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SEPT./OCT 1978 28 MOTHER JONES

The Bechtel File How The Master Builders Protect Their Beachheads

By Mark Dowie Illustrations by Lou Beach

In the course ofresearching this article And that's the way it has been with Fortune 500, Bechtel would rank about on the Bechtel Corjioration, I met about Bechtel. This story is based mostly on 25th—bigger than Coca-Cola, Lock- a dozen reporters who had lookedat the documents, sources outside the Bechtel heed or American Motors. Bechtel. company over the years. Most of them Corporation itself and interviews with however, is far more than just another found Out very little of interest. One re- nervous Bechtel employees who talked large corporation. It is an empire that pOrter toldme, "Bechtelwill never talk to only after I assured them total andper- hires its executives right out of the Pres- you. You'll have toget itall onyour own." manent anonymity. I was surprisedhow ident's Cabinet at huge salary increases, He was right. little they knew about their company— receives billion-dollargovernment con- When I hadcompiled enough informa- even somewho hadworked therefor many tracts, maintains close ties with the tion on Bechtel to ask intelligent ques- years. The stone walls are not just powerful elites of most major countries tions, I calledits public-relations depart- around Bechtel. They are inside the and harbors the secrets of uranium en- ma/it torequest an interview. Iwas routed company, too. richment. to Tom Flynn, whose name I recognized If Bechtel manufactured musical in- as the crack reporter who covered Viet- ODAY, is a sleepy little struments or beer, its complete lack of namfor the Oakland Tribune. Flynn re- fishing village on the Persian public accountability would not be so turnedfrom the war to take ajob as press T Gulf. Sixteen years from now it alarming. But a company that has de- secretary to 's Mayor Jo- will be a major industrialcity the size of signed or built almost half of our nu- seph Alioto. At the time Alioto was be- Toledo, Ohio, with oil refineries, steel clear power plants,traded technological leaguered by charges of Mafia involve- mills, a deep-water port, hotels, hospi- information with the Soviet Union and ment, and it was while working for him tals, an international airport, several writtenthree major sectionsof the Ford that Flynn learned, in his own words, power plants and the world's largest Administratiod's energy plan must, in "how to stonewall," desalinizationcomplex. This mammoth the words of one of its own top execu- I met Flynn once, but he asked all the feat is at the heart of Saudi tives, "beable to stand the light ofday." questions.' Whom was I writing for? With Arabia's plan to transform itself from Yet not only does the company refuse what angle? What questions did I have a nation of desert nomads into a major to talk to reporters; as a privately- for company officials? After that, Tom industrial state. Jubail is far and away owned firm, it does not even publish an Flynn promised to meet with me again. the largest single project annual report. With this article, then, ThIee separate appointments were post- in history. The entire city is being built we're publishing that report for Bechtel ponedfor various reasons, The lastpost- by a secretive family-ownedbusiness in —and we hope this will be just the be- ponement turnedout to be a cancellation. San Franciscowhose name is familiar to ginning of a process of public inquiry "We will not cooperate," Flynn an- prime ministers and presidents around into the effects this corporation has had nounced through tight lips. the world but is unknown to most on our lives and our environment, "You mean no press releases, no bro- Americans: the Bechtel Corporation. Few unnatural forces have altered the cliures, no interviews? You're stonewall- Bechtel would be important if for no face of thisplanet more than the Bechtel ing us" other reason than its sheer size. If pri- Corporation. Followingits terse slogan, "Thai's right." vately held firms were listed among the "Bechtel Builds," the company has un- SEPI/OCT. 1978 29 MOTHER JONES dertaken as projects the world's first of the company's humble beginnings, nuclearpower plant (Arco , 1951), when Dad Bechtelleased his mule team the , the San FranciscoBay to grade a railbed through Oklahoma , the Pipeline, the Wash- Indian territory. Dad later sold his ington, D.C., Metro, the San Francisco mulesand made cOnstruction history by system and the being the first person to use a steam 1,100-mile Trans-Arabian Pipeline. shovel in road construction. Bechtel has built the world's tallest Today, teams of another sort—hun- earth-filled darn(Swift Dam in Oregon), dreds of architects, engineersand com- Central America's first oil refinery (in puter specialists—travelback and forth Panama),the biggestcopper complexin from San Francisco to Jubail, drafting the world (Bougainville. Papua New a totally planned community. They Guinea),the first and biggest -slurry bring to the project a myriad of closely pipelines, the planet's largest hydro- held secrets developed, traded or electric project (Labrador) and this brought to the company in the brains country's largest plant and files of more than 1,000 scientists (San Onofre, ).With one ma- raided from competitors and foreign jor construction project, Bechtel dou- countries.(Twenty-five percent of Bech- bled the energy output of . tel's domestic employeesare registered Started by an immigrant muleskinner aliens.) named Warren "Dad" Bechtel in 1898, When Bechtelis ready to begin build- this "little family business" has grown ing 's new city, 42,000 la- to be the largest engineering and con- borers will move into a temporary city struction company in the world. All that Bechtel will construct before be- As if it didn't have enough to do, three of Dad's sons, Warren, Steve and ginning Jubail. Most of them will travel Bechtel has salesmen out hunting for Ken, have worked with the company thousands of miles from countries like newbusiness. Unlike other construction over the years; but during the '30s the Korea, the , , Taiwan companies, however, which seek out gregarious and resolute Steve emerged andAlgeria, where wagesare lower than single-item projects—a $2 billion nu- as the leader of the three brothers and, in oil-rich Saudi Arabia. clear plant here, a $70 million shopping at 77, remains the senior director of the Although Bechtel's original price tag center there—Bechtelhas taken to pro- Bechteldomain. Ken and Warren both for Jubail was $9 billion, estimates in posing the building of entire cities, like died recently. Steve's 53-year-old son, the engineering press began running as Jubail, or the installation of industrial Stephen Jr., who, in contrast to his high as $20billion shortly after the con- infrastructures for entire nations. father, is highly educated, reserved