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Texaco has PR nightmare
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November 7, 1996: 8:40 p.m. ET
Firm scrambles as audio tape shows alleged racism in the boardroom
From Correspondent Allan Dodds Frank
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NEW YORK (CNNfn) - Public-relations disasters can cost a corporation dearly if not handled properly.
From the Tylenol scare to the wreck of the Exxon Valdez, it's often up to company executives and public-relations experts to put the best spin on a bad situation.
Yet while a corporation struggles to make a bad situation look better, trial lawyers who stand to benefit from suing the firm can be trying just as hard to scuttle the spin control.
Plaintiffs' attorneys often know that a win in the court of public opinion can often precede a win in court.
The scenario played out this week at Texaco, as what once looked like a routine lawsuit escalated into a major public-relations problem -- thanks to the release of secret audio tapes.
Last week, a racial-discrimination case against Texaco languished in an obscure federal court in White Plains, N.Y.
But that changed when The New York Times published a story about the lawsuit, quoting alleged secretly made audio tapes.
The tapes reputedly had top Texaco executives using racial slurs and talking about illegally destroying documents related to the lawsuit.
Suddenly, Texaco became one of the biggest business stories in newspapers, TV and on Wall Street.
New York State Comptroller Carl McCall, who manages 1.3 million Texaco shares in pension funds, is among those who are watching the case closely. (122K WAV) or (122K AIFF)
Daniel Berger, who represents plaintiffs in the case, welcomed the publicity.
"The attention of the nation has been focused on what's happening (at) Texaco," he said. "So it's going to improve our chances in the case. It's also going to make it more likely that (company officials) are going to take constructive steps to ensure that the employment practices at Texaco are changed."
Berger and his colleagues made the media's job easier by making their clients available to describe their shock at hearing the secret audio tapes.
Texaco Chairman Peter Bijur had little choice but to face the media and try to explain.
"When something like this happens, it's like a punch in the gut," Bijur said.
The executive said he wanted to clean up the mess immediately, hoping to reassure employees, investors and consumers.
Experts say all of the attention makes an out-of-court settlement of the lawsuit very likely.
So far, public-relations experts are praising Bijur for reacting quickly.
"You can almost create a formula for it," said James Cox, corporate-communications firm at Hill & Knowlton. "The greater the denial at the front end, the longer the term of penance to get free on the back side."
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