News: Analysis & Commentary: SCANDALS
THE UGLY TALK ON THE TEXACO TAPE
Along with racism, it reveals cavalier plans to destroy evidence
It wasn't the kind of story a fledgling CEO likes to see splashed on the front page of The New York Times. On Nov. 4, news broke that in 1994, senior managers at Texaco Inc. had been taped discussing shredding of documents relevant to a race-discrimination lawsuit and using vulgar racial epithets in talking about black employees. Peter I. Bijur, a Texaco veteran who took over as CEO in July, wasted little time in launching a campaign of damage control. "We will not tolerate disrespect or prejudice in this company," Bijur told Texaco's 27,000 employees in a satellite broadcast. He quickly ordered an outside legal review of the allegations. And on Nov. 6, he announced a battery of steps to redeem his company's reputation, including beefed-up sensitivity training and the creation of a special board committee on diversity. Meanwhile, federal prosecutors started a probe into whether employees obstructed justice.
The new CEO may not like what the investigators find. The taped comments are blatantly racist: Former Texaco Treasurer Robert W. Ulrich, who retired in early 1995, allegedly called black employees "niggers" and "black jelly beans." Attempts to reach Ulrich were unsuccessful. Texaco calls such remarks isolated, but outside experts on diversity say they reflect a climate of widespread racism within the oil industry. Within the last two years, Shell Oil Co. and BP Oil Co. also have been hit by bias suits.
Almost as disturbing--from a legal and ethical standpoint--is the Texaco managers' comments about withholding or shredding documents. At one point in the transcript, Ulrich says: "We're gonna purge the s--- out of these books," referring to internal documents detailing minority hiring.
Experts fear such destruction and concealment of documents is rapidly rising as a legal tactic. "As litigation has become more frightening and more costly, I have no doubt that the amount of document destruction has gone up," says Charles Nesson, a professor at Harvard University School of Law.
Indeed, there are plenty of recent examples of such suspected foul play. In October, a panel of Georgia federal judges recommended that the U.S. Attorney's office investigate whether DuPont Co. hid evidence relating to the safety of the fungicide Benlate DF. In September, Minnesota Attorney General Hubert H. Humphrey III, who is suing tobacco companies to recover Medicaid costs related to tobacco use, filed court papers citing "clear, unmistakable, and repeated references to document destruction" in the files of Philip Morris Cos. and RJR Nabisco Inc. And in July, a state court judge in Texas unsealed documents that plaintiffs' lawyers claim prove that Chrysler Corp. destroyed test records concerning the safety of its minivans. The companies in all cases have denied the charges.
NEW PENALTIES. Document destruction has become a hot topic in legal circles. Seminars for plaintiffs' lawyers increasingly include instruction on how to cope with discovery abuse. Meanwhile, courts and legislatures in a growing number of states are creating new laws punishing attorneys and executives who destroy evidence.
The motive behind document shredding is easy to fathom. Billions of dollars can ride on an individual lawsuit, and the suits themselves frequently depend on a few key documents. For instance, jurors who awarded $750,000 to a Florida smoker in August said they did so largely because of a Brown & Williamson Tobacco Corp. memo that read: "We are, then, in the business of selling nicotine, an addictive drug." Plus, the chances of document destruction being discovered are slight.
As a result, critics want the courts to crack down. "Prosecutions are based on evidence, and if companies can get away with destroying evidence, they can escape accountability for their crimes," says consumer activist Ralph Nader. If Texaco executives did deliberately hide or alter evidence, the company may have the misfortune of being one of the rare companies that gets busted for it.By Mike France in New York and Tim Smart in New Haven