Bechtel Corporation





Bechtel Corporation (Bechtel Group) is the largest civil engineering company
in the world. With headquarters in San Francisco, Bechtel was ranked as the
6th largest privately-owned company in the United States. As of 2002,
Bechtel had 47,000 employees working on 900 projects with $11.6 billion in
revenue.

Bechtel was a major contributor in the building of the Hoover Dam in the
1930s. It has also been involved in several other high profile construction
engineering projects, including the Chunnel, numerous power projects,
including pipelines, refineries, and nuclear power plants, the BART, Jubail
Industrial City in Saudi Arabia, Hong Kong International Airport, the Big
Dig, and most recently the rebuilding of the civil infrastructure of Iraq
funded by the United States Agency for International Development (USAID).

The Bechtel family has owned Bechtel since the company's creation in the
1920s. 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
U.S. administrations, including those of Reagan, George H. W. Bush, 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 raised accusations of cronyism between the Bush administration and
Bechtel.

For many years, Bechtel has been a strong proponent of the privatization of
utilities, highways, airports, and other facilities traditionally managed by
governments. The company owns and operates its own power plants, oil
refineries, water systems, and airports in several countries including the
United States, Turkey, and Saudi Arabia. Bechtel's long involvement with
oil, power, and water overseas have been a focus of criticism by the growing
anti-globalization and environmental movements.

Company History and Timeline

Early 1900s

Bechtel has always been a family owned company. Its founder, Warren A.
Bechtel, started as an employee of the burgeoning U.S. 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.

In 1919, Warren Bechtel and his partners (including his brother Arthur)
built the Klamath Highway in California. In 1921, Warren Bechtel partners
won a contract to build the the water tunnels for the Caribou Hydroelectric
Facility in California. In 1925, Warren A. Bechtel was joined by his sons
Warren Jr., Stephen, and Ken and they incorporated as W.A. Bechtel Company.
In 1926, the new company got 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
dam was originally supposed to be called the Boulder Dam, but was later
renamed (after some controversy) the Hoover Dam in honor of President
Herbert Hoover. It was 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 was
formed for the sole purpose of the Hoover Dam project, and their combined
strength virtually guaranteed that they would be able to submit the most
competitive bid. On March 11, 1931, the United States Department of the
Interior selected 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 Stephen took over as president of the
company and served in that position until he was succeeded by his son
Stephen Jr. in 1947.

World War II

After the Hoover Dam, Bechtel's reputation was soaring. 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.

In 1936, Bechtel built the 8-mile long San Francisco-Oakland Bay Bridge. In
1937, Bechtel became joined forces with John McCone's engineering company to
form an engineering/construction firm called Bechtel-McCone Company.

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. The Bechtel Shipyards were
constructed in Sausalito, California and produced hundreds of cargo ships
and oil tankers for the Navy. John McCone's California Shipbuilding Company
was also awarded many large and profitable shipbuilding contracts starting
in early 1941 and continuing through the end of the war.

While the United States built its so-called arsenal of democracy, war
planners were increasingly worried about what would happen if the Axis
gained control of the world's oil reserves. The Italian invasion of Egypt
and Libya in September 1940 was a cause for deep concern, as was 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 concerned that the Japanese would invade Alaska and
threaten the northern oil fields, which were becoming 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 allow troops and
supplies to be moved to Alaska, and the CANOL oil pipeline was authorized
soon afterwards.

The CANOL pipeline contract was awarded 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 was a total failure. 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 were not able 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, there were several
scandals and allegations involving wartime profiteering and widespread
corruption at a number of defense contractors. In 1941, the 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 judgement of the $143
million CANOL project, calling it more destructive to the war effort than
any act of sabotage by an enemy. Bechtel-Price-Callahan was singled out for
criticism for its role in the cost overruns and mismanagement that plagued
the project. The Committee was later to criticize the shipbuilding industry
for its wartime activities, including fraud, bribery, and other forms of corruption.

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 CIA (see below).

Post-war era: late 40s through 50s

In 1947, Bechtel expanded its oil pipeline business with its construction of
the Trans-Arabian pipeline in Saudi Arabia. At over 1,000 miles, this was
the longest pipeline in the world at the time. In addition to the pipeline
itself, Bechtel was responsible for building large parts of the modern
infrastructures of Saudi Arabia and Kuwait, including airports, sea ports,
and oil refineries.

In 1946, the United States Congress authorized government research into
nuclear power with the Atomic Energy Act of 1946. This act created the
Atomic Energy Commission, which was 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 was selected to build the world's first nuclear power
reactor, the Dresden-1 in Illinois. Construction began in 1957 and the plant
was fully online in 1960.

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

60s and 70s

Throughout the 1960s and 1970s, Bechtel expanded its energy engineering
business. In 1963, Bechtel began construction of the San Onofre nuclear
power plant in California. This was also a time of diversification into
other areas. In the late 1960s, Bechtel launched its development, finance,
and investment arm named Bechtel Enterprises Holdings, Inc. This firm was
able to leverage Bechtel's experience, its capital, and its government ties
to help other companies compete for engineering contracts in the U.S. and
around the world.

In 1972, Bechtel was awarded 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 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 and beyond

In 2000, the government of Bolivia privatized its water industry and awarded
a large water contract for Bolivia's 3rd-largest city, Cochabamba, to a
Bechtel subsidiary named Aguas del Tunari (which was formed for that
purpose). Shortly thereafter, the company tripled the water rates in that
city, an action which resulted in protests and rioting. Despite the Bolivian
police's attempts to quell the rioting, the situation continued to
deteriorate. Amidst Bolivia's nationwide economic collapse and growing
national unrest over the state of the economy, the Bolivian government was
forced to withdraw the water contract. In 2001, Bechtel filed suit the
Bolivian government for $25 million in lost profits. The continuing legal
battle has attracted attention from anti-globalization and anti-capitalist
groups.

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. 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.

Bechtel has long had close ties to the American government. From 1974 to
1982 George Schultz, former Secretary of Treasury and future Secretary of
State, was president and director. As Secretary of State, Schultz sent
Donald Rumsfeld to Iraq to discuss with Saddam Hussein a Bechtel contract
for an oil pipeline to Jordan.

In 1988 Bechtel was awarded a contract to build a chemical plant in Iraq,
but construction was halted with the Iraq invasion of Kuwait. On April 17,
2003, following the 2003 U.S. invasion of Iraq, USAID awarded a $680 million
reconstruction contract to Bechtel. This placed Bechtel 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.

Like most large American companies, Bechtel has contributed large amounts of
money to United States politicians (over a million dollars in campaign
contributions between 1999 and 2002). The company has particularly close
ties with the current U.S. administration, and critics in both the U.S. and
allies like Britain have questioned the process by which the U.S. awards
Iraq contracts to American companies.

On May 5, 2003, The New Yorker ran an article revealing that the bin Laden
family have invested $10 million in The Fremont Group, a private equity fund
owned by the Bechtel family (the fund was formerly called Bechtel Investments).

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.
   * George P. Shultz is the former U.S. Secretary of State under Ronald
     Reagan, former president of Bechtel, and a current Bechtel director. He
     also serves on the Committee for the Liberation of Iraq.
   * Caspar Weinberger is the former U.S. 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. Sheehan currently serves as Bechtel's General
     Manager of the Petroleum and Chemical Business Unit for
     Europe/Africa/Middle East/South West Asia and is also a Bechtel
     partner. He is 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.