and tract was signed. A recent Jubail is only a sample of what the calculating, is now chief executive offi- Times article alluded to rumored adjust- company has in store for countries like cer, a position he assumed at 35 after ments running as high as $45 billion. Nigeria, another oil-rich country that "workinghis way up through the ranks" Havingbeen badlyburned on one or two today stands on the brink of industriali- in a short 13 years after graduatingfrom fixed-price jobs in the past, Bechtel will zation. "Using criteria starting with the Stanford businessschool. sign only cost-plus contracts on projects oil," begins a March 4, 1977, company Steve Sr. is now one of the five richest like Jubail. So the total bill will not be memo on "International Job Strategy," men in the , with personal seen untilthe key is turned and the city "wehave selectednine countries,includ- wealth exceeding $700 million. He and is running. ing four where Bechtel could exploit Steve Jr. own and control about 40 per- Ifthe final prices of the San Francisco good current positioningand five where cent of the company's common stock Bay Area Rapid Transit system, the we suggest business-development posi- andan undisclosed percentage of thepre- Alaska Pipeline and the tioning should begin or be intensified. ferred stock, and both have multi-mil- Metroare fair examples of Bechtel's re- Heading the list of the latter five is lion-dollarinvestments in land and other cent work, the cost of building Jubail Nigeria." (The others: Iraq, Malaysia, corporations. When old Steve dies he should come in just under $55 billion. Algeria and Indonesia.) will most likely pass most of his wealth That's about three percent of this year's This confidential memo goes on to on to his son, making him the family's U.S. Gross National Product. say that Bechtel has learned from U.S. be- first billionaire. Financial experts Jubail is Bechtel's largest current foreign-service intelligence sources lieve that one other American only living project, but far from its only one. More (more on that point shortly) that Ni- —oil-tankertycoon Daniel Ludwig—is than full-time inabout geria is planningto spend $50 billion on When 26,000 employees worth a billion dollars. Ludwig 21 permanentoffices and 30-oddsubsid- industrial development. The Bechtel dies, Steve Bechtel, Jr., stands a good iaries are at work on elaborate oil memo then touches on Nigeria's enor- man busy chance of becoming the wealthiest and gas pipelines in Indonesia, a pet- mous potential for construction in "ir- in America. food plant in Missouri, a trade center rigation, power, hydrocarbon installa- and oil refineries." A CONFIDENTIAL MEMO in and a copper complex in tions, airports South Africa. Still in the blueprint stage Bechtel's political clout in Nigeria is To build the city of Jubail, billionsof is a Bechtelplan for a nuclear-powered underlinedin the memo by its reference cubic yards of earth and sand must first submarine that will extract oil directly to the ease with which a meeting can be be moved—inan enterprise reminiscent from the oceanfloor andpump it ashore. arranged with Lieutenant General Oba- SEPT/OCT. 1978 30 MOTHER JONES

asey testified at C McCone's confirma- tion hearing: "I daresay that at no time in the history of American business, whether in wartime or in peace- time, have so few men made so much money with so little risk and all at the expense of tax- payers, not only of this generation but of generations to come." sanjo, chief of state, whom Bechtel'sun- Bechtel was asked to join a consortium formed a business partnership called identified intelligence sources describe called Six Companies that formed to Bechtel-McCone,of which McCone be- as "a very good man, competent and build the Hoover Dam. Later voted came president. honest." Suchintelligence is particularly president of the consortium, Dad com- Although Bechtel-McCone was sup- vital to Steve Sr., who expounds elo- mitted the best and brightest of his posedly formed to build refineries, by quently and frequentlyon the virtues of growingcompany to work on the darn. 1940 the United States was tooling up honesty and competence. In fact, if he Dad Bechtel died suddenly in 1933 in for war, and McCone consequently really trusts his sources, he will prob- the SovietUnion while inspectinga dam landed contracts to build Liberty ships ably fly into Lagos after contract nego- similarto Hoover, and the three Bechtel and tankers for the Pacific theater and tiations are completed and ink the deal Sons finished the Hoover Dam. Left an aircraft-modificationcenter in Ala- with Obasanjo himself. Or he may send with an established membership in the bama. The company then formed a syn- his energetic son, Steve Jr., who circles construction fraternity and enough dicate with major competitors Kaiser the globe more than ten times a year retainedearnings to expand rapidlyinto Industries, Brown and Root, and Par- visiting Bechtel projects and signing new industries, Bechtel began to look sons to build enormous shipyardsin Los contracts. beyond the American market. And ex- Angeles and in Sausalito, a town across "There are great problems workingin pand it did, diversifying into power the bay from San Francisco. McCone Nigeria," the memo concludes, "but plants, mines, refineries and shipbuild- ran the Calship yards in Los Angeles, profits are excellent, perhaps better—if ing. In 1940 it accepted its first overseas and Steve's younger brother Ken ran care is taken in contract negotiations challenge—theMene Grande Pipeline in Sausalito. Together they andappropriate positioning—thaneven in . collected the bill for almost 600 ships in the ." When the Hoover Dam was being builtfor the war effort. planned, anaggressive young steel sales- After the war McCone left the com- YOU SCRATCH MY BACK man named John McCone came to call pany and went where so many govern- Although Bechtel seems like a true on Bechtel. Since the company needed ment contractors have gone since: tothe internationalcorporation—with a poly- literally miles of reinforcementbars for DefenseDepartment. At his Senatecon- glot work force, with most of its per- embedding in the dam's pre-stressed firmation hearing, General Accounting manent offices overseas and with more concrete, Bechtel was a natural cus- Office official Ralph Casey entered evi- than 50 percent of its revenuesfrom for- tomer for McCone'semployer, Consoli- dence that McCone and his associates eign projects—it is very American. De- dated Steel. The cool, handsome, gray- had made a $44 million profit from Cal- spite valued contracts with the General eyed McCone was probably assigned ship on a personal investment of Obasanjos of the world, the company's the call because his old University of S100,000. rise to power has been helped most by a California pal Steve Bechtel was in "I daresay," Casey testified, "that at key friendin Washington. charge