Orin E. Atkins was forced out as chairman of Ashland Oil Inc. in October 1981 amid a swirl of controversy over exotic investments and foreign payments that left the company in turmoil.

Atkins' exit was eased by a handsome, three-year "consulting" contract from Ashland in which he was allowed to keep his $425,000-a-year salary, with an annual cost-of-living increase, plus an office in West Palm Beach, Fla., and a secretary.

During the time he was receiving the $1.2 million in consulting fees from the company, Atkins was never asked to do any work for Ashland, according to a company spokesman.

"During the period of the consulting agreement, Atkins did not play a role in running the company or advising the company," said Dan Lacy, Ashland director of public relations.

Asked about this, Atkins recently said, "Whatever they tell you is fine with me. . . . I'm not arguing with it."

Nor does Ashland appear upset over the arrangement. In fact, Ashland and some of its directors sound all too happy now to distance the company from its controversial former chairman, who ran the firm for 17 years and had been credited with building it into the nation's largest independent oil refiner.

In three pending lawsuits -- one by a sole stockholder and two by former Ashland executives who were discharged -- Ashland is accused of making more than $40 million in illegal payments to foreign officials in the Mideast during 1980 and 1981 while Atkins was still chairman.

The allegations, which come principally from the two former Ashland executives who were fired, have prompted inquiries by two congressional subcommittees and an ongoing investigation by the Securities and Exchange Commission into possible violations of the Foreign Corrupt Practices Act, which bars U.S. firms from bribing foreign officials. In 1975, Ashland, Atkins and several other officials had signed a consent decree with the SEC that enjoined them from using company funds for any illegal purposes, including improper foreign payments. The SEC is looking into whether that decree was violated, sources said.

The ongoing SEC investigation and lawsuits show the difficulties Ashland has had in severing its ties to an earlier era. Ashland, its directors and Atkins have denied violating the Corrupt Practices Act and the consent decree. The company has confirmed it made the foreign payments cited in the lawsuits.

But it has released a lengthy report by an outside law firm that concluded the payments were not illegal because the recipients were not foreign officials within the meaning of the law. The report, prepared by Pittsburgh attorney Charles J. Queenan Jr., was presented to Ashland's board in 1981 and was disclosed to the SEC two years later.

At the core of the controversy are a series of unorthodox business transactions initiated by Atkins in 1979 when the company's access to Iranian oil was cut off because of the Iranian hostage crisis and Ashland was scrambling to find new sources of crude to keep its refineries busy. Ashland's shortage of crude oil was particularly grave because it had sold off its own limited oil reserves in 1979.

These transactions included Ashland's $25 million purchase in April 1980 of a controlling stake in a Zimbabwean chrome mine that turned out to be worthless. Later, in November 1980, Ashland entered into a joint venture with a Liechtenstein company to develop Gore-Tex sausage casings that could be ripped off cooked sausages at processing plants and used again. The sausage process never worked and Ashland ended up losing $2.3 million.

The owner of the Liechtenstein sausage firm was Yehia Omar, a wealthy Libyan businessman who was then serving as an economic adviser to the Sultan of Oman.

A "unique and inscrutable" figure, in the words of the Queenan report -- and a one-time "Rasputin-like adviser" to former Libyan King Idris in one journalistic description -- Omar had persuaded Atkins that he had sufficient influence to help the company land crude oil contracts from the Omani Sultantate, the Queenan report said. Moreover, the company did actually get oil from Oman: In September 1980, company reached a one-year agreement with Oman to receive 20,000 barrels per day, although Queenan report concluded there is no evidence this had anything to do with its business dealings with Omar.

In one of the lawsuits, a former Ashland executive alleges that Atkins and his two sons, Charles and Randall, benefited financially from some of the foreign payments through a longstanding social and business relationship with Omar.

William D. McKay, a former Ashland vice president who was fired by the company in 1982 and is now suing the company for "wrongful discharge," has charged that the Ashland payments to Omar were part of a "circle of funds" to the Atkins family.

In one instance in December 1980, confirmed by the Queenan report, Atkins ordered that a $1.35 million Ashland payment be wired to the Swiss bank account of a wholly owned Omar-owned company called Mont d'Or after Omar demanded a "commission" for the crude oil agreement.

That same month, Atkins' son, New York financier Charles Atkins, received a $5 million personal loan, secured only by his own signature, from the ARTOC Bank & Trust Ltd., a Bahamian bank in which Omar was a director and part owner. The suit charges that Charles Atkins sought the loan from ARTOC after he was unable to receive similar financing in the United States at that time.

In a 1979 letter, Charles Atkins had urged Omar to invest in The Securities Group, a cluster of tax shelters he and his brother had started and which have since gone bankrupt. At the time, Atkins wrote that such an investment would "mark the continuance of the long and profitable relationship between the Atkins and Omar families," according to a copy of the letter obtained by lawyers for a group of aggrieved investors in The Securities Group.

Citing the alleged Atkins families' ties to Omar, McKay has charged in one of his court filings that "Oren Atkins was systematically looting Ashland's funds for his and his family's benefit."

