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Bechtel

Bechtel

Bechtel Corporation (Bechtel Group) is the largest engineering company in the United States, ranking as the 9th-largest privately owned company in the U.S. With headquarters in San Francisco, Bechtel had 40,000 employees as of 2006 working on projects in nearly 50 countries with $20.5 billion in revenue.

Bechtel participated in the building of Hoover Dam in the 1930s. It has also had involvement in several other high profile construction engineering projects, including the Channel Tunnel, numerous power projects, refineries, and nuclear power plants, BART, Jubail Industrial City and Kingdom Centre and Tower in Saudi Arabia, Hong Kong International Airport, the Big Dig, the rebuilding of the civil infrastructure of Iraq funded by the United States Agency for International Development (USAID), and the hauling and installing of more than 35,000 trailers and mobile homes for Hurricane Katrina victims in Mississippi.

The Bechtel family has owned Bechtel since incorporating the company in 1945. Bechtel's size, its political clout, and its penchant for privacy have made it a perennial target for journalists and politicians since the 1930s. Bechtel has maintained strong relationships with officials in many United States administrations, including those of Nixon, Reagan, George H. W. Bush, Clinton, and George W. Bush. The company also has strong ties to other governments, particularly the Saudi Royal Family.

Recently, the company has come under criticism for alleged mismanagement of the Big Dig project, illegal resource extraction in the Democratic Republic of the Congo, its financial links to the bin Laden family, and the manner in which it received Iraqi rebuilding contracts after the U.S. invasion of Iraq in 2003. Politicians in the United States and in Europe have made accusations of cronyism between the George W. Bush administration and Bechtel.

For several years Bechtel owned and operated power plants, oil refineries, water systems, and airports in several countries including the United States, Turkey, and the United Kingdom. Bechtel's long involvement with oil, power, and water overseas has become a focus of criticism by the growing anti-globalization and environmental movements.

Company history and timeline

Early 1900s

Bechtel has always functioned as a family-owned company. Its founder, Warren A. Bechtel, started as an employee of the burgeoning United States railroad industry in 1898 after his Oklahoma cattle ranch failed. Over the next 20 years, he built up a sizeable contracting business that specialized in railroad and highway building. One of Bechtel's earliest major contracts was grading the site of the Oroville, CA depot for the Western Pacific Railroad, then under construction.

In 1919, Warren Bechtel and his partners (including his brother Arthur) built the Klamath Highway in California, and in 1921 Warren Bechtel partners won a contract to build the water tunnels for the Caribou Hydroelectric Facility in that state. In 1925, Warren A. Bechtel's sons Warren Jr., Stephen, and Ken joined him and incorporated as W.A. Bechtel Company. In 1926, the new company won its first major contract, the Bowman Lake Dam in California.

1930s

In 1928, the U.S. Congress passed the Boulder Canyon Project Act, which mandated the construction of a hydroelectric dam on the Colorado River. The plan used the name "Boulder Dam", but after some controversy the structure gained the name of "Hoover Dam" (in honor of President Herbert Hoover). The construction involved the largest civil engineering project ever undertaken at the time.

Over the next two years several companies competed for dam-building contracts. To compete for the contract, the W.A. Bechtel Company joined with five competitors to form the Six Companies Corporation. This partnership formed for the sole purpose of the Hoover Dam project, and their combined strength virtually guaranteed that they would submit the most competitive bid. On March 11, 1931, the United States Department of the Interior selected the Six Companies to build the dam. Construction of the Hoover Dam began in late 1931 and finished in 1936, two years ahead of schedule.

Warren A. Bechtel died suddenly while traveling abroad in 1933, in the midst of the Hoover Dam project. His son Warren A. Bechtel, Jr. took over as president of the company and served in that position until succeeded by his brother Stephen.

After the building of Hoover Dam, Bechtel's reputation soared. However, Stephen Bechtel wanted the company to become more than just a construction firm. He pushed the W.A. Bechtel Company to undertake more complex engineering projects and oil contracts.

