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TAPES PICK UP TEXACO OFFICIALS’ RACIAL BANTER

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Senior executives with Texaco Inc. bantered comfortably among themselves in August 1994, planning the destruction of documents demanded in a federal discrimination lawsuit and belittling the company's minority employees with racial epithets.

Unknown to almost everyone in the room, one executive was carrying a tape recorder. And it was on.Those tapes, which were provided to the plaintiffs in the discrimination suit by the executive who recorded the conversations, are now at the center of the court proceedings.

The Texaco tapes offer an unfiltered, and perhaps unprecedented, glimpse into one company's senior levels, where important decisions - including promotion policies for minority employees - are made.

Equally important, the recordings - transcripts of which were obtained by The New York Times and which were excerpted in court papers - appear to have captured senior Texaco officers conspiring to illegally destroy documents subject to discovery requests in the lawsuit.

The tapes, in which the executives are heard referring to black employees as "black jelly beans" and "niggers," raise the stakes in the discrimination suit brought against Texaco by six company employees on behalf of as many as 1,500 other minority employees. The suit, brought in early 1994, asserts that Texaco systematically discriminates against minority employees in promotions and has fostered a racially hostile environment.

Texaco officials said they had yet to hear the tapes and did not know whether the words quoted in court papers were ever said. But Andrea Christensen, a lawyer representing the company, said company officials were "shocked and dismayed" by the words attributed to the executives, adding that they constituted "a clear violation of Texaco policy."

The company reportedly has appointed an outside lawyer to conduct an independent investigation.

But the recordings, as described in the excerpts included in the court papers filed in U.S. District Court in White Plains, N.Y., where Texaco is based, leave little doubt that such an action was planned.

"You know, there is no point in even keeping the restricted version anymore," Robert Ulrich, the company's treasurer who retired last year, was quoted in the court records in reference to one key document. "All it could do is get us in trouble. That's the way I feel. I would not keep anything."

Richard A. Lundwall, who was the senior coordinator for personnel services in Texaco's finance department, quickly agreed. "Let me shred this thing and any other restricted version like it," said Lundwall, who secretly recorded such conversations to ensure the accuracy of his minutes of such meetings.

At a different point, when the executives discussed disposing of certain pages of documents, J. David Keough, then Texaco's senior assistant treasurer, appeared to advise the executives to be careful not to remove information helpful to the company's case. "If it was a favorable chart, you'd want to retain it," Keough said.

During the conversation, Ulrich urged caution as the executives discussed withholding some older records covered by the discovery requests. "I don't want to be caught up in a cover-up," he said. "I don't want my own Watergate here."

Later, as recounted in the court records, the conversation turned to the executives' frustration about the employees who had filed the discrimination suit against Texaco.

"This diversity thing, you know how all the black jelly beans agree," Ulrich said.

Eventually, according to the court records, the executives began discussing their difficulties in adjusting to the demands of minorities at Texaco, in particular the interest of some black employees in Kwanzaa, a December celebration patterned on festivals held after African harvests.

"I'm still having trouble with Hanukkah," Ulrich said. "Now we have Kwanzaa."