discrimination lawsuit against the New York-based company, The Royal Gazette learned yesterday.

The suit in America claims Texaco discriminated against minority employees in promotions and whipped up a racially hostile environment.

At the centre of the court case are tape recordings of senior Texaco executives, including Mr. Keough, then the company's senior assistant treasurer.

In the recordings -- transcripts of which were obtained by The New York Times and excerpted in court papers filed in the US District Court in White Plains, New York -- executives are heard referring to black employees as "jelly beans'' and "niggers''.

The New York Times said the tapes had "raised the stakes'' in the discrimination suit brought in 1994 against the company by six employees on behalf of as many as 1,500 minority employees.

The paper did not attribute any of the racial epithets to Mr. Keough, now chief financial and administrative officer with Heddington Insurance Co. a Texaco subsidiary.

The article stated Texaco maintained it had yet to hear the tapes and did not know whether words quoted in court papers were ever said.

But a company lawyer, Andrea Christiansen, is quoted as saying Texaco was "shocked and dismayed'' by the words attributed to executives.

She said the words constituted a "clear violation of Texaco policy''.

The company said it had appointed an outside lawyer to conduct an independent investigation.

Mr. Keough could not be reached by The Royal Gazette last night for comment.

Story: Business, Page 12