When the insidious stain of racism permeates a society, it all too readily enters the business and corporate world as well. Two of the world's best known corporations, oil giant Texaco and British Airways, have recently been reminded of the costs - both financial and to reputation - of allowing old-fashioned racism and anti-Semitism to dwell within their ranks.

Facing large scale adverse publicity and the threat of a consumer boycott, Texaco Inc. recently caved in spectacularly to the tune of US$176.1 million in settling a class action lawsuit brought by 1400 black employees alleging systemic racial discrimination.

Although the suit was filed in mid-1994, it languished until a tape recording of a meeting of senior Texaco executives was turned over to the plaintiffs by their former Personnel Director. The transcript, which soon appeared in The New York Times, revealed the shredding of documents relating to the suit, and recorded black employees being referred to as "black jelly beans" and "niggers", and the company's then Treasurer complaining about a demand from black workers for recognition of Kwanzaa, the black holiday, saying "I'm still having trouble with Hanukkah."

Without any further tape transcripts emerging in the national press, the corporation has not felt any urgency to settle 28 remaining lawsuits involving similar allegations. One of these was filed in January 1996 by two Jewish former employees - Israeli-born Mordechai Pasternak, 53, a chemist, and Anatoly Kramer, 42, a chemical engineer from the Ukraine - who worked at Texaco's offices in suburban New York. The two men claim they suffered economic and psychological harm from three supervisors - two Christians and a Palestinian Muslim - because they are Jewish.

The allegations include being pressured to convert to Christianity, denied promotions and bonuses given to less experienced colleagues, exclusion >from meetings and assignments needed for advancement and being berated for complaining about performance reviews. Anatoly Kramer claims he also had Nazi and other anti-Semitic materials placed on his desk. He believes the Palestinian supervisor dislikes Jews because his brother, a former aide to Yasser Arafat, was assassinated. Both of the Jewish employees were eventually sacked.

Texaco's only response so far has been to state that it is not prepared to discuss matters under litigation, while asserting that this is the only anti-Semitic complaint in the company's 95-year history.

Clearly, the key differences in the two Texaco cases were the levels of media publicity and political support. For the black class action suit, the unearthing of the tape recorded meeting was media-friendly evidence which turned the heat on Texaco and brought political pressure from the likes of Reverends Jesse Jackson and Al Sharpton (who called for the consumer boycott) to the Anti-Defamation League. Assisting them also were the sheer numbers of people who could identify with the issue. Messrs Pasternak and Kramer will need to attract some heavyweight publicity and support to successfully pursue their claims.

Meanwhile, British Airways has also had to take a good look at itself recently. Only those with an eye for some of the smaller news items would have noticed that the airline has only just changed a rule that had resulted in the recent ejection of an orthodox Jewish man from a transit lounge. Mr Aaron Tyk, a New York prosecutor returning to the US from a vacation in Israel, was asked to leave while reciting prayers in the Oasis Lounge for Middle East travellers at London's Heathrow airport. He was told by an employee that the lounge "was not for Jews".

British Airways initially denied the incident, then offered different explanations: firstly, that Israel was not considered a Middle Eastern destination for the lounge's purposes, then that Tyk did not have the correct ticket for the lounge, even though Tyk said the BA employee who had asked him to leave did not check his travel documents.

British Airways launched into a flurry of damage control after receiving letters of complaint from Tyk, who works for the New York state Attorney-General, and ADL director Abraham H. Foxman. The general manger of BA's United States operations, Barbara Cassani, wrote in reply to express regret that Tyk "felt distressed by what happened" and stated that the lounge in question had now been re-dedicated to all passengers to and from the Middle East, including Israel, "to avoid any future misunderstanding". For some reason, Israel was previously classified as a European destination.

Upon being questioned by The Review about the incident, an Australian spokesperson for British Airways hurriedly contacted London for clarification before conceding that the matter "could have been handled better", adding the employee involved had been counselled on the encounter to prevent any re-occurrence. He then stressed that the airline had a policy of total non-discrimination in regard to race, religion, creed and gender. What's more, BA has kosher food available on all its flights.

But the self-styled world's favourite airline has faced previous allegations of racism. In 1995, Tony Kaye, an award-winning film director, was contracted by British Airways' advertising agency Saatchi and Saatchi to direct the airline's £1m "feeling good" advertisement. Kaye claims he was instructed to use fewer black, Asian, oriental and Jewish actors in favour of white actors. British Airways wrote to Saatchi and Saatchi expressing concern that the shoot needed to reflect more accurately the make-up of BA staff and passengers.

The filming was hampered by a series of disputes between Kaye, BA and Saatchi. Kaye was removed from the project only days before the advertisement was first broadcast in October 1992 - a modified version was later shown in 45 countries. Kaye, who is Jewish, said the first hint of trouble came when a senior BA executive referred to a widely acclaimed advertisement the director had made for British Rail, which featured an elderly Jewish-looking man playing chess with a boy on a train. The executive allegedly told Kaye that he didn't want such characters in the BA commercial.

"I have occasionally encountered racism in advertising, but never in such an unsavoury way," Kaye told the London Sunday Times. "It is particularly surprising from an airline that obtains its revenues from carrying people of all different ethnic origins all over the world."

He claimed that a Ghanaian stewardess he had flown over to London to appear in the advertisements was rejected on ethnic grounds, as was an Israeli model. A Hispanic businessman was shown only in profile to disguise his features.

Kaye's claims appear to be confirmed in a letter sent by BA's advertising and promotions manager to the airline's then advertising agency, Saatchi and Saatchi. "Following our meeting yesterday, I have attached the ethnic breakdown of all British Airways passengers surveyed last year," wrote Andrea Matthews.

"As you can see, 89 per cent of our surveyed passengers are European/North American and, dare I say it, predominantly white. It is therefore important that this information is explained to Tony Kaye and his team urgently, in particular the split of Japanese, eastern Indian and Caribbean we carried."

In these two cases involving British Airways, it is fortunate the two protagonists had considerable resources at their disposal. As a lawyer, Aaron Tyk, had little fear of litigation and the backing of New York state Attorney-General Dennis Vacco. He knew how to apply the right kind of pressure. Director Tony Kaye had his considerable reputation to bolster his claims. Most others are not so lucky.

Victims of corporate racism face opponents possessed with daunting financial and human resources, yet with the law as their ally, there are good reasons to pursue their claims - even if the case does not reach the courtroom. Legislation to combat racial discrimination has emerged in most Western countries over the past 30 years.

Nowhere is losing such a case more costly for a company than in the United States, where massive awards for damages accompany the ever-growing litigation costs. In addition, there is the incalculable damage of adverse publicity - making revelations of racism not only morally disturbing but bad for business. It is no wonder therefore that many companies endeavour to prevent a court case or make the pragmatic decision to seek an out- of-court settlement.

Even long established companies like Texaco and British Airways can no longer consider themselves invulnerable to scrutiny on racism, whether it be institutionalised, condoned, isolated, or simply unintended. No doubt such revelations are particularly embarrassing for international companies that pride themselves on their non-discriminatory and equal-opportunity employment policies.

However, beyond the specifics of these incidents, the most revealing insight is that hidden bigotry and hypocrisy still festers in the corporate world, sometimes right up to the top level. The myth going around has been that few people hold racist views these days, especially not polite, well-educated, white collar middle and senior managers.

Relatively few incidents of racism in the corporate world ever reach the press. Most occur in an environment where bigots are confident their behaviour will never be known outside the protective cocoon of the workplace. For such behaviour to continue, it requires either the active promotion or, at least, the passive indifference of managers, and the surest way to entrench it is to pretend it no longer occurs.