Texaco knows what it means to pay for past sins. Just two months after the company agreed to pay Pennzoil $3 billion to end their epic legal battle, Texaco last week consented to shell out $1.25 billion to settle another dispute — this time with the U.S. Government. Texaco is one of seven major oil companies accused by the Department of Energy of overcharging customers between 1973 and 1981, when federal oil-price controls were in effect. The $1.25 billion penalty is the largest imposed so far against a single company.
Texaco’s slate is still not clean. The Internal Revenue Service says the company may owe the Government up to $6.5 billion as a result of allegedly underpaying taxes between 1965 and 1986. Texaco’s troubles have sent its stock down from a high of $54 in 1980 to nearly $43 currently. That has attracted corporate raiders. Carl Icahn has bought a large block of stock, and T. Boone Pickens says he will follow suit. They are gambling that Texaco, which went into bankruptcy proceedings during the Pennzoil affair, will survive and even make a comeback.