM in 1984 for $2.5 billion, filed suit against its founder and his new company in Virginia on Tuesday for allegedly violating the terms of his $700-million buyout agreement.
Although Perot agreed in his 1986 buyout to pay stiff, multimillion-dollar fines to GM if he continued to make derogatory public statements about the company, Tuesday’s lawsuit doesn’t seek such damages from Perot.
Since the buyout, however, Perot has frequently and loudly complained in public that GM is beset by power-hungry top executives who spend all their time trying to move up the corporate ladder and who do little to improve GM’s cars.
GM officials refused to comment on the suit and noted that it was filed by EDS rather than GM. Perot’s “muzzle” agreement was with the parent company. The suit was, instead, brought on the more narrow grounds that Perot has violated his pledge not to compete with EDS for three years after his buyout.
Still, Perot said he believes that EDS was only acting on orders from GM. “Obviously, this was done on GM’s orders,” Perot said. “EDS can’t order toothpicks without GM’s orders.”
EDS is seeking an injunction in Fairfax County, Va., Circuit Court to stop Perot Systems Corp., Perot’s new computer services company, from competing with EDS or hiring EDS executives. Perot’s firm has offices in Dallas and in the Washington suburb of Vienna, Va., in Fairfax County.
“It’s become obvious to us, through Perot’s public statements and his marketing activities (at Perot Systems) that he has absolutely no intention of honoring his agreement,” said Tony Good, a spokesman for EDS in Detroit.
‘Competing With Us’
“He made a commitment not to compete with EDS for three years,” Good added. “If you look at the activities he is undertaking, he is competing with us. We’re asking the court to make him live up to the contract he signed with us.”
Since Perot founded Perot Systems specifically to compete head to head with EDS in the burgeoning computer services field, an order not to compete with EDS would seem designed to effectively force Perot Systems out of business.
Perot argues that he has not violated the terms of his pact, however. He said his agreement with GM allowed him to form a company and hire away EDS executives 18 months after the buyout, as long as his new company was a not-for-profit organization for another 18 months.
Perot founded Perot Systems and recruited a group of top EDS executives in June of this year, just after the initial 18-month waiting period had passed. His first major contract at Perot Systems, with the U.S. Postal Service, was also structured so that Perot Systems would not make a profit from it until November, 1989, three years after the buyout, according to Postal Service spokesman Jim Vanloozen.
“The agreement is very clear on my right to form a company and hire people from EDS,” Perot said.
Helped Block Contract
Good of EDS charges, however, that Perot is violating his agreement by jumping the gun on his waiting period to solicit business from EDS customers “across a broad range of industries.”
In a separate legal action continuing in Washington, EDS has also helped block Perot’s controversial Postal Service contract. Perot was awarded the contract without competitive bidding, which led to criticism in Congress of the Postal Service’s handling of the deal.
Postmaster General Anthony M. Frank was pressured into a commitment with Congress that Perot would not be granted all of the contract’s expected work; meanwhile, EDS and another firm won an order from a federal contract appeals board that has forced the Postal Service to suspend the contract, pending a court appeal.
Staff Writer Robert A. Rosenblatt contributed to this story from Washington.
