TEXACO'S HIGH-OCTANE RACISM PROBLEMS

By Jack E. White

Whenever I have a choice, I buy Exxon gasoline. It started when my family drove through the Deep South to visit relatives during the early 1960s and found that service stations affiliated with Esso, now Exxon, were less likely than other chains to have separate "white" and "colored" rest rooms. Whether that was the result of enlightened company policy or fortunate happenstance, I don't know, and neither do the Exxon representatives I asked about it last week. But that gesture to its black customers made me a lifelong supporter. So it's a no-brainer for me to help Jesse Jackson and other black leaders keep the pressure on Texaco by boycotting the chain while they negotiate concessions that go even further than last Friday's extraordinary settlement of a bitter discrimination suit.

It was the specter of economic retaliation--and the fact that Texaco executives were caught red-handed using racially insulting language as they discussed the destruction of evidence--that motivated Texaco chairman Peter I. Bijur to perform the most spectacular flip-flop since Kerri Strug's Olympic showstopper. In a textbook feat of corporate damage control, he agreed last week to spend $176 million to end the lawsuit filed by black employees whom Texaco has been stonewalling for years. The pact contains the most lucrative settlement ever of a U.S. discrimination case. If wholeheartedly implemented, it could transform Texaco from a bastion of bigotry to an oasis of equal opportunity. But Bijur deserves no applause for all this: he had no other choice.

If the plan is approved by the courts and the federal Equal Employment Opportunity Commission, Texaco will shell out $115 million in cash to about 1,400 current and former black workers, $26.1 million in pay raises over five years for black employees, and $35 million for diversity-training programs. Even more startling, it will create an unprecedented independent Equality and Tolerance Task Force to oversee changes in Texaco's employment policies and report twice a year to the company's board of directors. The task force--three members selected by the company, three named by the plaintiffs in the lawsuit and a chairman agreed to by both sides--will in effect be Texaco's in-house antibias agency, with access to all corporate records. If Texaco fails to carry out the task force's recommendations, it will have to answer to the courts. Says Max Berger, one of the plaintiffs' lawyers: "The independent task force we have created will not only have the power to eradicate institutional discrimination at Texaco but also provide a model for corporate America to follow. We should all pray for its success."

Believe me, I do. But Jackson and the N.A.A.C.P. are right to keep the heat on until Bijur also agrees to a specific plan to increase minority ownership of service stations and do more business with minority-owned companies. Texaco's record so far does not inspire great faith--and some questions still need to be answered. Why did it take more than two years of legal action by six aggrieved black employees, the leak of an embarrassing tape recording and the threat of a boycott to get Texaco to live up to the fine-sounding promises in its glossy equal-opportunity brochures? Why was it so hard for black Texaco employees to be taken seriously when they complained about being called "porch monkeys" and "orangutans" by co-workers and being passed over for promotions? In short, why are so many whites ready to declare that the war against racism has been won when fresh evidence that it is alive and well pops up all the time? Even as Texaco was scrambling to repair its image last week, Avis was sued for refusing to serve blacks in North and South Carolina.

By now it should be abundantly clear to everyone that bigotry still flourishes in many parts of corporate America. Ironically, that's one of the main reasons so many big companies opposed California's newly adopted Proposition 209, which effectively repeals government affirmative-action programs in the state. Cynical executives know that a passionately proclaimed commitment to equal opportunity is not only good public relations but also a tough defense against bias suits. They understand too that big investors shy away if a company's image is tarred by ugly charges of bigotry. Texaco's stock fell $3 a share in the first few days of the scandal--a loss of roughly $1 billion to shareholders, who are, after all, the real owners of companies.

Texaco's shareholders, though, deserve to share the blame with corporate managers for the poisonous atmosphere at the company. Even before the appalling transcripts surfaced, Texaco's history of discrimination was not exactly a secret. The company has forked out millions in legal fees to defend itself in a series of well-publicized cases brought by minorities and women. In 1991, for example, a California jury awarded $17.6 million in compensatory and punitive damages to Janella Sue Martin, who sued after Texaco denied her a promotion and gave the job to a man. The trial judge set aside the verdict, and the case was later settled for an undisclosed but hefty sum.

Last year Texaco was reprimanded by the Office of Federal Contract Compliance Programs for unfair employment practices at its facilities in Houston. And just this past June, the EEOC, which conducted its own investigation of the complaints covered by last week's settlement, found there was reasonable cause to believe that Texaco discriminates against blacks in certain salary categories "because of their race."

Such findings speak far more tellingly about the racial climate inside Texaco than the distracting fuss that erupted last week over whether the N word was actually used by taped executives.

Yet, despite all the red flags, Texaco's stockholders did next to nothing. They could have put serious pressure on the company to clean up its act, but until Texaco's racial climate became a public embarrassment, most of them ignored the issue. For the past four years, New York City's Interfaith Center on Corporate Responsibility, an ecumenical group that invests in companies so that it can have a voice in their policies, has introduced resolutions to make Texaco more accountable by disclosing data about its employment practices. But, says the I.C.C.R.'s Gary Brouse, such efforts have failed because "we couldn't get much support" from Texaco's largest shareholders.

One of the few institutional investors who did vote with I.C.C.R. is New York State comptroller H. Carl McCall, who manages a portfolio that includes 1.2 million Texaco shares. "As shareholders, we have a responsibility to demand an accounting from companies on how they plan to deal with these kinds of issues, because it's clear that if a company has an image of diversity, it's more acceptable to consumers and therefore more profitable," McCall says. "The market reacts negatively to companies where there's a perception that the culture supports discrimination."

What remains to be seen is how Texaco's dramatic--if belated--change of heart plays out in practice. Some consumers may decide to wait a bit before they trust their car to the man who wears the star.