in Bermuda over a Texaco Inc. race scandal, has won the first round in his libel suit against his former employers, claiming he was used as a scapegoat.

A US district court judge in Manhattan has denied Texaco's motion to dismiss Mr. Keough's libel claims in which he is seeking $50 million in damages.

Mr. Keough was fired as chief financial and administrative officer of Heddington, the oil company's Bermuda-based captive, in 1997.

He was suspended and later fired as a result of an investigation into tapes allegedly recording company bosses -- but not Mr. Keough -- uttering racial slurs and discussing destroying documents needed for a racial discrimination lawsuit. The tapes eventually led to a $175 million racial discrimination class action settlement.

Mr. Keough then launched a lawsuit alleging that Texaco slandered him through false statements, implying he was part of the taped discussions.

Texaco then moved to dismiss the claims. In ruling against a dismissal Judge Lawrence McKenna said that "reasonable minds could look independently at Texaco's statements and find a defamatory connotation''.

Robinson Lerer & Montgomery, Texaco's public relations firm, will also remain a defendant in the suit.

Mr. Keough has said his reputation has been destroyed and he has been forced to move back to Connecticut "unemployed, unemployable, homeless and shamed''.

The lawsuit alleges Texaco and its public relations company falsely portrayed him as having made racist comments about blacks.

The original class action suit was brought in 1994 by six employees on behalf of as many as 1,500 minority employees, who were alleging they had been denied promotions because of their race.

Keough denies being present at taped meetings of Texaco's finance department where racist comments were allegedly made by company executives. He also denied destroying documents.

DISCRIMINATION DIS COURTS CTS