From 1933 to 1936, Bechtel helped build the 8 mile (13 km) long San Francisco – Oakland Bay Bridge. In 1937, Bechtel joined forces with John McCone's engineering company to form an engineering/construction firm called the Bechtel-McCone Company.

World War II

On July 19, 1940, President Roosevelt signed the Two-Ocean Naval Expansion Act, which authorized the construction of two huge fleets in both the Atlantic and Pacific theaters. The U.S. Maritime Commission selected Bechtel to build a new shipyard for the Pacific fleet. Bechtel constructed the Marinship Bechtel Shipyards in Sausalito, California and produced hundreds of cargo ships and oil tankers for the Navy. John McCone's California Shipbuilding Company also gained many large and profitable shipbuilding contracts, starting in early 1941 and continuing through the end of World War II.

While the United States built its "Arsenal of Democracy", American war planners increasingly worried about what would happen if the Axis gained control of the world's oil reserves. The Italian invasion of Egypt in September 1940 caused deep concern, as did the April 1941 coup in Iraq which brought the pro-German Golden Square faction to power.

Matters came to a head after the Japanese attack on Pearl Harbor in December 1941. War planners became concerned that the Japanese might invade Alaska and threaten the northern oil fields, which had started to become an important part of the U.S. oil supply. In April 1942, the United States Army authorized the creation of the ALCAN (Alaskan-Canadian Highway) to facilitate the movement of troops and supplies to Alaska. Soon afterwards the authorities authorized the CANOL oil pipeline.

The CANOL pipeline contract went to Bechtel-Price-Callahan, a partnership formed for the purpose between the W.A. Bechtel Co., the H.C. Price Co., and the W.E. Callahan Construction Co. In June 1942, the Japanese invaded the Aleutian Islands off the coast of Alaska, and the construction began in earnest. However, due to poor planning by the Army and mismanagement by the contractors, the CANOL project failed totally. The pipeline consumed more oil than it produced and cost taxpayers an enormous amount of money. Furthermore, as time went on, it became clear that the Japanese did not have the resources to invade Alaska. The CANOL pipeline was abandoned after a mere 11 months in operation.

During the pre-war period in late 1940 and early 1941, several scandals and allegations had surfaced involving wartime profiteering and widespread corruption at a number of defense contractors. In 1941, the U.S. Senate created the Special Committee to Investigate the National Defense Program at the urging of Senator Harry Truman. This committee, chaired by Truman, spent two years investigating waste and corruption in the defense industry.

In 1943, the "Truman Committee" released a scathing judgment on the $143 million CANOL project, calling it more destructive to the war effort than any act of sabotage by an enemy. The judgment singled out Bechtel-Price-Callahan for criticism for its role in the cost overruns and mismanagement that plagued the project.

Post-war era: late 40s through 50s

After the war, the W.A. Bechtel Company bought out John McCone's share in Bechtel-McCone and incorporated as Bechtel Corporation. John McCone went on to head the Atomic Energy Commission and later the Central Intelligence Agency (see below).

In 1947, Bechtel expanded its oil pipeline activities with its construction of the Trans-Arabian Pipeline in Saudi Arabia. At over 1,000 miles (1,600 km), this comprised the longest pipeline in the world at the time. In addition to the pipeline itself, Bechtel built large parts of the modern infrastructures of Saudi Arabia and Kuwait, including airports, sea ports, and oil refineries.

In 1946, the U.S. Congress authorized government research into nuclear power with the Atomic Energy Act of 1946. This act created the Atomic Energy Commission, later headed by Bechtel's former partner John McCone. Following President Eisenhower's famous Atoms for Peace speech in 1953, commercial research into nuclear power was authorized.

In 1956, Bechtel won the right to build the world's second commercial nuclear power reactor, the Dresden-1 in Illinois. Construction began in 1957 and the plant came fully online in 1960, four years after the first commercial nuclear power reactor, Calder Hall in Sellafield, England.

In 1959, a Bechtel partnership called Parsons Brinckerhoff-Tudor-Bechtel gained the contract for San Francisco's Bay Area Rapid Transit (BART) system. The system, completed in 1972, served as a model for other urban transit systems around the world.