of for the project. no time in the history of Americanbusi- During its first 40 years in business McCone graduated from the U.C. en- ness, whether in wartime or in peace- Bechtel stayed in the United States, gineering school in 1922, but Steve had time, have so few men made so much building mostly in the Western states. dropped out earlier because "Dad money with so little risk and all at the Railroads, irrigation systems, natural- needed me in the business." McCone expense of the taxpayers, not only of gas lines and earth-filled dams all led to and Bechtel rewarmed their old friend- this generation but of generations to the first big break in 1931, when Dad ship and, after the dam was finished, come." SEP] /OCT. 1978 3' MOTHER JONES McCone calmly denied being a war •The company operates in more profiteer,pointingoutthatan additional than 100 countries. $7 million in loans and bank credit had • Many of its projects are out in the been invested in Calship. This absurd "boonies," where revolutionaryactivity logic satisfied the Senate, and McCone often begins—and where it's usually wasconfirmed as Undersecretaryof De- hard to find cover for agents. fense. There, he became the center of a • The company moves large equip- major conflict-of-interest scandal by ment and material around the world. giving out multi-million-dollar govern- ("One 30-foot section of large pipe will mentcontracts tocompanies like Stand- hold a lot of rifles," one Bechtel em- ard Oil and Kaiser Industries,in which ployee, who spent four years in Libya, he retained large investments. told me.) Although the Bechtel-McCone "cor- • Since its assetsare notfixed in place, poration" was dissolved, the unofficial as are mines and factories, Bechtel is Bechtel-McCone partnership remained mobile and can leave projects quickly if intact. As John McCone rose through things get too hot. (Company personnel the Washingtonbureaucracy—from his don't often leave, though, electing in- Defensejob to that of chairman of the stead to hole up in a hotel until the Atomic Energy Commission and ulti- shooting stops and a new strongman mately tothe post ofdirector of the Cen- emerges with whom they can negotiate a tral Intelligence Agency—he never for- new contract.) got his old friend Steve Bechtel. •The potential information ex- McCone, as AEC chairman, helped change is mutually beneficial—indus- swing to Bechtel the contract to build trial intelligence (the background for cretionary fund. the country's first commercial nuclear something like Bechtel's Nigeria plant) Then there is C. Stribling Snodgrass power plant in Dresden, . When for politicalintelligence (the kind of in- (whose name is not an alias); who went the plant was dedicated on October 12, formation the CIA needed to success- the other way. As vice president at 1959, McCone showedup to praise it as fully engineer coups in places like Iran Bechtel, Snodgrass masterminded the "the largest, most efficient, most ad- and Guatemala). company's near-monopolization of vanced" power plant in the world. Two organizations as security con- Saudi Arabian heavyconstruction, pri- Although the Dresden facility has scious as Bechtel and the CIA don't marily through cordial relationships since been plagued with serious opera- leave many visible traces of their rela- with influential State Department offi- tional problems, it gave Bechtel an tionship. And Bechtel employees are cials who sold Bechtel to King Faisal enormoushead start inthe nuclearbusi- sworn to secrecy, both when the com- and his predecessor, Ibn Saud. Snod- ness. Since 1959, Bechtel has partici- pany hires them and when they leave. retired from his Bechtelvice as grass early pated either engineer or builder or But the flow of men back and forth be- presidency and set up a small energy- both in the completionof almost half of tween the two institutions indicates consulting firm called LSG Associates. the United States' 68 commercial nu- more than mere coincidence. While was alive,LSG Associ- clear Snodgrass plants—thanks primarily to John Take John Lowrey Simpson, for ex- ates was one of man5' CIA proprietaries McCone. ample.His sudden employment as chair run out of the Washingtonlaw offices of AND I'LL SCRATCH YOURS of Bechtel's high-level finance com- Burwell, Hansen and Manley. Under the mittee in 1952 surprised the company's LSG cover, Snodgrass' assignment un- High-level back-scratchingis a mu- old-timers. Bechtel has a strong tradi- doubtedly was to collect economic in- tual affair. John McCone wasappointed tion of internal promotion, and Simp- telligence and pass it on to American CIA director in the fall of 1961, at a son, whose prior job was as executive companiesthat, like Bechtel, were in a time when the agency was expandingits vice president of the obscure Schroder position to profit from it. Thecompanies arrangements with American corpora- Bank in New York, seemed to come out in return would furnish voluminouspo- tions to providecover to CIA operatives of nowhere. What the old-timersdidn't litical information on the countries in and to share in intelligence gathering, realize, though, was that Simpson had which they operated to Snodgrass,who particularly in countries like Iran, Al- strong ties with the Office of Strategic would pass it on to the CIA. geria and Libya, where Bechtel was Services through his friendship with Bechtel's links with the CIA through constructing, designing or pursuing Allen Dulles (a founding director of men like Simpson and Snodgrassgave large projects. Schroder Bank as well as of the OSS), the company an invaluable boostin its In every respect, Bechtel is a CIA and that Simpson, who had access to dealings with the Third World. Look, director's dream come true: military intelligence during the war, for instance, at Bechtel's operations in • The company's chief executive is served as a Bechtel adviser during those Libya. Few American companies were an old and trusted friend, (Recent evi- years. After the war the OSS, of course, willing to operate in Libya during the dence indicatesthat the CIA prefers to became the CIA, and the Schroder volatile 1960s; yet, with the Suez Canal deal from the top to the top in its rela- Bank, of which Simpson remained a closed, Libyanoil was vital to the West. tionships with corporations.) director after joining Bechtel, was re- In keeping with Steve Sr.'s proud • It is privately held and already se- cently discovered to have been a bank claim, "We will build anything, any- cretive in style. for the CIA director's controversialdis- where, anytime," Bechtel constructed a SEPT./OCT 17S 32 MOTHER JONES

is in many Bechtelrespects a CIA director's dream.The company's chief is an old friend.It operates in more than 100 countries. The company moves large equipment around the world. ("One 30-foot section of large pipe will holda lot of rifles," says one Bechtel employee who worked in Libya.)

