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Bechtel Wins Iraq War Contracts

by Pratap ChatterjeeSpecial to CorpWatch
April 24th, 2003

Bechtel in Iraq
 

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Last month, multi-billionaire Riley Bechtel was sworn in as a member of President Bush's Export Council to advise the government on how to create markets for American companies overseas. It was hardly a surprise to the 104th wealthiest man in world, whose family had amassed its fortune in mega-construction projects around the globe was tapped to advise the Bush administration on trade.

Indeed the family-owned Bechtel Corporation is one of the world's largest engineering-construction firms whose projects range from the first major oil pipelines in Alaska and Saudi Arabia to nuclear reactors in Qinshan, China and refineries in Zambia. Founded in 1898, the company has worked on 20,000 projects in 140 nations on all seven continents. In 2002 Bechtel earned $11.6 billion in revenue.

Soon after Riley Bechtel was appointed as an advisor to Bush, on April 21, Terry Valenzano, the man who ran Bechtel's construction business in Saudi Arabia, flew into Kuwait city to meet with Jay Garner, the Pentagon official appointed to oversee Iraq. The two men met at the Hilton resort to plan the reconstruction of Iraq after the fall of Saddam Hussein's government.

It was like a dream come true for former Secretary of State and former Bechtel president, George Schultz, who penned a Washington Post op-ed last September that said: "A strong foundation exists for immediate military action against Hussein and for a multilateral effort to rebuild Iraq after he is gone."

Last week when the United States Agency for International Development (USAID) announced the contract, Tom Hash, president of Bechtel National, released a brief statement: "Bechtel is honored to have been asked to help bring humanitarian assistance, economic recovery, and infrastructure reconstruction to the Iraqi people."

The initial contract is capped at $680 million over 18 months, although experts say this may be one of the biggest export bonanzas in history that could eventually be worth up to $100 billion. Eventually Iraqi citizens will probably be handed the bill, most likely to be financed out of the country's oil revenues.

The first contract covers virtually all the major projects in Iraq such as seaports, two international and three domestic airports, potable water, electric power plants, roads, railroads, schools, hospitals and irrigation systems.

For Bechtel was just like old times. Twenty years ago, in December 20, 1983 Middle East peace envoy Donald Rumsfeld arrived in the Iraqi capital of Baghdad, on a special mission from George Shultz (then secretary of state for President Ronald Reagan) to meet with Saddam Hussein. Rumsfeld asked the Iraqi dictator to support Bechtel's bid on construction of an oil pipeline from Iraq to the Jordanian port of Aqaba.

The Tangled Web Between Bechtel and Government

The two men meeting in Kuwait this week to plan Iraqi reconstruction -- Jay Garner and Terry Valenzano -- work for the very same public/private alliance that lobbied Saddam two decades ago. Today, Defense Secretary Rumsfield heads up the Pentagon, which is paying Garner's salary, while Shultz is a board member of the Bechtel Company who is paying Valenzano's bills.

That's not all: Jack Sheehan, a senior vice president at Bechtel, is a member of the Defense Policy Board, a government-appointed group that advised the Pentagon on the war. Meanwhile Bechtel also advises both the federal agencies that provide loans and insurance to American companies overseas. Daniel Chao, another Bechtel senior vice president, serves on advisory board of the US Export-Import Bank, while Ross J. Connelly, a 21-year veteran of Bechtel Group, is the chief operating officer for the Overseas Private Investment Corporation (OPIC).

Indeed, Andrew Natsios, the administrator of USAID, which awarded the reconstruction contract for Iraq, was overseeing Bechtel just two years ago as the chairman of the Massachusetts Turnpike Authority, which hired the company to complete the Boston Central Artery project.

Activists say that the incestuous relationship between Bechtel and the US government bodes ill for the Iraqi people.

"Bechtel and privatization go hand in hand. As people learned the hard way in Bolivia and around the world, when Bechtel comes to town, you can expect costs to soar and accountability and local control to evaporate," says Juliette Beck, senior organizer at Public Citizen's Oakland office.

Bechtel recently brought a $25 million lawsuit against Bolivia for canceling a contract to manage the Cochabamba water system, which resulted in skyrocketing rates for local people.

Boston taxpayers have been just as unlucky. The Boston Central Artery tunnel project (popularly known as the 'Big Dig') is wrapping up reconstructing Interstate 93 underneath the surface of the city. In 1985 the price tag of the project was an estimated $2.5 billion. This figure has been spiraling upwards every year. The latest price tag for the project was a whopping $14.6 billion or $1.8 billion a mile, making it the world's most expensive highway.

And California citizens are still paying the bills for the cost over-runs at the San Onofre nuclear power plant in northern San Diego County where Bechtel installed one of the reactors backwards. Meanwhile the local environmental costs continue to mount every day as the plant sucks in huge quantities of plankton, fish and even seals with the water to cool the reactors. The reactor also destroys miles of kelp on the seabed by discharging the heated water back into the ocean.

Other construction boondoggles by Bechtel include the Ok Tedi gold mine in Papua New Guinea where the dam Bechtel was building to contain mining waste collapsed before gold was even extracted in 1984. In 1996 when the local people took them to court, BHP, the Australian operators of the mine agreed to spend up to $115 million to contain the toxic waste that they were dumping into the Fly river at a rate of 80,000 tons a day from the mine.

Follow the Money

Today some lawmakers want to know how a company like Bechtel is winning contracts in Iraq. Ron Wyden, a Democratic Senator from Oregon, is one of handful of members of the US Congress that are sponsoring a bill asking the government to explain publicly how contracts have been awarded under a limited bidding process.

"You look at this process, which is secret, limited or closed bidding, and you have to ask yourself: `Why are these companies being picked?' Wyden, told the New York Times. "Is this the best use of scarce taxpayer money at a time when seniors can't afford medicine, kids are having trouble getting access to a quality education and local communities are just getting pounded?"

To find the answers you just have to follow the money. The Bechtel Group and its employees have been among the biggest political donors in the construction industry, according to an analysis by the Center for Responsive Politics, a nonpartisan Washington-based group that tracks campaign finance.

The company and its workers contributed at least $277,050 to federal candidates and party committees in the last election cycle, about 57 percent to Democrats and 43 percent to Republicans, the center found. Bechtel gave at least $166,000 to national Republican Party committees, center figures show.

The money may seem like chump change for a transnational giant like Bechtel, but it has paid handsome dividends. And as Iraq looks to expand its oil production in the future who better to ask than Bechtel, which built a pipeline from Iraq's northern oilfields in Kirkuk to Syria in 1950.

Should Iraq want to build new industries, Bechtel can easily claim to be the leaders in this field having converted Jubail, once a fishing village on the Saudi Arabian Gulf, into a 360-square-mile industrial zone with a planned community expected to house as many as 370,000 people.

For Bechtel, the $680 million dollar AID contract could just be the beginning.

Pratap Chatterjee is an investigative reporter based in Berkeley, California.