After brooding for six months about being fired as president of Chrysler Corp., William C. Newberg, 50, decided that he had been played for a sucker. Last week Newberg, who was forced out because of profits he had made from ownership in two of the company's suppliers, sued Chrysler. He charged that Chrysler Chairman Lester Lum Colbert and fellow board members had used him as a scapegoat to prevent discovery of "incompetence, maladministration, neglect, breaches of duty and self-dealing" on their part. He asked for cancellation of his agreement to pay Chrysler the $455,000 profit he had made from the suppliers. He has already paid $200,000; the court postponed the $65,000 installment due this month until his suit is heard.
In his brief, Newberg claimed that Colbert had long known of his interests in the suppliers. In fact, Mrs. Newberg claims that she was asked by Mrs. Colbert to get her son a summer job as a laborer with one of the companies. Newberg said he was made the scapegoat because the company management was threatened with "wholesale investigations" by stockholders disgruntled at low earnings. In the nine weeks that he was president, Newberg said he had uncovered evidence of "favoritism, and preference of certain friends, relatives and intimates of top executives."
He said he had resigned only after he was assured that the affair would be handled delicately, so that his reputation would not be ruined, and the chance to become chairman of Studebaker-Packard Corp. was dangled before him. The final settlement to pay back his outside earnings, said Newberg, was forced from him and his wife by threats of ten years' imprisonment and financial ruin from Colbert and board members. His wife Dorothy had come to New York to be with him during the negotiations, and "was precipitously reduced to tears at the contemplation of her husband's being imprisoned."
Studebaker flatly denied ever offering Newberg a job. Chrysler said that the "suit is without foundation in fact." The settlement was not forced on Newberg, said Chrysler, but was proposed by him after he took three weeks to confer with an attorney and negotiate with Chrysler attorneys. In October the finances of the 36 remaining top executives were given a clean bill by an investigation conducted by Chrysler's own law firm and checked by Thomas E. Dewey's firm. As for the conversation concerning a job for Colbert's son, Colbert said that it was Mrs. Newberg who suggested it to his wife, and there was no indication that Newberg had any connection with the company.