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Bechtel Corporation

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Template:Infobox Company Bechtel Corporation (Bechtel Group) is the largest civil engineering company in the world. With headquarters in San Francisco, Bechtel ranks 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 participated in the building of the Hoover Dam in the 1930s. It has also had involvement 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 (from 2003) 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 setting up the company 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 United States 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 made accusations of cronyism between the George W. Bush administration and Bechtel.

For many years Bechtel has strongly advocated 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 has become a focus of criticism by the growing anti-globalization and environmental movements.

Contents

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.

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 water tunnels for the Caribou Hydroelectric Facility in California. 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 "the 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 would 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 Stephen took over as president of the company and served in that position until succeeded by his son Stephen Jr. in 1947.

After the building of the 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.

In 1936, Bechtel built 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 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 so-called 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 and Libya 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 did not 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 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 on the $143 million CANOL project, calling it more destructive to the war effort than any act of sabotage by an enemy. The judgement singled out Bechtel-Price-Callahan for criticism for its role in the cost overruns and mismanagement that plagued the project. The Committee would later criticize the shipbuilding industry for its wartime activities, including fraud, bribery, and other forms of corruption.

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 CIA (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 United States 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 first nuclear power reactor, the Dresden-1 in Illinois. Construction began in 1957 and the plant came fully online in 1960.

In 1959, a Bechtel partnership called Parsons Brinckerhoff-Tudor-Bechtel gained the contract for San Francisco's Bay Area Rapid Transit 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 power plant 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 and beyond

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 dual-use chemical plant in Baghdad.

In 2000, Bechtel signed a contract with Hugo Banzer, the former dictator of Bolivia, to privatize the water supply in Bolivia's 3rd-largest city, Cochabamba. The contract was officially awarded to a Bechtel subsidiary named Aguas del Tunari, which had been formed specifically for that purpose. Shortly thereafter, the company tripled the water rates in that city, an action which resulted in protests and rioting among those who could no longer afford clean water. Many people had to withdraw their children from school and stop using doctors because of abnormally high costs for water. Bechtel demanded payments even for rain 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 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 (http://search.boston.com/globe/metro/packages/bechtel/020903.shtml) 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, and with the Republican Party specifically. 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. Schultz also served as the chair of the advisory board of the Committee for the Liberation of Iraq, an influential think-tank that advocated the 2003 invasion of Iraq. Former U.S. Secretary of Defense Caspar Weinberger was general councel for Bechtel. Former deputy Secretary of Energy W. Kenneth Davis was Bechtel's vice-president. Riley Bechtel, the company's chair, is on President George W. Bush's Export Council. Jack Sheehan, a senior vice-president of Bechtel, is a member of the U.S. Defense Policy Board.

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. Bechtel has been awarded reconstruction contracts in Iraq worth over a billion dollars.

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

In a report submitted by Saddam Hussein to the United Nations shortly before the 2003 invasion of Iraq, it was revealed that Bechtel had participated in Iraq's nuclear weapons program. (Though the U.S. attempted to redact the names of all U.S. companies involved, an uncensored copy was leaked to the press.)

As of late 2004, leaks have sprouted in the Ted Williams Tunnel, which was built by Bechtel as part of the Big Dig. Minor ones resulted from gaps in the roof of the tunnel; major ones from structural weaknesses in the tunnel walls, which lie below the water table. Many of the leaks resulted from Bechtel Corporation failing to remove gravel or other debris before pouring concrete.

Former and Current Executives

See also

List of United States companies, Cochabamba protests of 2000, Big Dig, Riley P. Bechtel, Stephen D. Bechtel, Sr., Warren A. Bechtel

Joint ventures and subsidiaries

TODO (other Bechtel projects)


  • North America: Bajo power project, Mexico; AT&T wireless network, US wide; Equinix business exchange, US wide; Delta Energy Center, California
  • Europe, Middle East, Africa: OGD2 Gas, United Arab Emirates; Athens Metro, Greece; Coca-Cola plant, Ireland; Croatian Motorway; Shoaiba power plant, Saudi Arabia; Rail improvement projects, UK
  • Asia: CSPC petrochem plant, China; Meizhou Wan power station, China

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