pipeline from the Sahara Desert to the And in return for the "free advice," does not have to file lengthy and reveal- Mediterraneancoast for OccidentalPe- Bechtel provided cover for at least two ing financial reports with the govern- troleum (estimated cost $43 million, CIA agents operating in Libya between ment and is thus correspondingly im- final cost $147 million).Occidental, and 1965 and 1969. mune from inquiring federal investi- other American oil Unlike traded companies, paid SECRECY PAYS gators. publicly compa- Bechtel an 18-percent handling charge nies like Lockheed and Ford, Bechtel to manage its affairsrather than send its Besides helping its relationship with has not been required to disclose any own executives into Libya's explosive the CIA, secrecy has been a continuing overseas bribes, slush funds or illegal political climate. Occidental even ar- theme for the Bechtel family. The com- payments. (One member of Congress is ranged for Bechtel to conduit "pay- pany, likemost of the other greatAmeri- currently drafting a bill that would ments" to Libyan officials so that it can empires, could have gone public change this situation. He plans to use could continue working in the country. years ago. It undoubtedly could have Bechtel as a prime argument for his (A Bechtel lawyer recently warned us had its stock listed on the New York legislation.) that the company would sue us if we Stock Exchange and would have done • All Bechtelshareholders (about 56 used the word "bribe.") well in the capital market. New York at last count) are either company vice Bechtel was ableto stay in Libya with- analysts estiniate that Bechtel shares presidents or their wives (wives' shares out serious consequences by forming a would trade publicly at about nine are held in trust by their husbands, who joint venture with a corrupt ex-premier times the current value now arbitrarily retain voting power). Each shareholder named Mustafa Ben Halim. Although placed on each tightly held share by the agrees to sell his stock back when lie Ben Halim was held in high disgraceby family-dominated stock-evaluation leaves the company or dies, at a price most Libyans, Bechtel was advised by committee. determined by the owners of 66 percent the CIA that lie was the man it would Butthe Bechtel family has deliberately of the company's stock.A Bechtel share- have to work with to build the pipeline. exchanged higherstock prices for greater holder thus has less power than a share- In the Libyan case, as always, Bech- advantages. They are happy not to be holder has in, say, General Motors. Ifa tel's correspondence with the CIA went listed with the Fortune 500, or indexed Bechtel shareholder proposed a resolu- through the top. A company officer in in Standard and Poor's or registered tion calling for termination of company Libya wrote to Jerome Komes, the with the Securities and Exchange Com- business with South Africa, as a Ford pipeline project's home-office sponsor, mission. In fact, if they had their way shareholder did at the company's 1977 asking whether or not he should deal they would be known only by their cus- annual meeting,he could be fired by the with Ben Halim. Komes wrote a memo tomers, a fewkey Cabinetmembers and family and forced to sell his stock back to president Steve Jr., askinghim to ask perhaps a dozen bankers. They rarely to them at a price determined behind his father to check with Undersecretary advertise, and when they do it's usually closed doors by the Bechtel family and of State C. Douglas Dillon and Bechtel in trade publications. two or three other shareholders. CIA sources for advice on Ben Flalim. What appears to an outsider as an al- • Mostforeign governmentsand cor- We have no record of what the actual most paranoiac preoccupationwith pri- porations would rather deal with a U.S. advice was: it appears tohave come ver- vacy is instead a strategic business corporation than a governmentagency, bally. But the results are clear. Ben policy with severalmotives: and particularly with one that is im- Halim was paid a "retainer" of $2,500 • Privately held companies are not mune from government surveillance. a month not to obstruct the project. subject to SEC regulation. So Bechtel Bechtel is able to offer this feature to

SEPT./OCT. 1')78 33 MOTHER JONES overseas customers.The Soviet Union, Since leaving the Treasury Depart- for instance,recently signed a technolog- mentfor Bechtel, Shultz has joined the ical-exchange agreementwith Bechtel(a boards of Morgan Guaranty, J.P. Mor- fact learned not from Bechtel's tight- gan Company, the International Mone- lipped vice chairman, Jerome Komes, tary Fund, the World Bank, the Inter- who refused to comment, but from the American Development Bank and the Soviet news agency, Tass). DevelopmentBank. Theseconnec- combined with the of THE McCONE OF THE '70s tions, occupation other bank boards by members of the Hiring people in high places to deal Bechtel family and other Bechtel direc- withothers in high placesis nothing new tors (Crocker National, Wells Fargo), for American The revolv- cover the financial markets fairly well. corporations. isin ing door between big businessand gov- Today Bechtel a position tochannel ernment is well documented. But Bech- long- or short-term financecapital any- in tel seems to hire higher. When it needs where the world. financialconnections it hires the Secre- Bechtel's access to capital has placed tary of the Treasury. When it needs nu- the company in a unique bargaining clear technology, it hires the general position. Ifit can assure a Third World manager of the Atomic Energy Com- country of U.S. financing of a major mission. When it needs international project. it doesn't have to worry much clout it hires an undersecretary of about competition.Since most develop- state. And when it needs expertise to ing nations can't afford to pay out bil- run the bureaucracy it is becoming it lions for roads, power plants, ports or hires the secretaryof Health, Education refineries, U.S. financing is the sine qua technology into those societies. Even and Welfare. non of development. Bechtel arranges when, as in the case of indonesia, the Names like , Caspar the financing,Bechtel gets thejob. And technologyis supposedlyowned by "the Weinberger, CordellHull, RearAdmiral because Bechtel is never the direct re- people," a