bechtel complex

8/11/2019 Bechtel COmplex

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Chapter 6: The Bechtel Complex

Construction projects and political influence

Bechtel Group and the Reagan Administration

The Early Years of Bechtel

Bechtel Connections

Power Politics

Editor's notes

Bechtel Group and the Reagan AdministrationWhen President Eisenhower concluded his term he warned the nation in a parting message a!out the rapidgrowth of the "military industrial comple#"$ The American people did not %now what he was tal%ing a!out$ Asa military man Eisenhower had seen firsthand the growing political and economic power of two giantconstruction firms& Brown Root of (ouston Te#as and the Bechtel Group of )an *rancisco$

Brown Root put its man in the White (ouse +yndon B$ ,ohnson$ The Bechtel Group has put its own manin the White (ouse Ronald Reagan whose presidential campaign in -./0 was run !y George Pratt )hult1president of Bechtel and Caspar Wein!erger 2ice president and general counsel of Bechtel$ They wereappointed )ecretary of )tate and )ecretary of 3efense$ The New York Timesreports ,uly -4 -./5&

")hult1 is the fourth mem!er of Bechtel Group ser2ing in Reagan's ca!inet$Treasury )ecretary 3onald T$ Regan was chairman of 6errill +ynch whose

White Weld unit is in2estment ad2isor to the )audi Ara!ian 6onetary Authority$Atty$ Gen$ William *rench )mith's California law firm Gi!son 3unn Crutcherhas !ranch offices in Washington and Riyadh 7capital of )audi Ara!ia8 andrepresents the )audi 6inistry of *inance and 9ational Economy$"

:n 3ec$ 4 -./0 the New York Timesnoted in a headline story Business )ection&

"6r$ Bechtel a reclusi2e 44 year old engineer informed his su!ordinates that 'weencourage and applaud the acti2e participation of our employees in thedemocratic process'$ Bechtel a pri2ately held concern at wor% on -;0 prontelligence and former Am!assador to >ran and *ran% ,ungers formerChmn of Ara!ian American :il Co$

:n the !asis of its =?$. !illion re2enues last year the company ran%ed as thethird largest engineering and construction concern in the @$)$ after Brown Root >nc$ and the *luor Corp$ Bechtel's contracts are largely in huge industrialand energyrelated pro


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*rancisco 6ETR: the Washington 3$C$ su!way system 7the Washington Post recently noted it was already=500 million in the red and will ultimately cost =-5 !illion8 and ,u!ail called "the !iggest !oondoggle inhistory"$

Time ,uly -5 -./5 wrote of ,u!ail& "Bechtel has spent =;4 !illion and plans to spend =-00 !illion more$Bechtel's original contract had !een for a modest =. !illion$" ,u!ail is descri!ed as lying ;5 miles northeastof the )audi Ara!ian capital Riyadh with -00 plus Ddegree temperatures most of the year a desolate areaof salt flats washed !y the Persian Gulf$ -?00 Bechtel employees li2e on the site in ; !edroom ranch houses

!uilt for =;00000 each directing the acti2ities of ;.000 construction wor%ers$ Time says "The infant citycould wind up !eing an enormously e#pensi2e ghost town as marching dunes are e#pected to co2er it !ythe year 5000$"

Christopher Reid who wor%ed for Bechtel says ",u!ail is a massi2e WPA prosraeli lo!!y 2oiced confidence today in Pres$ Reagan's)pecial En2oy to the 6iddle East Philip C$ (a!i! Thomas A$ 3ine e#ecuti2edirector of American >srael Political Action Committee said he had the highestregard for Am!assador (a!i!'s integrity$"

A letter to the Times,uly 5F -./5 from Gen$ *$P$ (enderson noted that when Count Bernadotte raisedsupport for Palestine refugees in -./ the largest contri!utors were Ara!ian American :il Co$ 7Aramco8=500000 and Bechtel >nternational =-00000$ 7@9 Records 9o$ -- A ?/8$

The re2elation of (a!i!'s connection with Bechtel alarmed some >sraeli leaders !ecause of Bechtel'scontracts with the Ara!s and )en$ +arry Pressler R$ )$3$ called for his resignation$ The New York

