City Manager Robert Healy is investigating charges that the city police chief made racist comments last month at a dinner in honor of a retiring detective, city officials said yesterday.

Healy, who supervises all city employees, has discussed the alleged racist remarks with Police Chief Anthony Paolillo and other police officers who attended the April 22 dinner, City Solicitor Russell B. Higley said yesterday. After reviewing the case, Healy may take disciplinary action against Paolillo or dismiss the allegations, Higley said.

"If, in fact, the remarks were made, then it's really a discretionary matter" for the city manager, said Higley, who did not attend the dinner.

At the dinner, Paolillo told a joke about a Black man and a woman who went to the woman's apartment, according to last Thursday's Cambridge Chronicle. Paolillo then related that the woman removed her clothes and told the man to "do what he did best" or "let's see what you can do," the Chronicle reported.

The punchline was that the Black man robbed the woman and escaped.

Paolillo's alleged comments come in the midst of a $15 million lawsuit against the city for discrimination in the police department. Paolillo is included in that suit as a defendant.

The attorney for the Cambridge Afro-American Police Association, which filed the suit, said he would refer to the comment during the trial to reflect the racial insensitivity within the police department.

"It doesn't make much sense for someone who is a defendant in a civil rights case to stand up and tell a racist joke," said Douglas Louison, the lawyer representing the officers in their suit. Louison said that while telling the joke "doesn't rise to a violation" of Constitutional rights or warrant additional charges, the incident suggests a lack of "sensitivity" on Paolillo's part.

"I'm certainly going to quote it [the comment]," Louison said. The attorney said that the federal judge hearing the case "clearly said there is a problem in Cambridge" and has suspended the trial for two months for discussion between the two parties and representatives from the federal Justice Department.

The city denies the allegations against the police department, Higley said.

Neither Healy nor Paolillo returned phone calls to their offices yesterday. Healy could not be reached at his home last night.

Lt. Calvin Kantor, a Black aide to Paolillo, declined to comment on the incident yesterday. Kantor was quoted by the Chronicle as saying that he "wasn't offended" by the joke, and "in my heart I know Tony Paolillo is not a racist."

Higley, who said he has known Paolillo for a long time, said, "I would not say Tony Paulillo is a racist." He added, "He's done a good job. I was surprised to read he had said those things."