new elite class of technocrats, John Dillon and WilliamHollingsworth cipient of World Bank loans or IMF middlemenand business leaders—many (former general manager of the AEC) credit, George Shultz can use his influ- of them trained by Bechtel—takecon- are found sprinkledthrough the Bechtel ence without fearing the kind of con- trol of the government.One of their first directory. A look at one of Bechtel's flict-of-interestallegations that plagued moves is often to apply for U.S. military strategic hires, George Shultz, reveals John McCone during his years in gov- aid to protect their new technologyand the advantagesof this business practice. ernment. institutions—notfrom foreign invasion If John McCone was the Bechtel- but from dwellers key THE POLITICS OF PROFIT peasants,poor city Washington link of the '40s, '50s and and students, who can't always discern '60s, George Shultz clearly plays that Although the Bechtels and most of the beneficial effects of industrial devel- role for the '70s. their executives are conservative Re- opment. Alltoo often theresult has been While he was Secretary of Labor, publicans domestically, internationally bloodshed,although Bechtelhas usually director of the Office of Management they seem almost apolitical. Unlike received enough advance notice from and the Budget(0MB) and Secretary of many of the company's competitors, the CIA to keep clear of conflict. the Treasury, Shultz played golf with who patrioticallyrefuse to work in hos- Perhaps the best exampleof Bechtel's Steve Bechtel, Jr., whenever Steve went tile nations, Bechtel will work for any- apolitical stance is its operations in Al- to Washington.Steve Jr. was impressed one who has borrowed or can borrow geria. Even though in the '60s Bechtel's with Shultz's mind and background. large sums of money: socialists, tribal middle management, whose anti-Com- There were also a few minor entries on sheiks, fascist dictators andeven alleged munist leanings superseded their profit his résumé that made Shultzeven more enemies of the United States. Bechtel, motives,offered considerableresistance attractive to Bechtel—former chair of for example, was the first American to working in Algeria, the family's the Council of Economic Advisers, company to resume doing business in "apolitical" policies prevailed, and in member of the President's Foreign In- after 1956, when John Foster 1972 the companysigned a S167-million telligence Advisory Board and member Dulles forbade Americans to work on contract to build a natural-gas pipeline of the Cabinet Committees on Federal the Aswan Darn. for Sonatrach, Algeria's state-ownedoil Credit and Construction. Beyond American shores, Bechtel's and gas complex. Furthermore, as Secretary of the only publicly expressed concern is for Through close ties with the Export Treasury, Shultzhad traveled to Russia the safety of its employees. Its unofficial Import Bank, Bechtel was able to nego- in April of 1973 to arrange U.S. credit ideologyis that technology is apolitical tiate a 567-million line of creditfor the for a gigantic natural-gas project Bech- and brings the progress and well-being project—nomean trick, given the bank's tel was interested in. And as 0MB direc- that inevitably lead to democracy and statutory position on lending to the tor he pushed for the privatization of freedom. The Bechtel philosophy, of "Communist bloc" and to countries uranium enrichment, a Nixon-inspired course, ignores the fact that repressive that harborexiled terrorists. boondoggle that eventually could have military dictatorships arose in Iran, In- At a committee hearing, Congress given Bechtel a world-wide monopoly donesia, Brazil and Saudi Arabia fol- member Les Aspin protested the loan, on the sale of nuclear fuel. lowing the introduction of centralized not because Algeria harbored the likes

SEPT./OCT. 1978 34 MOTHER JONES

echtel will work for B anyone who has or can borrow large sums of money. Nowhere is this more evident than in Bechtel's eagerness to participate in the re- construction of Viet- nam, a country whose destruction the Bechtel family supported through generous gifts to Richard Nixon's ampaigns. of Eldridge Cleaver, but because Steve mission. . . .Bunker stated that hewould in cash anda promiseto fixthe problem. Sr. was on the Eximbank's powerful keep me advised of the results and of- Another Bechtel nuclear trouble spot advisoryboard. The bank simplydenied fered to be of any help he could." has been its Tarapur reactor in India, any conflict of interest and the loan which has been plagued with break- went Bechtel has since then NUCLEAR POWER... downs, leaks and unex- through. AND BEYOND radioactivity stayed in Algeria, where it has also built plained deaths among former em- a large liquefied-natural-gasfacility and Bechtel saw the profits in nuclear ployees. An AEC inspector called the is proposingmany new projects. Social- power early on and quickly moved to plant "a prime candidate for nuclear ist Algeria is one of the top nine coun- become a dominant company in the disaster." The late Paul Jacobs first tries in Bechtel's previously mentioned field. After John McCone gave Bechtel brought Tarapur to public attention in a "International Job Strategy" plan. its nuclear head start in the '50s,Bechtel Mother Jones article in 1976. Bechtel'sapolitical stance is also evi- hired W. Kenneth Davis, head of re- Such problems—and Bechtel is not dentin its eagerness toparticipate in the actor development at the AEC, along the only firm in the nuclear field experi- reconstruction of Vietnam, a country with a handful of his top aides.They be- encing them—have put a damper on whose destruction the family supported gan to push nuclear power as the salva- Bechtel's nuclear business in the last few through generous gifts to Richard Nix- tion of the modern world. Bechtel years. But because the company doesn't on's electioncampaigns. pumped money into campaignsfor this own the plants it builds, it doesn'thave After the war Bechtel hired South "clean and safe" source of energy, to worry about being saddled with bil- Vietnam's exiled Minister of Industry helped finance the opposition to anti- lions of dollars' worth of obsolete and Khuong Huu Dieu. Dieu, who was a nuclear referenda and began building dangerous machinery. Leaving that close friend of Ellsworth Bunker when