60s and 70s

Throughout the 1960s and 1970s, Bechtel expanded its energy engineering activities. In 1963, Bechtel began construction of the San Onofre Nuclear Generating Station in California.

At this time the Corporation also diversified into other areas. In the late 1960s, Bechtel launched its development, finance, and investment arm, named Bechtel Enterprises Holdings, Inc. This firm leveraged Bechtel's experience, its capital, and its government ties to help other companies compete for engineering contracts throughout the world.

In 1972, Bechtel won a $13 billion contract for the James Bay hydroelectric project in northwest Quebec. The project was completed in 1985 and drew criticism from the growing environment movements in the U.S. and Canada.

In 1976, Bechtel was awarded a contract to build Jubail Industrial City in Saudi Arabia. By 1992, the 360 square mile (930 km²) city of Jubail was one of the most modern cities in Saudi Arabia, with a population of over 70,000. After the successful completion of the project in the late 1980s, Bechtel's contract was extended by the government of Saudi Arabia through 2007.

1980s

In 1981, Bechtel constructed the Ok Tedi Mine, the largest mine in Papua New Guinea at the time. An engineering feat, the mine was constructed in one of the most remote and inaccessible regions in the world. Controversy would surround the major shareholder of the mining company, Broken Hill Proprietary (BHP), which is now known as BHP Billiton, when it allowed mine waste to be dumped directly in the Ok Tedi River after a tailings dam built by Bechtel was destroyed in a land slide. The Ok Tedi Environmental Disaster resulted from the riverine dumping of pollution.

In 1981, Bechtel bought controlling interest in Wall Street investment bank Dillon, Read & Co., and George Schultz joined Dillon Read's board representing Bechtel. Dillon's Chairman, Nicholas F. Brady was a personal friend and advisor to Vice President George H. W. Bush and later served as Secretary of Treasury under both Reagan and Bush. The Dillon investment was not successful, and the Dillon partners bought the firm (now part of UBS) back in the mid-80's. See Dillon, Read & Co. Inc. and the Aristocracy of Prison Profits

Bechtel's recent history has been fraught with controversy. In 1988, just after Saddam Hussein had earned international condemnation for using poisonous gas against thousands of Kurds, Bechtel signed contracts with Iraq to build a chemical plant. Bechtel never completed the project due to the onset of the first Gulf War in 1990.

In 1989, Bechtel repaired the San Francisco – Oakland Bay Bridge after a 30 ft (9 m) section collapsed as a result of the Loma Prieta Earthquake.

1990s

According to the Wall Street Journal, Bechtel established a strong relationship with the rebel leader Laurent Kabila during the First Congo War of 1996-7 in central Africa, compiling "the most complete mineralogical and geographical data of the former Zaire ever assembled, information worth a fortune to any prospective mining or oil firm" and commissioning and paying for "U.S. National Aeronautics and Space Administration satellite studies of the country and for infrared maps of its mineral potential." According to government officials, some of the satellite data provided to Kabila by Bechtel was "militarily useful information."

2000 to present

In September 1999, Bechtel signed a contract with Hugo Banzer, the elected president and former dictator of Bolivia, to privatize the water supply in Bolivia's 3rd-largest city, Cochabamba. The contract was officially awarded to a company named Aguas del Tunari, a consortium in which Bechtel held a 27.5 percent interest. Shortly thereafter, water rates in that city went up an average of about 200 percent.. Both of these actions resulted in the Cochabamba protests of 2000. Many had to withdraw their children from school and stop using doctors because of higher costs for water. Martial law was declared, and Bolivian police killed at least 6 people and injured over 170 protesters. Amidst Bolivia's nationwide economic collapse and growing national unrest over the state of the economy, the Bolivian government withdrew the water contract.

