TEXACO is trying to head off a threatened nation wide boycott by African American customers following disclosures of alleged racial slurs by senior company executives.
After the call by the Rev Jesse Jackson for the boycott to begin next Saturday, Texaco shares fell on Tuesday by $3.
Texaco is already the defendant in a 1994 lawsuit by 1,500 black employees who are suing for $71 million for alleged discriminatory practices. But last week a fresh storm burst over the company when the existence of a tape with the executives' comments was leaked to the media.
In the tape transcript, which was part of confidential court documents, the former Texaco treasurer apparently uses the epithet "nigger" and another finance executive refers to "black jelly beans" sticking to the bottom of the jar. The poor quality recording was made by a participant at the meeting who has since left the company.
The chairman of Texaco, Mr Peter Bijur, who had not heard the tape before, immediately apologised to employees and expressed "shock and outrage" at the apparent comments. Incidents were reported at some Texaco stations by black protesters.
Mr Bijur also hired a former, US assistant attorney, Mr Michael Armstrong, to investigate whether the officials said what was in the transcript and whether they discussed destroying documents relating to the lawsuit.
But in his report, Mr Armstrong said that when the tape was digitised, the so called racial slurs in the transcript were not correct and the word "nigger" had not been used.
It also emerged that the "jelly bean" analogy is one that is used in approved courses on how companies should handle race relations among employees.
These claims have been dismissed as irrelevant by Mr Jackson, who commented: "I don't care if it's nigger, trigger or bigger. It's still talking about blacks."
Mr Bijur himself said that the new findings "do not change the categorically unacceptable context and tone of the conversations" and he pledged "to eradicate discrimination thoroughly from our company, wherever and however it exists."
However, following a meeting this week at Texaco headquarters between Mr Bijur and civil rights leaders, Mr Jackson called for a national boycott of Texaco starting on Saturday.
He said that Texaco had "the power to stop the boycott by settling the lawsuit and putting forward an affirmative action plan that addresses the deep fundamental problems at Texaco."
The boycott call was backed by Mr Emmanuel Cleaver, president" of the National Conference of Black Mayors, and other black groups. But the influential National Association for the Advancement of Coloured People (NAACP) has not yet supported it.