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It's a Bechtel World 

Think that a $680 million Iraq contract is a big deal? You don't know Bechtel.

Wednesday, Jun 18 2003
Within hours of the United States military's invasion of Iraq, San Franciscans of a certain political bent went on the offensive against one of the city's home-grown businesses: the Bechtel Group Inc. The public heat only intensified with news that the engineering and construction firm had been included in the handful of companies chosen in secret to bid on the government's reconstruction efforts in Iraq -- and subsequently won the job. And as late as two weeks ago, 43 people were arrested protesting in front of Bechtel's headquarters near Beale and Market streets.

Indeed, Bechtel has long been the firm that anti-corporate San Franciscans love to hate. Protesters descended on the company's headquarters after a controversial utility project Bechtel and its partners built for the Bolivian government resulted in soaring water rates in 2000. (The company left Bolivia, but remains in litigation over the project.) But the attention that came with the Iraq contract put Bechtel, the nation's largest construction firm, the largest privately held company in California, and one of the most secretive businesses in the developed world, into a rare and clearly uncomfortable spotlight.

In April, Bechtel chief Riley Bechtel issued the following statement to his employees: "We have a decades-long record of experience and performance on tough jobs under tough conditions, including the Kuwait oil fires and scores of other projects in the Middle East and around the world. It's a record that few, if any, companies in the world can match. Any implication that we won this work as a result of anything other than our capabilities discredits our record, and the great work you do and will continue to do."

Critics, of course, see the situation another way, using slogans like "No blood for oil" to underscore their contentions that the firm is profiting from a Republican war through the political connections of its most prominent board member and past president, George P. Shultz. As bigwigs go, Shultz, who's served in multiple GOP administrations as secretary of state, treasury, and labor, brings a lot to the table.

But to assume that George Shultz somehow was single-handedly responsible for Bechtel's Iraq contract, or, for that matter, that his involvement was necessary for the company to get the job, is to ignore Bechtel's all but permanent place in the global power structure.

In the network of Bechtel, George Shultz is but one officer (albeit an important one) in an army of notables who have long-standing business and personal contacts in government, and in the social circles that form what's often called "the permanent government," around the globe. In the world where Bechtel competes, the orientation of a government -- whether it is Republican or Democratic, Baathist or monarchical or Islamic -- can be less important than the business that government might generate. For more than 70 years, Bechtel has been a serious player on the field of global commerce by staying connected to and friendly with, or at least maintaining friends who are connected to and friendly with, everyone who might have anything to do with rounding up a game.

Rightly or wrongly, Bechtel may be the case study that explains how business is done between multinational construction giants and the governments that approve and fund the projects those giants engineer and build. In that case study -- at least, as it has been written to date -- the protests of ordinary citizens, regardless of how passionate or creative, remain footnotes.

To consider Bechtel's $680 million, insider contract to rebuild Iraq a shocking or grand instance of influence-mongering is simplistic. What's shocking is the relative routineness of the transaction. Bechtel has become so skilled at the worldwide pursuit of profit that it regularly wins projects many times the size of the Iraq contract -- and then, because it is one of the few firms that can build on such a grand scale, is in a position to negotiate, as payment, ownership of the very public works it builds.

The W.A. Bechtel Co. was founded in Oakland during the late 1800s, doing construction work for the railroads' expansion into the west. Still largely undeveloped, California was booming in the wake of the Gold Rush, and, with the recent addition of the steam engine, railroads couldn't lay track fast enough to link the new west to the rest of the country.

A century later, the Bechtel Group has revenues of $11.6 billion a year and manages more than 900 projects in 60 countries. All the while, the firm has remained privately owned and tightly controlled by four generations of the Bechtel family, making it a rarity among American family-founded corporations, most of which were sold or taken public as squabbling descendants of the founders succumbed to the lure of cash-producing stock offerings.

Through the generations, Bechtel has solidified its image as the company that can build anything, anywhere. During the first half of the 20th century, the firm built oil refineries and pipelines, ships for World War II, and a variety of other infrastructure projects. As the size of those projects grew, so did Bechtel's geographical reach. Its frequently touted domestic accomplishments include Hoover Dam -- a massive engineering feat that used some 45 million pounds of reinforced steel and 3.25 million yards of concrete to block the mighty Colorado River -- the Bay Bridge, and the BART rail system. The company also has secured billions in work from the U.S. Department of Energy, including contracts to manage the Nevada Nuclear Test Site and parts of a massive radioactive-waste cleanup at the former Hanford Nuclear Test Site.

But over time, Bechtel also became a truly global player, leading construction of the Channel Tunnel between England and France and building several major airports, including a $20 billion project at Hong Kong International, among other efforts.

In the Middle East, particularly, Bechtel is a household name; it has a long history of work in Saudi Arabia, beginning with construction of the trans-Arabian pipeline in the 1940s for Standard Oil Company of California (SoCal).

About The Author

Lisa Davis


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