Timesreported&

"British officials offered no immediate reaction to the news of '(a!i!'s departure'nor would they comment on his replacement !y George Pratt )hult1 whosereputation as an economist is well %nown here$ +ord Carrington said$ '6r$ )hult1is %nown to e2ery one and > am sure they will wor% with him$' >sraeli *oreign6inistry spo%esman said '>srael deeply regrets the resignation$ >srael respected6r$ (a!i! as an outstanding statesman and faithful friend of the )tate of >srael'$"

The Timesfailed to get the comments of any Ara!s a!out 6r$ (a!i!$

:n ,uly -0 -./5 )hult1 a mem!er of the )tandard :il Pratts was reported !y the New York Timesto ha2epromised he would "di2est" himself of his Bechtel holdings !y putting them in a !lind trust$ Bechtel is apri2ately held company 0 of the stoc% held !y the family the rest !y its e#ecuti2es who sign anagreement that when they lea2e the firm or die the company has first option to repurchase their stoc% whichoption is always e#ercised$ The New York Timesreported ,an$ -/ -.F.&
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">ncreasingly sensiti2e to accusations of secreti2eness the pri2ately held Bechtelgroup of companies too% a new step in implementing a policy of disclosure todaywhen it issued for the first time something approaching an annual report$ )inceall stoc% is held !y top e#ecuti2es and mem!ers of the Bechtel family this too%the form of a report to the ;0000 employees around the world rather than areport to stoc%holders$"

The Timescommented in -./5 that "Bechtel does not disclose its earnings"$ >nformed estimates are thatBechtel earned 4 net profit on its =--$? !illion re2enues in -./5$ )tephen 3$ Bechtel )r$ now in hiseighties is said to !e worth =F40 million$ (is son )tephen ,r$ now head of the firm is said to !e worth =540million$ When his father dies the younger Bechtel is e#pected to !ecome a !illionaire$

Newsweekreported 3ec$ 5. -.F4&

"The Bechtel group of companies is hardly a household word$ As a pri2ately heldcorporation it has operated for FF years !ehind a wall of secrecy that isconsidered uneHually impenetra!le in the competiti2e world of hea2yconstruction$ >ts re2enues are estimated at =5 !illion a year eHual to General6ills or )tandard :il of :hio$ Bechtel got that way !y wheeling and dealing notonly in pri2ate operations !ut with go2ernments themsel2es$ The company is!uilding a new ; story !uilding on *remont )t$ in )an *rancisco$ The company

says one *ederal energy official is putting together a modern 2ersion of amilitary industrial comple# machine and they ha2e an inside trac% on the growthmar%et of the future$ >t will !e called the new General 6otors !efore the centuryis out$"

The Early Years of Bechtel

Bechtel!egan in -/./ when a 6idwestern farm !oy Warren 73ad8 Bechtel came to California to see% hisfortune$ (e !egan with a mule team hauling dirt on small construction pron -.-/ with war prosperityhis income increased$ (is first important pron -.;- 3adBechtel !ecame president of )i# Companies a consortium formed to !uild the =. million Boulder 3am$ >twas incorporated in 3elaware in *e!$ -.;- !y ($,$ Iaiser )r$ and ,r$ *eli# Iahn of 6ac3onald and Iahn(enry W$ 6orrison of 6orrisonInudsen W$A$ Bechtel Co$ ,$*$ )hea of +os Angeles which !uilt the PacificBridge at Portland and General Construction Co$ )eattle$ 6ac3onald and Iahn had !uilt the 6ar% (op%ins(otel 6orrison was a trustee of )tanford and close friend of (er!ert (oo2er and +eland Cutler$

Between -.;- and -.;? the consortium !uilt the Bonne2ille 3am the )an *rancisco Bay Bridge and otherpro> !ro%e out$ >n 3ec$ -.0 they gotan order of =5-0 million for si#ty British freighters to !e !uilt in alliance with Admiral Jic%ery of Bath >ronWor%s$ 6cCone and partners later made / million profit on +i!erty ships !uilt at their )ausalito plant$ Theyalso owned California )hip!uilding a +os Angeles yard which turned out .?F ships during the war as well as6arinship the :regon )hip!uilding Co$ They owned ,oshua (endy Corp$ an ironmonger which !uilt theengines for +i!erty ships$ By )ept$ -.; they had more than =; !illion in ship!uilding orders$ The crews of

