Tape Catches Texaco In Scandal, Cover-Up Fired Official Secretly Recorded Panel Plotting To Destroy Evidence

Federal authorities in New York have launched a criminal investigation of Texaco, sources said, after disclosures Monday that executives of the nation’s third-largest oil company apparently had plotted to destroy evidence and had reviled black employees with crude racial epithets.

A federal grand jury in Texaco’s corporate hometown of White Plains, N.Y., will probe whether company officials may have shredded or hidden documents requested by plaintiffs in a racial-discrimination lawsuit, according to individuals involved in the case.

A Texaco spokesman said that as of late Monday night, the company was unaware of the criminal probe.

Throughout the day, Texaco sought to confront what shapes up as a moral, legal and public-relations nightmare for the venerable oil company, condemning the actions attributed to top officials and hiring outside lawyers to investigate.

The scandal, sparked by a secret tape recording of Texaco executives discussing the discrimination suit, reverberated outside Texaco as well.

Critics who have assailed major corporations for racist and sexist behavior said the disclosures are a graphic confirmation of the worst suspicions often harbored about corporate management - notably Texaco’s.

Peter I. Bijur, Texaco’s chairman and chief executive, in a rare act of corporate contrition, addressed the company’s 19,000 U.S. employees in a satellite broadcast on Monday, declaring: “This alleged behavior violates our code of conduct, our core values and the law.”

Bijur decried the “rank insensitivity” of the taped remarks, first disclosed by The New York Times on Monday, and declared himself “both ashamed and outraged that such a thing happened to our family.”

Texaco said the outside firm has launched “an extensive independent investigation to determine whether these allegations are true.” It said it would discipline and possibly fire employees found guilty of misconduct.

The explosive transcript of the August 1994 meeting - secretly taped by one of the Texaco executives present - was filed last week in federal court in White Plains in connection with the lawsuit by black middle-managers who say their careers have been stalled by pervasive racial discrimination.

Robert W. Ulrich, Texaco’s then-treasurer and the highest-ranking officer at the meeting, is heard on the tape referring to African Americans by a racial epithet and exhorting subordinates to purge the the books, alluding to records being sought by attorneys for plaintiffs in the case.

“I don’t want to be caught up in a cover-up. I don’t want to be my own Watergate,” Ulrich said in the transcript.

The lawsuit that sparked the taped meeting was brought in June 1994 by six Texaco employees on behalf of themselves and at least 1,500 other black managerial, professional and supervisory employees who worked at the company between 1991 and 1994.

Citing a companywide “pattern and practice of discrimination,” the plaintiffs contended that blacks have lower representation in every salary class at Texaco than in the oil industry as a whole and that the disparity grows worse as the salary range increases.

The suit also cites racist remarks and attitudes among the company’s executives.

The lawsuit sparked an investigation by the U.S. Equal Employment Opportunity Commission, which ruled last June that there was reasonable cause to believe that blacks in some lower salary groups were denied promotions because of race, although the commission made no finding with respect to higher-salaried workers. The commission’s ruling was a qualified victory for the plaintiffs. But the biggest break in their struggle came three months ago when, according to court documents, one of their lawyers received an unsolicited phone call from Richard A. Lundwall, a senior personnel manager in Texaco’s finance department - a unit headed by Ulrich and located in Harrison, N.Y.

Part of Lundwall’s job involved attending meetings of the department’s human resources committee, which reviewed, among other things, job development and promotion of minority employees. Lundwall said he secretly taped the meetings to maintain accurate minutes. Saying that he was being terminated by Texaco, Lundwall offered to turn over the tapes to the plaintiffs, according to court documents.

The critical meeting detailed in the transcript occurred on Aug. 14, 1994, nine days after Lundwall had been deposed by plaintiffs’ lawyers in the lawsuit. Based on Lundwall’s deposition, the lawyers had already begun demanding documents from Texaco detailing discussions, statistics and other records of the committee’s twice-yearly meetings.

Besides Lundwall and Ulrich, the Aug. 14 meeting was attended by J. David Keough, then the company’s senior assistant treasurer, and several other officials.

The executives, in the transcript, discuss their practice of keeping two sets of minutes of the committee meetings - a sanitized version and a franker “restricted version” that apparently contained information harmful to their case in the lawsuit.

“You know,” Ulrich says in the transcript, “there is no point in even keeping the restricted version anymore. All it could do is get us in trouble. That’s the way I feel. I would not keep anything.”

“Let me shred this thing and any other restricted version like it,” Lundwall replies.

The men then go on to detail their frustrations in dealing with black workers.

“This diversity thing,” Ulrich says, “You know how black jelly beans agree.”

“That’s funny,” Lundwall agrees, “All the black jelly beans seem to be glued to the bottom of the bag.”

Lundwall told the plaintiffs’ lawyers that as a result of the meeting, some documents had been shredded, handwritten comments were deleted from others and people with copies of certain key documents were instructed to say they had not kept them, according to court records.

Lundwall’s job was targeted for elimination in a Texaco layoff last August, according to a company source.