Texaco: Lessons From A Crisis In Progress

CEO Bijur talks about discrimination and mending fences

It has been a trial by fire for Texaco Inc. Chief Executive Peter I. Bijur. Named to the job in July, Bijur faced his first major crisis on Nov. 4, when The New York Times printed a story describing taped conversations in which senior Texaco managers made disparaging comments about minorities and discussed destroying documents related to a class-action discrimination suit. On Nov. 15, Texaco settled the suit, filed on behalf of 1,400 employees, for $115 million in cash plus salary adjustments for the plaintiffs and other expenses. Still, the story simmers. On Nov. 19, just as federal prosecutors charged Richard A. Lundwall, the ex-Texaco executive who made the tape, with obstruction of justice, Bijur talked with BUSINESS WEEK's Tim Smart.

Q: How did your legal strategy change once the news of the tapes was printed?

A: When I saw [the story], I knew that this lawsuit was pending and moving forward. I made the judgment that we needed to accelerate the settlement process. And those discussions on settlement commenced almost immediately.

Q: It has been reported that you didn't get the board of directors involved with the settlement talks and other issues. Why not?

A: You're drawing conclusions that are erroneous. The board was fully involved throughout the entire process. I talked to numerous directors personally. We had several board and executive committee meetings. The board was fully supportive of our actions.

Q: Have you met with shareholders?

A: Yes, of course. I went down to [New York] and met with the Interfaith Center on Corporate Responsibility, which is a group of religious shareholders. I expressed our position on this and listened carefully to their position and got some good counsel and guidance. But I wanted to provide our side of the issue as well. I have met with [New York State Comptroller] Carl McCall and [New York City Comptroller] Alan Hevesi about concerns that they had, and I will continue to meet with other shareholders as I normally do.

Q: Why do you think the oil industry has such a poor reputation on issues of racial diversity and gender equality? How does Texaco stack up against the others?

A: The percentage of minorities within Texaco is just about average for the petroleum industry. We have made really significant progress in the last several years in improving the percentage. But there are some very interesting points that need to be examined to place in context what may be going on in this industry. I just read a study that showed that in 1995, there were only nine petroleum engineering minority graduates that came out of all engineering schools in the United States--only nine. That's not an excuse. But it is indicative of why it is difficult for this industry to have a lot of people in the pipeline. Now, of course, that does not apply to accountants, finance people, and anybody else. But we are a very technically oriented industry.

Q: Have you personally witnessed discrimination at Texaco?

A: In the nearly 31 years I have been with Texaco, I have never witnessed an incident of racial bias or prejudice. And had I seen it, I would have taken disciplinary action. I've never seen it.

Q: Is there a widespread culture of insensitivity at Texaco?

A: I do not think there is a culture of institutional bias within Texaco. I think we've got a great many very good and decent human beings, but that unfortunately we mirror society. There is bigotry in society. There is prejudice and injustice in society. I am sorry to say that, and I am sorry to say that probably does exist within Texaco. I can't do much about society, but I certainly can do something about Texaco.

Q: What are your views on affirmative action?

A: Texaco's views on affirmative action have not changed a bit. We have supported affirmative action, and we will continue to support affirmative action.

Q: This is your first big trial since taking over. What have you learned?

A: I've learned that as good as our programs are in the company--and they really are quite good, even in this area--there's always more we can do. We've got to really drill down into the programs. We've got to make certain that they are meeting the objectives and goals we've set for them.

Q: Are there other lessons in terms of your style of management?

A: I don't think I would do anything different the next time than what I did this time.

Q: How will you make sure the spirit as well as the letter of the policy is followed at Texaco?

A: We're going to put more and more and more emphasis on it until we get it through everybody's head: Bigotry is not going to be tolerated here.

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