+i!erty ships made wry


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The partners also !uilt the colossal Army modification center at Birmingham Ala$ to handle the B5. outputfrom Willow Run they !uilt the Alas%an 6ilitary (ighway and other pro> Bechtel Group held 50 of IaiserPermanente 6etals which owned Richmond )hip!uilding the Iaiser firm$ The youngest son Ien Bechtel

ran the 6arin )hipyard$Bechtel's rush program of !uilding +i!erty ships considera!ly antedated Pearl (ar!or$ Roose2elt 73r$ Win theWar8 issued his emergency ship!uilding order in ,anuary -.- !y )ept$ 5F the first +i!erty ships were !einglaunched$ *3R as Asst$ )ec$ of the 9a2y in -.-? had done the same thing awarding 9a2y contracts long!efore we entered World War >$ "Preparedness"$ The Bechtel6cCone alliance !eing short of capitalin2ented the ingenious "costplus" contract arrangement$ @nder this generous stipulation the go2ernmentguaranteed war contractors all costs of production plus a guaranteed -0 profit$ The more the contractorspent the greater his profit$ >t was the greatest !oondoggle for the fortunate few since the *ederal Reser2e)ystem started printing paper money with no !ac%ing e#cept paper !onds$

The freeflowing profits led to an ine2ita!le intelligence connection$ ,ohn 6cCone !ecame president of theAir Pollution Committee in -.F and in -./ !ecame deputy )ecretary of 3efense$ Ralph Casey of theGeneral Accounting :ffice later testified that while holding this office 6cCone ga2e contracts to )tandard

:il and Iaiser firms in which he had large in2estments$ 6cCone went on to !ecome @nder )ecretary of theAir *orce -.404- Chairman of the Atomic Energy Commission -.4/?0 and 3irector of the Central>ntelligence Agency -.?-?4 resulting in a close connection !etween Bechtel and the C>A$ While 6cConeser2ed as chairman of the Atomic Energy Commission Bechtel !ecame the largest contractor of nuclearplants in the world$ Bechtel completed the world's first nuclear plant at Ara >daho in -.4-$ 6cCone later!ecame a director of Pacific 6utual +ife )tandard :il of California and >TT$

The Bechtels were now counted among the most influential wheelerdealers in Washington$ )tephen )r$ and,r$ and ,ohn 6cCone were %ey mem!ers of the small group of millionaires who regularly played golf withPresident Eisenhower and Arthur Godfrey at the mecca of all lo!!yists Washington's Burning Tree CountryClu!$ When George Pratt )hult1 !ecame a Washington official he regularly played golf with )tephen Bechtel,r$ at Burning Tree which led to his !eing named president of Bechtel Group$

Bechtel Connections

The Bechtels had come a long way from the an#ious days of -.;- when a small sand and gra2el contractorwas as%ed to put up =/ million wor%ing capital for the Boulder 3am n -.44 Fortunereported that as @nder )ecretary of )tate C$ 3ouglas 3illonhadarranged important contracts for Bechtel with the )audi Ara!ian go2ernment culminating in the present =-;4!illion ,u!ail operation$

Allen 3ulles director of the C>A was also a director of )chroder Co$ The 2ice president of Bechtel )audiAra!ian operations C$ )tri!ling )nodgrass also ran a C>A firm called +)G Associates$ Bechtel !uilt the --00

mile long Trans Ara!ia Pipeline for =-00 million the largest contract let to that time$ A worldwide constructionfirm with entree to many countries can also !e a conduit for intelligence agents$ >n -./0 Bechtel was!uilding apartments in )audi Ara!ia a hydropower comple# in Kue!ec a coal fueled power prondonesia a =400 million tourist resort in 6alaysia a copper and gold mine in Paint 9ew


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Guinea and a =540 million palace for the )ultan of Brunei$ >t was an ideal operation for the C>A e2enwithout the u!iHuitous )chroder connection$

Bechtelwas awarded the !illion dollar contract for cleaning up the situation at Three 6ile >sland$ >n -.F.a!out half of its !usiness deri2ed from nuclear power acti2ity despite many complaints a!out its faultyconstruction in this field$ Bechtel made a =- million settlement of complaints from Consumers Power Co$that the Palisades nuclear plant lea%ed radioacti2e water into the steam generating system$ At Bechtel's6idland 6ich$ nuclear power station the reinforcing !ar mport Ban% freHuently steps in and offers tofinance the huge prot could !e said that e2ery American has asta%e in Bechtel$ The president of E#port >mport Ban% William ($ 3raper >>> resides at Palo Alto California home address of the (oo2er >nstitution and (ewlettPac%ard Co$ and )tanford @ni2ersity the presentheadHuarters of the ReaganBechtel comple#$

