RACINE - Milton Morris demanded cash kickbacks from a company formed primarily to do business with SC Johnson, according to testimony Thursday.

Morris, SC Johnson's former transportation director, was sued by the company for his alleged role in a kickback and bribery scheme involving several of SCJ's transportation contractors. Several of the companies that allegedly gave Morris cash, jewelry and travel, in exchange for business, also have been named as defendants.

Testifying Thursday in Racine County Circuit Court was Peter O'Malley, who helped start Vantraxx, Inc. to do business with Morris.

Initially, O'Malley and his company were named defendants in this case, but they have reached a settlement.

O'Malley said he and his company took the position that they were innocent, at the outset, but said he has since decided to tell the truth.

Attorney Jeffrey Willian questioned him about that, asking if he told the truth during initial interviews.

"I lied to you," O'Malley said.

"How long did you maintain that lie?" Willian asked.

"Up until about four months ago," O'Malley said.

Willian asked what led O'Malley to come forward.

"I had lied to my wife, my family, all my friends," O'Malley said. "The amount of pressure was enormous. I broke. I couldn't do it anymore. I was extremely scared of the ramifications of being found guilty."

Kickbacks in mind from the start

O'Malley testified that the idea for the company grew out of a golf trip to Scotland.

"In the evening at dinner he approached and told me All Modes was for sale," O'Malley said. "He said to take a look, and if you take a look and buy it, I want a part of the action. I said I'd look into it and see what possibilities there were."

O'Malley looked at All Modes, he said, but decided it wasn't a good business decision. Instead, in June 1999 he created Vantraxx, his own intermodal shipping company, to do business with Morris. SCJ was the company's only client for several years.

The kickbacks were discussed in closed-door meetings in Morris' office, O'Malley said.

"We sat down and he dictated (the kickbacks) to me," O'Malley said. "I didn't have much to say except to comply, otherwise we would not get the business."

O'Malley said Morris demanded between $100 and $150 per trip. Documents presented as evidence showed Morris' records of the kickbacks Vantraxx owed. By June 2004, Morris records show he was owed $418,160 by

Vantraxx.

O'Malley said he made three $15,000 payments to Morris before they got scared and stopped payments.

"In the summer of 2000 on a golf course I transferred $15,000 from my golf bag to his golf bag when no one was looking," he said.

Another cash payment was disguised as a Christmas gift, O'Malley said. He had the $15,000 in an envelope, he said, and he put it in a box, put a golf shirt on top of it, wrapped it up and presented it as a Christmas gift, in December 2001.

After that, O'Malley said, they got scared.

"Mike Rivett (a Vantraxx colleague) came to me and said 'We're not going to pay Morris any more money,' O'Malley said. "At the next meeting I told him 'We're not going to do his anymore,' and that we would talk about it after his retirement." O'Malley said he gave Morris the impression that he would be paid after he retired from SCJ.

Breadth of corruption

In addition to the kickbacks Vantraxx was paying to Morris, O'Malley said he saw evidence of other special treatment given to Morris, including travel and prostitutes.

O'Malley said he and Tom Buske, of Buske Intermodal and Buske Lines, paid for Morris' travel to faraway destinations, including Hawaii, Spain, Scotland and Mexico. Morris, O'Malley and Buske were also together at Buske business review sessions in Florida, O'Malley said.

On several of those trips Morris and Buske arranged for prostitutes, O'Malley said.

"(In Hawaii) Mr. Buske brought a girl," O'Malley said. "We met her in the airport in Honolulu. Milt recognized her and introduced her to us. (He said) that she was for him. He said that he was going to have some fun for a couple days. He knew her before and he told me she was a prostitute."

O'Malley also said that Morris showed him briefcases full of cash on several occasions.

"In Sarasota I met him early in the morning," O'Malley said. "He said to come on up to the room. He said, 'I got something to show you.' He opened a briefcase and there was a lot of cash in there. I was embarrassed and turned away." O'Malley said the briefcase appeared to be at least half-full of $100 bills.

The second time Morris showed him cash like that, O'Malley said, was outside the Kenosha Country Club. That time, Morris said he had won the money playing cards, O'Malley said.