nuclear plants all over the world. problem to its customers, Bechtel has he was ambassador to South Vietnam, However, all has not gone smoothly quietly changed directions and set its had discovered oil off the Vietnamese for Bechtel's nuclear business in recent sights where the smart new money in the coast. years. The directors of Consumers energy businessis: on coal. Using Bunker's friendshipwith Dieu Power in Michigan sued the company Bechtelis "quickon its feet," one en- as entrée, Bechtel's Washington con- for $300 million in 1974, when the Pali- gineer from the company's Scientific sultant Parker Hart (retired ambassa- sades nuclear generator broke down Development Department told me. dor to Saudi Arabia) met with Bunker shortly after opening. Thesuit was filed Bechtelhas five-year plans, andthe engi- in March of last year, ostensiblyto dis- when a number of metal steam-gener- neer was discussing the one that covers cuss the forthcomingAmerican (Mans- ator tubes corroded, allowing radio- 1974to 1979. Jt was in this confidential field-Woodcock) mission to Vietnam. active water to leak into the steam- plan that the company spelled out its Although the alleged purpose of the generating system. Consumers Power intention to increase its investment in mission was to seek an accounting of claimed that Bechtel had not fulfilled coal technology while cutting back on Americans missing in action, Hart's its "duty and obligation to warn the nuclear. "Bechtel sometimes likes to memo to San Francisco reporting the company about potential operating pioneer a new construction technol- meetingsuggests that Bechtelhad other problems and to prevent errors indesign ogy," he explained, "and get as much interests. "Bunker felt that Bechtel's and manufacture of equipment and profit as it can out of it while no one else opportunitiesin Vietnam might depend components." Bechtel recently settled is around. Then when the competition on the outcome of the Americanspecial with Consumers Power for $14 million gets stiff, as it is in nuclear power, it SEPT/OCT. 1978 35 MOIHER JONES mvcs on to somethingelse." over or under its tracks. The Coal Slurry Once Bechtel decided to move into PipelineAct, containing this giveaway, coal, its first step was to join a consor- is now one of the most hotly contested tiumwith Neirnont Mining Company, bills on Capitol Hill. Bechtel helped Boeing and Bechtel's rival construction form a front group to lobby for the bill. firm,the FluorCorporation, tobuy Pea- Ex-Clerkof the House Pat Jenningshas body Coal Company from Kennecott been put in charge of maneuveringthe Copper for $1.2 billion. Peabody owns bill through the committees. by far the largest coal reserves in the If the Coal Slurry Act passes (and United States. even its opponents are predicting it The secondstep was tojoin with Leh- will), ETSI/Bechtel will still have to marj Brothers,the New York investment face the farmers and the environmental- banking firm, and the Kansas Nebraska ists. And, assuming they persuade or Gas companyto form somethingcalled defeat these adversaries, they still have Energy Systems, Inc. (ETSI). to prove to various state and federal Bechtel initiated the joint venture, agencies that coal slurry is more eco- bought 40 percent of ETSI and made its nomical than . In that own \ice chairman, Jerome Komes, the effort Bechtel has shown extraordinary chairman of ETSI. chutzpah. After Bechtel pioneered slurry sys- The day after ETSI was incorporated, tems—pipelines that pumplarge quanti- Bechtel wrote an unsolicited letter to ties of pulverizedore or coal suspended the Interior Department'sOffice of Coal in water from one point to another— Research proposing to do a study of ETSI proposed to build thousands of different coal-transportation methods. Although many cash-stuffed enve- miles of coal-slurrypipelines criss-cross- Bechtel did not mention its ETSI part- lopes have been under in the letter. sane reportedly passed ing the United States. To the present nership By standards, tables in Wyoming and South Dakota day, Bechtel has built 70 percent of the the recipient of a $418,000 government to smooth the for coal it is research contract should have been ex- way slurry, world's slurry lines—pipelines that serv- unlikely that Bechtel people have ac- ice copper minesin Venezuela and Indo- amined for any possible conflict of in- tually passed any of them. Within the nesia and carry coal from Black Mesa, terest. Bechtel somehow persuaded the United States, at least, the Bechtel fam- Interior to that Arizona, to the California border. Department skip proc- ily has a strict policy against cash [he slurry project that ETSI/Bechtel ess. Bechtel was granted the contract bribes. is now pushing hardest for is a 1,000- and promptly began its coal-transporta- This policy appears to be due less to mile line that will move 25 million tons tion study. The study concluded that of ethical considerations than to the fact of coal ayear from the hugestrip-mining all possible coal-transportation meth- that cases of have the . . past bribery brought area along Wyoming'sPowder River to ods, most economical was . you the secretive company too much un- White Bluffs, Arkansas, where Arkan- guesed it—slurry pipelines. wanted In 1972, con- While was publicity. felony sas Poer and Light wants to build a Bechtel arriving at its victions were given to four Bechtelexec- large coal-fired generator. ETSI esti- $418,000, taxpayer-supported pro- utives who bribed the mayor of Wood- mates that the pipeline will cost $750 slurry conclusion,however, the Univer- New with to of bridge, Jersey, $50,000 gain million, but Bechtel's recent history of sity Illinois Center for Advanced a pipelineright-of-way through the town cost overruns suggests it could cost Computation Research was also study- to a tank farm Bechtel was the building twice that. ing economics of coal transporta- nearby. Bechtel appealed. Its grounds With formidable opposition from tion. Itsresearch was funded by the Na- in view of the com- tional had —quite ironically, farmers (who fear dust bowls and Science Foundation. Rumor pany's own abysmal record in hiring deaths from the loss of scarce ground- it the Illinois study would conclude women box, that where (see page 38)—were wamer), environmentalists (who claim that, railroads existed, transport- the