In 2001, Bechtel filed suit against the Bolivian government, citing damages of more for $25 million. Bechtel argues that its contract was only to administer the water system, which suffered from terrible internal corruption and poor service, and that the local government raised water prices. The continuing legal battle attracted attention from anti-globalization and anti-capitalist groups. This topic is explored in the 2003 documentary film The Corporation and on Bechtel's website. In January 2006, Bechtel and the other international partners settled the lawsuit against the Bolivian government for a reported $0.30 (thirty cents) after intense protests and a ruling on jurisdiction favorable to Bechtel by the International Centre for the Settlement of Investment Disputes.

In 2002, Bechtel finished work on the Kingdom Centre in Riyadh, Saudi Arabia. The Kingdom Centre includes a shopping centre, a Four Seasons Hotel, state-of-the-art apartments, and most importantly the Kingdom Tower, a 302 meter tower, the tallest in Saudi Arabia and the 25th tallest building in the world. The total cost of the project was 1.717 billion Saudi Arabian Riyals and is owned by Alwaleed bin Talal bin Abdulaziz Al Saud.

In January 2003 as part of the 30 year London Underground PFI, Bechtel has a one third interest in Tube Lines.

In early 2003, the Boston Globe launched an investigation into Bechtel's role in massive cost overruns and accounting irregularities in Boston's Big Dig project totaling over $1 billion. Bechtel rebutted the allegations on its website. The Globe, along with the Associated Press, filed papers requesting that Massachusetts Turnpike Authority make public the results of all Bechtel's performance audits related to the Big Dig. Bechtel sought a preliminary injunction to block the release of the documents, but the superior court judge in the case denied Bechtel's request on April 11, 2003, opening the way for public release of the documents.

In 2004 BWXT, a partnership of BWX Technologies and Bechtel National are fined $82,500 for a February, 2003 accident at Oak Ridge, TN's Y-12 facility after an accident caused a small explosion, a fire, and contaminated three employees.

In late 2004, a significant leak sprouted in the Big Dig's Tip O'Neill I-93 Tunnel, due to a contractor's failure to remove gravel or other debris before pouring concrete. Bechtel acknowledged failing to catch and correct the error. The Boston Globe also made a major issue of many leaks that sprang from gaps in the roof of the tunnel; these were later sealed by the tunnel contractors as part of the construction process.

Bechtel has long had close ties to the American government. From 1974 to 1982 George Schultz, former United States Secretary of Treasury and future Secretary of State, was president and director. The late former U.S. Secretary of Defense Caspar Weinberger was general counsel for Bechtel in the late 1970s. Former deputy Secretary of Energy W. Kenneth Davis was Bechtel's vice-president. Riley Bechtel, the company's chair, was on President George W. Bush's Export Council. Jack Sheehan, a former senior vice-president of Bechtel, was a member of the U.S. Defense Policy Board. The Clinton Administration also appointed senior Bechtel managers to senior positions.

Like most large American companies, Bechtel and its employees have contributed large amounts of money to United States politicians (over a million dollars in campaign contributions between 1999 and 2002).

On April 17, 2003, following the 2003 U.S. invasion of Iraq, USAID awarded a $680 million reconstruction contract to Bechtel. Although Bechtel's contract was awarded by competitive bid, this job placed the company in the spotlight along with other American firms like Halliburton who have come under intense international scrutiny for receiving no-bid contracts for the rebuilding of Iraq. Critics in both the United States and allies like Britain have questioned the process by which the U.S. awarded Iraq contracts to American companies. The profiteering from the destruction caused by the shock and awe at the beginning of the war has caused Bechtel to be accused of disaster capitalism.

On May 5, 2003, The New Yorker ran an article revealing that the bin Laden family had passively invested several million dollars in The Fremont Group, a private equity fund owned by the Bechtel family.

In 2004, a contract was awarded to Bechtel in Romania for building the A3 freeway. The contract came under criticism from the European Union because it was awarded through negotiation, not competitive bid. In 2005, the new Romanian government held up the project to renegotiate the contract. It was reauthorized in 2006.

In 2005, Bechtel was awarded a no-bid contract by the Federal Emergency Management Agency to install temporary housing for the Hurricane Katrina disaster relief effort. Bechtel installed about 35,000 trailers and mobile homes for disaster victims. The lack of competitive bidding for the contracts was criticized, as was the high cost of the contracts and the failure to support local, minority-owned businesses.

