A novel whistle-blower suit that accused an indoor-air consulting firm of acting as a secret front for tobacco companies in their war on smoking bans has been settled out of court for $100,000--with the money to be paid by tobacco companies and split between the U.S. government and the former employee who filed the case. The settlement with Healthy Buildings International of Fairfax, Va., resolves the 5-year-old case in which a former HBI executive had charged the firm with defrauding federal agencies that hired it to perform air quality inspections of their buildings. HBI had done so, the suit claimed, by concealing a secret agenda of exonerating tobacco smoke as an indoor pollution cause. In a pair of surprising twists, a tobacco industry official, who would not speak for attribution, acknowledged that tobacco companies will fund the settlement and have been paying HBI's legal fees. And in an unusual clause in the agreement, filed in U.S. District Court in Washington, the former executive, Jeffrey R. Seckler, admitted that HBI "to his knowledge" had not defrauded or filed false reports with its federal clients. "If it had not been for that statement that HBI believes vindicates it, we would not have settled," Marc Efron, attorney for HBI, said in an interview Wednesday. Neither Seckler nor his lawyer returned calls. The settlement ends another turbulent chapter in the life of HBI, a once tiny consulting firm that tobacco companies rescued from obscurity to use in the global fight against smoking bans. After the whistle-blower case was filed in 1993, HBI's ties to Big Tobacco were probed in a subsequent U.S. House subcommittee staff report that quoted former employees as saying HBI officials changed data and conclusions in their building inspection reports. HBI denied this. The firm's documents were also subpoenaed by the Justice Department as part of its criminal investigation of the tobacco industry. HBI's extensive links to the industry were first disclosed by The Times in an article in 1992. The ties date from the mid-1980s, when tobacco officials on a lunch break spied company president Gray Robertson peering into ductwork in a Washington office building, and struck up a conversation.

Before long Robertson, a silver-haired, British-born chemist, and his staff were touring the country on the industry's dime and getting talk show bookings as independent experts on "sick building syndrome." A spread in People magazine, touting Robertson as "the building doctor," made him the closest thing to a celebrity in his field. His message: Secondhand smoke is an overrated problem, and along with other contaminants is easily managed by proper ventilation. In fact, as the only visible contaminant, tobacco smoke is a useful indicator of poor ventilation and thus of the presence of invisible poisons, the argument went. Backed by millions of dollars in industry contracts and grants, HBI also went global. Philip Morris secretly spent hundreds of thousands of dollars underwriting a glossy HBI house organ that was translated into eight languages and distributed worldwide to promote the firm's views on indoor pollution. But the tobacco company's involvement was never mentioned. Despite such provocative facts, the lawsuit produced little or no evidence that HBI had fudged air quality reports to federal clients such as the General Services Administration and Department of Health and Human Services. The suit was filed under the False Claims Act, also known as the whistle-blower statute, which allows employees of private contractors to collect a portion of damages for exposing fraud against the federal government. Under the settlement, $45,825 will be paid to the government, $19,175 to Seckler, and $35,000 to Seckler's attorney.

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