Texaco Disciplines Executives in Scandal

Embattled Texaco Inc. on Wednesday suspended two executives and cut off the retirement benefits of its former treasurer, as the oil giant responded to a racial and legal scandal that has spawned a criminal investigation.

Texaco Chairman Peter I. Bijur announced the disciplinary measures at a news conference and apologized once again for statements captured on a secret tape recording of a company meeting.

The recording--which Bijur said he heard for the first time Wednesday--was made at an August 1994 meeting in which senior Texaco executives discussed destruction of evidence in a racial-discrimination lawsuit and denigrated African American employees as “niggers” and “black jellybeans.”

“These are statements that represent a profound contempt not only for the law, not only for Texaco’s explicitly clear values and policies, but, even, more importantly, for the most fundamental standards of fairness, of mutual respect and of human decency,” Bijur said.

The revelations have sparked a criminal investigation by a federal grand jury in White Plains, N.Y., where Texaco is headquartered.

Texaco has received a subpoena in the criminal probe, Bijur said, but he declined to specify what evidence is being sought.

The suspended executives are J. David Keough, an officer of a Texaco insurance subsidiary, and Peter Meade, a senior manager in the fuel and marine marketing department. By company policy, both are suspended with pay, pending an investigation by an outside lawyer whom Texaco hired when the scandal broke this week.

Texaco suspended health and insurance benefits to Robert W. Ulrich, the since-retired treasurer who was the highest-ranking officer at the taped meeting. Earlier, the company cut off severance pay and other benefits to Richard A. Lundwall, a recently laid-off personnel manager who had taped the meeting and who later turned over his tapes to lawyers for plaintiffs in the suit.

Bijur also announced several steps to reinforce Texaco’s policies, including expanding “diversity learning” seminars and dispatching senior executives to every major Texaco workplace in the United States to meet with employees and “apologize to them for the embarrassment and humiliation this has created.”

The company also enlisted A. Leon Higgenbotham, a former U.S. appeals court chief justice, a Harvard professor and an author on race relations, to review Texaco’s employee relations standards.

Although Bijur’s announcements came after the close of the stock market Wednesday, Texaco shares were buoyed by a rally among blue-chip stocks and by some analysts’ upgrades. The stock gained $1.50 to close at $96 on the New York Stock Exchange, erasing some of Monday and Tuesday’s steep losses.

Bijur said the episode pained him particularly because he believes the company has made progress in recent years to improve its minority hiring and promotion record.

“When something like this happens it’s like a blow to the gut,” he told reporters.