They Whistled and Won

Bill McKay and Harry Williams were company men and proud of it. Vice presidents at Ashland Oil, they had a combined 35 years of experience in the oil business. McKay earned $150,000 a year and lived with his wife and two children in a handsome four-bedroom brick house in Russell, Ky., a quiet neighborhood less than a mile from company headquarters. Williams, who lived nearby, frequently traveled to New York City and Washington as Ashland's executive in charge of corporate lobbying. In 1983, however, the two men felt they had to blow the whistle on their employer: they told federal investigators that Ashland Oil had paid bribes to Middle Eastern government officials to obtain crude supplies. Before long, McKay and Williams were fired, and their comfortable lives began to come apart. Unable to find jobs in the industry, they filed suit in 1984 against Ashland, charging that they were unfairly dismissed merely for telling the truth.

Last week a federal jury in Covington, Ky., ordered Ashland to pay the former executives damages of $69.5 million, which would amount to 52% of the company's fiscal 1987 earnings. McKay, 45, won $44.6 million, while Williams, % 47, was awarded $24.9 million. McKay's judgment, which was higher because his salary at Ashland was larger than Williams', is one of the largest awards ever granted to an individual claimant. Ashland will appeal, and may be able to get the damages reduced. Because the company will not have to pay anything until the appeals process is complete -- something that could take years -- the verdict should have no immediate financial effect.

The company's troubles began in 1979, when the U.S. Government embargoed oil from Iran. Since Ashland had depended on Iran for 25% of its crude supplies, the firm scrambled to find alternative sources. In so doing, the jury ruled, Ashland resorted to bribery: in 1980 and 1981, according to court records, the company paid $49 million to government officials in Oman and Saudi Arabia and a government representative in Abu Dhabi to obtain oil. Ashland attorneys had argued that the payments were legal and were made to private consultants.

The four-year court battle has been hard on the whistle-blowers. Says McKay: "I would not urge anyone to subject their families to what I've had to do. If you stand up and insist on not going along with wrongdoing, you're going to have people try to crush you." Recalls Williams: "Ashland Oil had been my life. I felt fiercely loyal to the company, but I felt betrayed." Both men believe they were blacklisted by the petroleum industry after they left Ashland. The executives can hope, though, that their victory may bring about some change in corporate ethics. Says Thomas Dunfee, a professor of social responsibility at the University of Pennsylvania's Wharton School, of the Covington judgment: "I think it's likely to give managers courage when they are asked to do something illegal."