Atkins categorically denied the "circle of funds" charge, saying that Omar did not play a role in helping his son obtain the loan and that, in any case, the "terms were horrible" and it ultimately was refinanced by a U.S. bank with a lower interest rate.

Atkins also noted that the $1.35 million payment to Omar was returned to the company several months later after questions about it were raised by members of the company's board of directors.

James Moss, a lawyer for Charles Atkins, also described the terms of the loan as "onerous." He added: "For the circle of funds to make any sense, it would have to mean that the loan wasn't repaid. But it was a valid loan and it was repaid. So that breaks the circle."

Ashland spokesman Lacy said about the McKay allegation that the "the company has no evidence that Mr. Atkins routed company funds to his son" or that the ARTOC bank loan to Charles Atkins was related to the company's payment to Omar.

A second accusation is that a group of Ashland executives, outside directors and lawyers allegedly engaged in a coverup of the foreign payments and pressured McKay to give "untruthful" statements to federal investigators, according to lawsuits filed by McKay and Harry D. Williams, Ashland's former Washington lobbyist and vice president for governmental affairs.

The "coverup" charge has principally revolved around an Internal Revenue Service program, begun in 1976 to uncover tax evasion and tax avoidance schemes, including potential bribes, kickbacks and other questionable payments by large corporations.

Under the program, a letter asking five specific, standardized questions is sent to executives of hundreds of major American corporations who would be in a position to know such payments if they existed at their companies.

McKay received one such form in October 1982. According to one of his court filings, Ashland officials, including current chairman John R. Hall, made "intense efforts" to have him respond to the IRS questions with a "sanitized format" that was prepared by the company's lawyers.

This format, which was prepared by the lawyers for all executives to sign, did not include references to $17 million in Ashland payments to Saidqu Attia, a former official of the government oil company in the Persian Gulf sheikdom of Abu Dhabi in 1980 and 1981. Ashland contends Attia was not an official of the government at the time of the payments. Those payments are now being scrutinized as part of the SEC investigation, sources said.

McKay resisted such pressures and provided his own answers to the IRS -- a move that alienated him from the senior officers of the company, according to his filings. McKay said he provided these answers to the Louisville office of the IRS, including information about the Abu Dhabi payments, but never heard back from the IRS.

Ashland spokesman Lacy said the company was "aware of no pressure upon McKay to conceal any information" from government authorities. He said there was nothing unusual or improper about company lawyers preparing a standard form response to the IRS questionnaire.

Finally, Lacy said, the company's lawyers "did not list or disclose the Abu Dhabi payments as part of the response to the five questions because it did not then nor does it now believe that there was any difficulty with these transactions in terms of violations of the Foreign Corrupt Practices Act or any other law."

Meanwhile, Ashland officials have criticized their accusers. In a letter sent last summer to Ashland directors, chairman Hall personally attacked the credibility of McKay and Williams.

"Unfortunately, in Harry Williams and Bill McKay we have two disgruntled ex-employes who are dedicated to making all possible trouble for the company," wrote Hall. "They are apparently frustrated that they are were not given big promotions as a result of their questioning Mr. Atkins' behavior."

As for Atkins, he minces no words in denouncing his accusers. "This is the kind of crap you can expect from characters like McKay," said Atkins when asked about McKay's allegations that Atkins "looted" Ashland. "I only worked for Ashland for 35 years and was chairman for 17 years. If I was going to loot Ashland, I would have started a lot earlier."

Now an independent investor who "fools around with real estate and wanders around looking for pots of gold," the 62-year-old Atkins chalks up the furor over his deparature to a misunderstanding. Some of his much-criticized investments were attempts at getting Ashland to branch out into new and more profitable ventures, he said, a direction he wanted to move in because he contends that he forsaw the pending collapse of the world oil market.

This whole thing from beginning to end was nothing more than an argument over management philosophy," Atkins said in a telephone interview. "I wanted to run the thing for the shareholders, for the maximum benefit of the shareholders. But I was probably not as sensitive to the feelings of others as I should have been."

The controversy over the foreign payments followed a trail of other legal problems at Ashland. In 1973, the company and Atkins were convicted and fined for channeling $100,000 in illegal corporate campaign contributions to Richard Nixon's reelection campaign.

In addition, a number of Ashland subsidiaries and executives were indicted and convicted of antitrust violations in the wave of bid-rigging investigations on paving and construction jobs in the South. One of its subsidiaries, Ashland-Warren Inc. of Atlanta, paid a $6 million fine in a 1982 bid-rigging case that is believed to be the largest such penalty ever assessed against an American corporation.

Ashland spokesman Lacy emphasized in recent interviews that the company is now under new management, headed by chairman Hall, and that it believes its legal problems are behind it.

"Most of the events about which allegations have been made occurred almost five years ago. The current management has cooperated fully with the SEC, interested House subcommittees and the press and is proud of its record of corporate governance during this period," said Ashland spokesman Lacy.

And Jane Pfeiffer, an outside Ashland director adds, "I find that Ashland oil is a company that has very good management now and has come out of a very difficult period."