On July 10, 2006 a three ton section of concrete suspended ceiling crashed in the east bound lanes of the Massachusetts Turnpike I-90, in Boston. This tunnel ceiling collapse was in the Big Dig which Bechtel along with Parsons Brinckerhoff were responsible for building. This collapse claimed the life of Melena Del Valle, a 38 year old native of Costa Rica. Massachusetts Attorney General Tom Reily immediately designated the accident scene a crime scene. He has left open the possibility of negligent homicide charges being levied against Big Dig contractors and managers.

Effective October 1, 2007, the US Department of Energy awarded Bechtel partnership LLNS LLC the contract to operate Lawrence Livermore National Laboratory. This rounds out Bechtel's control, through various partnerships, of the bulk of the US nuclear weapons facilities, including Los Alamos National Laboratory (design), Lawrence Livermore National Laboratory (design), Savannah River Site (nuclear materials), Hanford Site (nuclear materials), Pantex Plant (assembly/disassembly), Y-12 National Security Complex (nuclear materials), and the Nevada Test Site (subcritical testing).

Former and Current Executives

  • Riley P. Bechtel is the CEO of Bechtel. With a net worth of $3.2 billion, he is the 50th richest person in the U.S. and the 127th richest in the world. In February 2003, he was appointed by President George W. Bush to the Export Council, which advises the president on international trade issues. He served for one year.
  • George P. Shultz is the former U.S. Secretary of State under Ronald Reagan, former president of Bechtel, and a former Bechtel director. He is a former member of the board of Dillon, Read & Co. Inc. He also served on the Committee for the Liberation of Iraq.
  • The late Caspar Weinberger served as the United States Secretary of Defense under Ronald Reagan. Prior to holding this position, Weinberger was the Vice President, Director, and General Counsel of the Bechtel Group of companies.
  • Gen. John J. Sheehan, USMC (ret.) is the former NATO Supreme Allied Commander, Atlantic and the former Special Advisor to Asia for the U.S. Defense Department and the former General Manager of the Petroleum and Chemical Business Unit for Europe/Africa/Middle East/South West Asia and was also a Bechtel partner. He was also a member of the Defense Policy Board.
  • Ross J. Connelly is the former CEO of Bechtel Energy Resources Corporation. He currently serves on the Overseas Private Investment Corporation under George W. Bush.
  • W. Kenneth Davis is a former Bechtel senior vice-president and is the former U.S. Deputy Energy Secretary.

Board of directors

Current members of the board of directors of Bechtel Corporation are: Riley Bechtel, Stephen Bechtel, Jr., Alan Dachs, Peter Dawson, Bill Dudley, Tom Hash, Bill Haynes, Sir John Jennings, Jude Laspa, Judith Miller, Nick Moore, Scott Ogilvie, Tim Statton, Foster Wollen, and Adrian Zaccaria.

Joint ventures and subsidiaries

Other Bechtel projects

Environmental Record

Bechtel was fined $90,000 for violating water quality laws in New Hampshire for constructing a gas pipeline in 1998, which would have leaked sediments into the stream that would increase turbidity and damage wetland habitats. On October 29, 2001, the EPA fined Bechtel $30,383 at the Idaho National Engineering and Environmental Laboratory for not keeping records of any service being performed or of how much refrigerant was added to the cooling systems, which could increase annualized leak rates more than 15%. On January 23, 1996, the Washington Department of Ecology fined Bechtel $5,000 for hazardous waste violations on an incident where a drum lid barely missed two workers due to the build-up of pressure inside a drum and improper closure operations. The penalty was issued because of inadequate worker training which lead to an incorrectly labeled drum. Inspections also discovered that Bechtel kept inaccurate records keeping of cleanup waste, which violated state regulations.<

See also

Footnotes

References

  • Friends in High Places: The Bechtel Story: The Most Secret Corporation and How It Engineered the World, by Laton McCartney, 1988. (ISBN 0-345-36044-3)

External links

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