3raper's father William ($ 3raper ,r$ !egan his career with 9ational City Ban% in -.-. went to Ban%ersTrust as treasurer and n -.0 he was namedPresidential Ad2iser on )electi2e )er2ice$ >n -. he was in charge of contract termination for the War 3ept$*rom -.4 to -.? he was dictator of Germany's economy chief of the economic di2ision of the *our PowerEconomic 3irectorate Allied 6ilitary Go2ernment$ (e formulated the 3raper Plan to re2i2e German industry$>n -.F he was military ad2iser to the )ecretary of )tate at the 6oscow Conference$ ,ames J$ *orrestal hispartner at 3illon Read named him @nder )ecretary of the Army in -.F$ *rom -.F to -.. 3raperdirected the occupation of ,apan as 6acArthur's superior$ (e allowed 6acArthur to !e portrayed as thea!solute ruler of ,apan !ut 3raper issued all the directi2es$ >n -.45 and -.4; 3raper was @$)$representati2e to 9AT: with the ran% of Am!assador$ (e then !ecame chmn of Com!ustion Engineering)ystems Worldwide a =;$-4 !illion company$ (e was also director of the George Putnam *und of Bostonwhich handles (ar2ard's huge endowment *reeport 6inerals Chu!! Corp$ and Chase >nternational>n2estment$ (e later !ecame chmn of Planned Parenthood consultant to the @9 *und for PopulationControl and author of the 3raper Plan for population control$

Bechtel now has a fulltime Washington +o!!yist Par%er (art a foundation incorporated in -.4; with =Fmillion 7the Bechtel *oundation has !een called a "rightwing foundation" !y 6other ,ones although it seemsto ha2e no particular loyalties8$ )tephen ,r$ also has a foundation with =5 million assets$ )hult1 is presidentof these foundations$

o!er olitics

Time :ct$ -.4 noted that&

")tephen Bechtel went to Iorea for the AmericanIorea *oundation$ Whilethere he paid a courtesy call on Coordinator C$ Tyler Wood of the *oreign:perations Administration Wood persuaded Bechtel to !uild threethermonuclear plants in Iorea for =; million the largest *:A contract e2erissued in Iorea$"

E2en when occupied with good wor%s !read cast upon the waters is returned$

:n April 5 -.F the Washington Postre2iewed a Mother Jonesarticle which stated that a Bechtelrepresentati2e Yoon )i% Cho a IoreanAmerican with connections reaching to the Iorean Presidency had!ri!ed Iorean officials to win four separate !illion dollar pro


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Although the Postspent millions in2estigating Watergate it was content to rely on Mother Jones' slenderresources for this in2estigation$ The Postcontinued& "The maga1ine Huoted an *B> informant as saying 'itwas common %nowledge among lawyers at Bechtel that anyone who didn't %eep Wein!erger informed would!e on the street the ne#t day"$ The article cited a source close to Wein!erger as saying "Cap only wanted to%now what it was safe to %now$"

The article also pointed out that )hult1 was the e#ecuti2e sponsor for internal auditing during the time inHuestion$ >t said two audits were cancelled at Bechtel in -./0 'at the insistence of Cho those audits would

ha2e re2ealed the large undocumented cash ad2ances !eing paid to Cho'$" At the time of the !ri!ery)ecretary of )tate )hult1 was president of Bechtel and )ecretary of 3efense Wein!erger was 2ice presidentand general counsel of Bechtel$ >n the ensuing months the Post and the *B> ha2e !een content to ignore thematter four !illion dollar contracts !eing "small change" in Washington$

Newsweeknoted ,uly -5 -./5 that Ienneth 3a2is 2ice president of Bechtel in charge of nuclear plantconstruction since -.F. had


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president is 9o$ 5 in the 3ept$ of Energy$ Casey 7C>A8 represented Pertominathe giant oil company of >ndonesia which has !een a good customer of Bechtel$"

When any !usiness places this many men in a President's office it is no longer a matter of "influence" it is amatter of control$ A Reagan panel of !usiness leaders including )tephen Bechtel ,r$ recently recommendedthat the nation must spend =;$4 !illion a year to re!uild its "infrastructure" roads su!ways !ridges etc$Bechtel could e#pect to get a large share of this !usiness$ The Prime 6inister of Canada ,ohn Turner was

director of Canadian Bechtel

bechtel complex

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