jury selection in Woodbridge dis- that water that has been used for slurry- ing coal by rail was far more efficient criminated against women because no ing is toxic and pollutant) and the rail- than building a new slurry pipeline. women were on the jury panel. The roads (whichwill lose billionsin freight Shortly beforethe study's release,the Bechtel Four won a new trial but were revenue), ETSi/Bechtel faces an uphill National Science Foundation issued an reconvicted. battle for its proposed pipeline. unexpected statement disavowing any These infractions, along with recent ETSI's tactics in the ongoing battle endorsement of the. study it had fi- publicity surrounding corporate brib- with the rails illustrate the determina- nanced. No reason was given. ery, have made Bechtel more circum- tion and tenacityof its energeticbacker, PAYING THE PIPER spect in its irregular payments. Bechtel. As a first step, Bechtel lobby- Perhaps the cleverestcover for ques- ists persuaded friends in Congress to After Congressional hearings on the tionable payments was devised in 1975, introduce legislation that would re- coal-slurry battle, Bechtel Vice Presi- when the Bechtel Foundation (whose define federal eminent-domain law to dent Jerome Komes commented: "To contributions are tax write-offs) gave a give pipelines right-of-way over rail- stay in this game you have to be stub- $100,000 grant to the World Wide Per- roads. No hostile railroad could pre- born as hell, and be willing to spend mina Fund, This contribution was the vent the ETSI pipeline from being built some money." largest singlegrant made in 1975, and it SLEPT /OCT. 1978 36 MOIHER JONES

erhaps the cleverest P cover for question. able payments was the Bechtel Foundation's $100,000 grant to the World Wide Permina Fund, to "further cul- tural ties betweenthe U.S. and Indonesia." But World Wide Permina is only pro- viding a scholarship for one Indonesian studentin the U.S. representsabout 30 percent of the Bech- a relatively ineffective way of doing take on an ambassadorial tone: con- tel Foundation's total gifts for the year. business. The company's oil-rich Mid- tracts sound like treaties, salesmen act According to its articles of incorpora- dle East customers care more about like diplomats and meetings between tion, World Wide Permina is chartered whether or not Bechtel builds in Israel, Steve Bechtel, Jr., and the Chiefof State to "further the cultural ties betweenthe which it does not, or whether it contin- resemble sunimitconferences. US. and the Republic of Indonesia." ues to abide by the Arab boycott of And like any nation, Bechtelmythol- At present, however, the extent of Israel, which, in effect, it does, and for ogizesits work. With boundlessenergy, World Wide Permina's activities is pro- which the Justice Department sued the lovable and imperious Steve Sr. vidinga scholarship for one Indonesian Bechtel in 1975. has created an almost evangelisticmys- student in the United States. The only Most of the people Bechtel deals with tique. His medium is Bechtel Briefs, a imaginable reason why Bechtel has ne- on a decisive basis don'tneed cash. They slick four-color monthly magazine in glected to expose this obvious rip-off is need billion-dollarEximbank financing which T-shirts have been airbrushed on that World Wide Permina has an inter- and friendly U.S. foreign policy. So photos of workers and smoke has been locking board of directors with Perta- when George Shultz tells the president removed from photos of exhaust pipes mina Corporation, the scandal-ridden of Tai Power Corporation of Taiwan and chimneys.The purity of a fairy-tale Indonesian oil and gas monopoly in that he can arrange a $100-million loan workplace is matched by the righteous- which Bechtel owns a major interest. In guarantee fromthe Eximbankto finance ness of endless morale-building edito- fact, untilhe was fired and placed under new nuclear generators, or promises to rials addressed to Bechtel customers, house arrestfor corruption, Pertamina's do what he can to delay the diplomatic workers and friends around the world. president,Indonesian General Ibnu Su- recognitionof the People's Republic of These editorials invariably repeat the towo, also chaired the World Wide Per- for a couple of years, he is offer- Bechtel line: mass technology is salva- mina Foundation Board. It was under ing something that money can't buy tion for a backward world. Sutowothat Pertamina negotiated most and something Taiwan knows he can The Bechtels know as well as any of its major contracts with Bechtel to deliver. So to Bechtel, which could multinational executive thattheir brand build a multi-billion-dollarcomplex of easily dish out Shultz's salary in bribes of development has failed to meet hu- gas pipelines, liquefaction plants and every year, it made business sense to man needs, that unemployment and liquefied-natural-gasports throughout hire Shultz instead. poverty have frequently increased in Indonesia. Since corporate donations to Third World nations invaded by West- World Wide Permina are co-mingledin BURIED IN SAND ern technology and that all too often the foundation's Bank of America cus- Bechtel'sphenomenal metamorphosis the elite decides to protect its new indus- tody account, there is no way of know- from muleskinner to sovereign state is tries from restive workers and peasants ing whether Bechtel's $100,000 ever not entirely surprising in a country with U.S.-armed military dictatorships. lined the pockets of General Sutowo. whoseeconomy has becomedominated The villain is not development itself, Butit certainlyhasn't been spent on cul- by a handful of multinational corpora- or technology itself. Rather, it is mass tural exchange with Indonesia, and tions. Acorporation whoseannual sales centralized technology that is shaped Bechtel knows it. are often greater than the GNP of the and installedto meet the needs of Bech- Although an occasional "grant" can country it is developing is bound at tel profits and local elites, rather than help greasethe way to a minor contract times to seem indistinguishablefrom a that of the population as a whole. Does or favor, in Bechtel'sleague, bribes are country itself. Dealings at every level India, for example, need a nuclear

