The Case Against Baxter International

Even by the standards of most chief executive officers, Baxter International Inc.'s Vernon R. Loucks Jr. sports the whitest of white-shoe credentials. At Yale University, he was inducted into the Skull & Bones secret society, which counts such high-powered initiates as President George Bush. Then, after a two-year stint in the U. S. Marine Corps, he headed off to Harvard business school, where he graduated in 1963.

These days, however, Loucks's white shoes are looking scuffed. In the past 18 months, his company has become the target of two investigations. In Chicago, a federal grand jury is hearing evidence to determine whether Baxter--the world's largest hospital-supply company--violated federal antiboycott law in an effort to get its name removed from an Arab League blacklist of companies doing business with Israel. Documents obtained by BUSINESS WEEK and under examination by the U. S. Attorney for the Northern District of Illinois suggest Baxter may have illegally provided information about its Israeli operation and pledged to Arab League officials not to do business with Israel. Fred L. Foreman, U. S. Attorney for the Northern District of Illinois, declines to comment.