Court Awards $400,000 to Fired GTE Executive

Times Staff Writer

A federal jury found Thursday that the former head of GTE Corp.'s Central American operation was fired by the company because he refused to engage in illegal practices designed to drain capital from countries in the region.

In a unanimous verdict, the six-member jury awarded $400,000 to Paul DiMatteo, 57, who had worked for GTE for 10 years when he was fired in 1985.

DiMatteo, who now lives in Escondido, alleged in a lawsuit filed in federal court in San Diego that high-ranking GTE officials were so intent on reducing the company’s exposure to the volatile economies of Central America that they advocated just about any means, legal or otherwise, to move their profits out of the region.

Bribery Allegation


DiMatteo also charged that GTE paid bribes to a Costa Rican official to keep a competitor out of the country.

During a three-week trial, lawyers for GTE argued that DiMatteo was fired for poor performance and that company officials never instructed him to violate any laws. After he was fired, the lawyers argued, DiMatteo put the worst possible interpretations on innocent statements and actions of GTE officials.

The jury deliberated for about 1 1/2 days before returning its verdict.

No Decision on Appeal


“What it means to people is that, if you get fired for refusing to engage in illegal conduct, you can sue your employers,” said Sean T. O’Bryan, DiMatteo’s lawyer. “The big issue here was whether he was terminated for refusing to violate the law. The jury found that he was.”

Richard Dowhan, a GTE spokesman, said Thursday that no decision has been made on whether to appeal the verdict.

“We plan to explore all our options, including an appeal,” he said. “We still maintain GTE did not encourage Mr. DiMatteo to engage in any illegal activities nor was he terminated for such refusal.”

The jury awarded DiMatteo $375,000 for lost wages and $25,000 for emotional distress, slightly less than half the amount his attorneys had requested. DiMatteo has had several jobs since he left GTE and is now co-owner of a small manufacturing firm.

General Telephone & Electronics, based in Stamford, Conn., is the nation’s third-largest telephone operating company and also manufactures electric lighting products.

DiMatteo alleged that from November, 1981, to August, 1984, while he was general manager of the GTE electric products subsidiary in Central America, his superiors in the United States frequently suggested that, if legal ways could not be found to exchange local currencies for U.S. dollars, then illegal means should be tried.

The exchange problem was particularly nettlesome in Honduras, Guatemala, El Salvador and Nicaragua because the economies of the countries were weak, DiMatteo said. In order to encourage foreign companies to reinvest profits in the local economies, the countries enacted tough regulations that made it difficult to convert local currencies to dollars.

The illegal practices advocated by his superiors to combat the problem included exchanging local currencies on the black market, smuggling money in suitcases and designing complicated pricing schemes to create paper losses that would “trick” Central American governments, according to DiMatteo.


The bribery scheme alleged by DiMatteo involved Odalier Villalobos, Costa Rica’s vice minister and later minister of the economy from 1983 through 1986. GTE paid Villalobos about 10,000 colones a month--the equivalent of $400 to $500--beginning in late 1983 to prevent Philips Industries from selling products in Costa Rica, DiMatteo said. The payments stopped when Villalobos left office.

GTE officials said the payments to Villalobos were not bribes, but payments for “consulting services.”