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SoCal was granted exploration rights in Saudi Arabia in the early 1930s. After limited success on its own, the outfit joined with Texas Oil Co. (Texaco), Standard Oil Company of New Jersey, and Mobil Oil Co. in a new venture called the Arabian American Oil Co. (Aramco). The company eventually was nationalized and renamed Saudi Aramco.
Thanks, in part, to Steven Bechtel Sr.'s established relationship with the heads of his San Francisco business neighbor SoCal, his firm was contracted to build an 850-mile pipeline to get oil out of Saudi Arabia.
From that early beginning, Bechtel developed a decades-long relationship with the Saudi royal family that few other American companies have been able to match, winning billions of dollars of infrastructure contracts as the kingdom's wealth grew. More recently, for instance, Bechtel was the primary contractor in a $20 billion project to create two industrial port cities in Saudi Arabia, the largest civil engineering project in history.
Once established in the Middle East, Bechtel expanded its work into Kuwait, and then Iran, Yemen, Lebanon, and Iraq, where, in 1984, Bechtel was involved in a deal that would have let the firm build a $1 billion pipeline to move oil out of the country through the port of Aqaba, Jordan.
According to a report published by the Institute for Policy Studies earlier this year, the Export-Import Bank of the United States approved a preliminary commitment of nearly $500 million for the project -- an unprecedented loan to Iraq -- and negotiations to assure the pipeline's safety were under way with then-Israeli Prime Minister Shimon Peres, through an intermediary. Donald Rumsfeld (now an outspoken secretary of defense, but then an envoy of the Reagan administration) met with representatives of Saddam Hussein in an attempt to close the deal, but in the end, Hussein rejected the plan.
As Bechtel's projects have grown larger and more complicated, its owners and managers have manufactured opportunity through carefully cultivated relationships with political and business power brokers. And that network started long before there was a man named Bush in high office or a war in an oil-rich country called Iraq.
In the 1930s, Bechtel founder W.A. Bechtel joined his buddy, Henry J. Kaiser, another Bay Area legend engaged in building the roadways and infrastructure that would shape the west, and Frank Crowe, a former U.S. Bureau of Reclamation superintendent, in the successful bid for a government contract to build Hoover Dam.
Some years later, W.A. Bechtel's son, Stephen D. Bechtel, created a partnership with his college chum John A. McCone to build pipelines and refineries for oil companies. During World War II, that firm, Bechtel-McCone Corp., entered into the business of building ships for the government, with the help of a land grant at Terminal Island in Los Angeles. (Bechtel-McCone also had sites near Sausalito and Richmond.) According to Laton McCarthy, author of Friends in High Places: The Bechtel Story, the Bechtel-McCone firm also built an oil pipeline through the Alaskan wilderness in secret for the War Department. McCone later became director of the Stanford Research Institute, a nonprofit concern studying government and business applications of science and technology, and was chairman of the Atomic Energy Commission and head of the CIA during the Kennedy administration. He remained a close friend and golf partner of Bechtel, and brought the likes of Allen Dulles, who succeeded McCone at the CIA, and Dwight Eisenhower into their social circle.
And so it has gone for decades. During the era of Stephen Bechtel Jr., a grandson of the firm's founder who ran it from 1960 to 1990, the company hired George Shultz, who'd been on Bechtel's board of directors, as president. (He later returned to a board seat.) Shultz had already served in the Nixon administration as secretary of labor and treasury secretary, and would go on to be Ronald Reagan's secretary of state in 1982. The younger Bechtel also hired Caspar Weinberger, who had been Richard Nixon's budget manager and secretary of health, education, and welfare, to be Bechtel's general counsel. Weinberger, of course, subsequently became Ronald Reagan's secretary of defense.
But Shultz and Weinberger were hardly alone in their use of the revolving door between Bechtel and federal office. Bechtel has been both a jumping-off and landing point for countless high- and midlevel government operators during the last 60 years.
Much of the corporation's overseas work in particular has been aided relatively directly by Bechtel's government connections. The Export-Import Bank of the United States, which loans money to foreign countries for the export of American goods and services, counted Stephen D. Bechtel Sr. among the members of its advisory committee from 1969 to 1972, and the engineering firm has maintained numerous ties since, with a company vice president now on the bank's advisory committee.
Outside the realm of what might be considered business-related fraternizing, the Bechtels remain virtually off the social radar, certainly for folks worth a reported $3 billion. (Forbes magazine ranks Riley Bechtel as the 104th wealthiest man in the world.) They are not among the usual suspects who grace the pages of the Nob Hill Gazette, Gentry magazine, or Town & Country at symphony fetes, art galas, and charity balls.
In fact, concerned about security, the family is so secretive that it successfully petitioned courts to seal the Bechtels' voter registration records some years ago, and their personal assets are held primarily in the name of a private corporation. Just the same, as owners of one of the largest private companies in the world, the Bechtels have a permanent place in the social order of high-level business.
Riley Bechtel, who is Stephen D. Bechtel Jr.'s son and the reigning chairman and CEO of his family's firm, is also a third-generation member of San Francisco's all-male Bohemian Club, best known for its Bohemian Grove encampment near the tiny town of Monte Rio in Sonoma County. Every year, the most powerful men in America gather at the Grove for what amounts to elite summer camp, where they produce skits and musical shows, listen to keynote speakers, eat, drink, and socialize. Officially, business discussions are taboo, but certainly camp kinship has evolved into many a serious deal.
