Everything about Bechtel totally explained
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 1925. 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, 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.
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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'd 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 didn't 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 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 wasn't 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.
2000 to present
In September of 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, and the collection of rainwater was prohibited by law. 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 more than 35,000 trailers and mobile homes, serving nearly 100,000 disaster victims, within six months, a record pace for federal emergency programs. 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's 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
Aguas del Tunari
Airport Group International Holdings, LLC
Alterra Partners
Alliance Bechtel-Linde
Alterra Partners (UK)
Arabian Bechtel Corporation
Bantrel Co. (Calgary)
BCN Data Systems (UK)
Bechtel Babcock and Wilcox Idaho, LLC
Bechtel Bettis, Inc.
Bechtel Canada, Inc.
Bechtel Capital Partners LLC
Bechtel China, Inc.
Bechtel CITIC Engineering, Inc. (China)
Bechtel COSAPI (Peru)
Bechtel Constructors Corporation
Bechtel Enterprises Holdings, Inc. (BEn)
Bechtel Financing Services, LLC
Power Generation Engineering and Services Co. (PGESCo) (Egypt)
Bechtel Great Britain Ltd. (UK)
Bechtel Infrastructure Corporation (BINFRA)
Bechtel Jacobs Company LLC
Bechtel Hanford Inc.
Bechtel McCone Parsons Corporation; Engineers, Constructors
Bechtel Metodo Telecomunicacoes Ltda. (BMT) (Brazil)
Bechtel National Inc.
Bechtel Nevada Corporation
Bechtel Northern Corporation
Bechtel Overseas Corporation
Bechtel/Parsons Brinkerhoff joint venture
Bechtel Petroleum, Inc. (U.S.A.)
Bechtel Plant Machinery, Inc.
Bechtel Power Corp. (U.S.A.)
Bechtel SAIC LLC
Bechtel Savannah River, Inc.
Bechtel-Sigdo Koppers joint venture (Chile)
Bechtel-Technip Joint Venture
Becon Construction Company, Inc.
BPR-Bechtel
Bechtel Telecommunications
Cimtas Pipe Fab. & Trading Ltd. Co. Bechtel-ENKA Joint Venture (Turkey)
Cliffwood-Blue Moon Joint Venture, Inc.
Colstrip Energy LP
Dabhol Power Company (DBC), joint venture with General Electric and Enron (India)
Dual Drilling Company
Eastern Bechtel Co. Ltd.
EnergyWorks LLC
The Fremont Group
Incepta Group PLC
InterGen (joint venture with Royal Dutch Shell)
International Water
IPSI LLC
Lawrence Livermore National Security LLC
Lectrix
Lima Airport Partners
Los Alamos National Security, LLC
Marathon Oil Equitorial Guinea LNG
NetCon Thailand (joint venture with Lucent)
Nexant
NorthGas, Ltd. (joint venture with Gazprom in Russia)
PSG International (partnership with General Electric)
Saudi Arabian Bechtel Company (Saudi Arabia)
Sequoia Ventures, Inc.
Spruce Limited Partnership
United Infrastructure Company (Chicago) (before Bechtel bought out its partner's share in 1998)
Technology Ventures Group
USGen Power Services, LP
Other Bechtel projects
Dulles Metrorail Extension
Hong Kong International Airport
Channel Tunnel
dual-use petrochemical plants in Iraq before the Gulf War
Kuwait oil fires after the Gulf War
Bekme hydroelectric dam in Turkey (1983)
the huge Tengiz Field in Kazakhstan (1997)
joint venture with Royal Dutch Shell (called Intergen) to build, own, and operate three natural gas power plants in Turkey
several United States Department of Energy projects including the Y-12 nuclear weapons plant and enriched uranium storage facility in Oak Ridge, Tennessee
Pantex nuclear weapons lab in Texas
chemical weapons disposal facility in Anniston, Alabama
rebuilding of sections of Croatian highway between Zagreb and Split in 1998 (a $990 million project funded by the Export-Import Bank of the United States)
Big Dig
Dabhol Power Project (joint venture with Enron and General Electric in Maharashtra, India (marking the biggest foreign investment in the history of India)
Trans-Caspian Gas Pipeline (another joint venture with Enron and General Electric
New Doha International Airport
Fissile Materials Storage Facility at Mayak, Ozersk, Russian Federation
South America: Aracaria Power project, Brazil; Jorge Chávez International Airport in Lima, Peru; a nickel smelter for the Cerro Matoso mine in Colombia; Antamina copper mine, Peru; Klabin Riocell pulp mill, Brazil
North America: Bajo power project, Mexico; AT&T wireless network, U.S. wide; Equinix business exchange, U.S. wide; Delta Energy Center, California
Europe, Middle East, Africa: OGD2 Gas, United Arab Emirates; Athens Metro, Greece; Coca-Cola plant, Ireland; Croatian Motorway; Transylvania Motorway; Shoaiba power plant, Saudi Arabia; Rail improvement projects, UK
Asia: CSPC petrochem plant, China; Meizhou Wan power station, China
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.<[Further Information]
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