SEP F /O( 1. 37 MOTHER JONES power plant, or solar-heat collectors in American Oil Company, small revo- the country has strengthened, not loos- thousands of villages? Does Saudi lutionary wars have raged throughout ened, the Shah's grip. U.S. aid to Saudi Arabia need Jubail, or betterprotection the Arabian peninsula—wars deliber- Arabia is partly used to support a crack for the way of life of its desert nomads? atelyhidden from Americanview behind "White Army" trained for internal re- All too often, the expansion of central- a media-manufactured preoccupation pression. And the rivers of Indonesia ized high technologymerely gives added with energy. The CIA-supported coup have more than once been swollen with powerto a tiny, repressive ruling group. in Iran installed one of the most brutal thecorpses of slaughteredpeasant rebels Since 1950, when Bechtel finished the autocracies on earth, and Bechtel's 12- who lost their land to "development." infrastructure of the giant Arabian- volumeindustrial-development plan for And through it all, Bechtel builds and builds and builds. Christopher Rand, an international- oil-industry consultant, worked for A WOMAN'S PLACE AT BECHTEL Bechtel for two years as an administra- bureaucrats no one so much as tive specialist in the company's inter- The Bechtel dislike the federal government's national division. He left Commission. have a for petroleum Equal Employment Opportunity "They reputation Bechtelin 1971 and in 1975 publisheda being by far the most militant and aggressive,"states one interoffice memo to book called Relations W. E. "Their in life seems to be Making Democracy Safe Employee Manager Squires. joy pur- for Oil, an exposé of the oil industry's suingthe cause of somedowntrodden minority and getting a big fat check from on resourcenations. As far back some Friends who have been close these impact big fat corporation. to agencies say as 1973 Rand was able to see run and down the hail the checks when them. projects they actually up waving they get like Jubail coming: I don't think they are as interested injustice as they are in the checks." The "It was a natural culmination of ev- memo never clarifies whether the writer means bribes or fines, but the Bechteland Saudi Arabia were tone matter. One erything suggests that it doesn'treally way or another, compliance Billions of U.S. dollars were with affirmative-action laws is The memo, one case of doing. pil- expensive. summarizing ing up in the Saudi treasury. Something "a paranoiac nut" who complainedto the EEOC about Bechtel, reads, "It cost had to be done to that back Bechtel with man-hours get money a lot of money the supervisory and employee spent into the U.S. The easiest was to con- with the investigators." vince the Saudis that they could become Bechtel'sstrategy is to wait untilit is toldto clean up itsact beforecomplying. an industrialnation and build "If we what want and then important anticipate they automatically implement, they an infrastructure for them. Well, it's a won'thave anything else for us to do and they will really have to think some- ridiculous notion. The Saudisdo have a memocontinues. The last sentenceis "We've thing up,"the prophetic. gotten by tremendous energy base, but that's so far, but those days are over." was about the only advantage. There is no Since the memo written, five class-action suits have been filed against economic for a Bechtel for discrimination women. But the suit Bechtel is the justification petrochem- against fighting ical complex there —particularly one hardest was brought by Linda Martinez before the memo was written, in of that will generate 6,000 tons of sulphur August 1972. a that in market can Martinez, a woman, claims that she was denied and day, todays only Philippine equal pay be dumped in the desert. There's prob- promotional opportunities because she is a woman. She complained about it was ably a market for aluminum,but Jubail and, her suit charges,she forced to resign under pressure. In 1975 the Fed- is not well situated on the world's baux- eral District Courtin Northern California ruled that her case could as proceed ite shipping routes; and steel? Steel is a a class action. This means her suit is now filed on behalf of thousands of farce. There is no rational women and Bechtelstands out millions in back women justification workers, to pay pay to for a steel mill in the Saudi who were "denied transfer because their denied peninsula. hire, or promotion of sex, "Jubail is a massive WPA compensation for of similar work because of their sex or project. equal performance Instead of employing idle workers, it's experienced retaliation because of complaints of sex discrimination." idle dollars. There's no Bechtel won't how women in the class have forward to employing ques- say many stepped tion that dollarwise it's the biggest in- complain. "It's not exactly a popular move." "And," one class member told dustrial in most is number womenwho talk Martinez boondoggle history." me, "whathurts the of won't to me." The desert has a of it- v. Bechtelis followed nervous across the way protecting being closely by corporate attorneys self. Sands shift from place nation. It is a landmark case, and we'll be on the verdict. mysteriously reporting to place and over the years have buried Although women's lot has reportedly improvedat Bechtelsince Linda Mar- Saudi Arabia. tinez filed one still about down from the settlements throughout her suit, has to look a yard and a half of will of the chart before a woman's name. As of there The sands the Dahana Desert top organization finding 1976, shift, Rand predicts, and cover Jubail were no women more than $30,000. still may not but since paid (There be, beforethe end of the century. Newsweek magazinepublished Steve Bechtel,Jr.'s, salary last year, Bechtelpay- roll records have been placed in the same vault as nuclear secrets.) The most important women to Bechtel are not employeesbut the wives of Mark Dowie has just been electedpub- men who work there. In a reminiscent of bases, each usher ofMother Jones by the magazine's way curiously military was Bechtel office has a chapter of "Bechtel Wives," a club whose members are business statj This story prepared treated to occasional tours of and luncheon with the researchassistance of the Center guided faraway projects frequent in speechesby company executiveslike George Shultz. for Investigative Reporting Oakland, California. SEPI./0C1.3 I C78