Postmaster General Marvin T. Runyon agreed yesterday to pay $27,550 to the government to end a criminal investigation of whether he violated federal conflict-of-interest laws by participating in negotiations that could have allowed Coca-Cola soft drink machines in the nation's post offices.
A wealthy former automobile executive, Runyon owned about $350,000 worth of stock in the soda company at the time. He maintained from the outset of the 14-month Justice Department investigation that he had never intended to profit from the soft drink venture, a point that federal prosecutors said yesterday was irrelevant to whether he broke the ethics law.
By agreeing to a civil settlement, Runyon may have saved his job as the nation's 70th postmaster general. Members of the agency's board of governors, a presidentially appointed panel, had said Runyon would be dismissed if he pleaded guilty to any criminal offense.
The Justice Department initially described Runyon's payment as "a fine," a statement that brought an angry denouncement from Runyon. "It's a voluntary payment . . . a gesture of good faith on my part," the postmaster general said in an interview, accusing prosecutors of "attempting to harpoon me."
Justice Department lawyers later agreed that the word "fine" was improperly used in their press release and issued a statement noting that the payment was a voluntary one made to terminate the civil lawsuit that Justice filed yesterday in U.S. District Court here.
Ira H. Raphaelson, a lawyer for Runyon, said the change was important because the postal board might view a fine as a finding of wrongdoing.
The $27,550 payment provided for in the settlement "represents the increase in the value of Runyon's Coca-Cola stock between the time he should have recognized the conflict and the time he actually disqualified himself from" the talks with the soft drink company, a Justice Department news release said.
The 73-year-old postal executive expressed relief that the criminal inquiry was ended.
"It's been tough," he said. "Fourteen months is a long time. {Now} it feels really good."
Justice Department lawyers contended in the suit that Runyon had violated the ethics law by his participation in discussions to place vending machines in postal lobbies. In a response to the suit, Runyon did not dispute the basic allegation that he participated in the Coca-Cola talks in both Washington and Atlanta, the company's headquarters.
But he rejected the government's contention that he violated the ethics law and argued that "the personal benefit to him of the proposed Coca-Cola strategic alliance was so remote and attenuated that it is illogical to impute to him a financial interest" in the deal.
Runyon also contended he had "a reasonable expectation" that a postal ethics officer should have warned him earlier of the potential violation. In the interview, he acknowledged that "even though they didn't tell me, I'm responsible" for obeying the conflict-of-interest law.
In any event, Runyon said, his "sole motive" for seeking the vending machines was to reduce stamp rate increases by creating new revenue sources for the Postal Service. The vending machine proposal died after Runyon's stock ownership was disclosed.
The prolonged inquiry had cast a cloud over Runyon, who has headed the Postal Service for nearly five years, and threatened to overshadow his accomplishments of transforming an agency that was perennially in debt into one that has produced a record three years of profits in excess of $1 billion.
"I entered government service to give something back to my country -- not to make money," Runyon said in a Postal Service statement.
The statement noted that prosecutors had said they found an "absence of evidence of willfulness on the part of Marvin Runyon" or that he was "motivated by personal profit."
"This allows me to put this year-long distraction aside and to concentrate anew on improving workplace relationships and service for our customers as well as directing the establishment of a vigorous proactive ethics compliance program to prevent other Postal Service officials from unwittingly participating in business matters that might affect their financial interests," Runyon said. CAPTION: MARVIN T. RUNYON