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Bechtel's Friends in High Places

by Pratap ChatterjeeSpecial to CorpWatch
April 24th, 2003

As legend has it, Peter Berlandi, chief campaign fund-raiser for the Massachusetts governor William Weld in the 1990s, was not subtle when he intervened on behalf of Bechtel's multi-billion dollar "Big Dig" Boston Central Artery construction project. Berlandi allegedly called the company's competitors in the construction industry and said: "If you want to work in this state again, don't play games with Bechtel."

Although both Berlandi and Bechtel deny making the statement, Berlandi was getting two salaries at the time -- one from Weld and the other from Bechtel -- a cool $200,000 dollars for his services to the construction company.

Ironically, a memo that surfaced in April 2000 showed that the state of Massachusetts initially reimbursed Bechtel for the money that it had paid to Berlandi. When the company came under fire for employing Berlandi as a consultant, they paid the state back the money to avoid any more unfavorable publicity.

Bechtel says that there was no conflict of interest in hiring Berlandi and that the bills to the state were just an accounting mistake. "There never was any intention to bill the state for these charges, and the state did not pay any of them. Bechtel paid all of them," explained Bechtel spokesperson Jeff Berger.

Yet another potential conflict of interest came to light when a Boston Globe study of the top officers in some 150 companies with contracts in the Big Dig showed that 77 executives had made at least $100,000 in campaign contributions to Weld and Lieutenant Governor Paul Cellucci since 1991.

Between 1991 and 1996, Weld personally reaped nearly $25,000 from Bechtel and Parsons executives, including several of the maximum $1,000 annual donations from:

  • George Shultz, who worked as a Bechtel consultant after his stint in the Reagan White House
  • Bechtel patriarch Stephen D. Bechtel Jr. and his wife, Elizabeth
  • Bechtel cheif operating officer Adrian Zaccaria
  • Levy of Parsons Brinckerhoff
  • The Business of Government

    Boston is not the only place that Bechtel has friends in all sorts of high places. The most well known is former Secretary of State George Shultz, who was president of the Bechtel group before he went to Washington and then got his job back when returned. Another member of the Reagan Cabinet, former Secretary of Defense, Caspar Weinberger, was vice president and general counsel of the Bechtel Group before going to Washington in 1980.

    Others include a Bechtel executive who went on to head the CIA for four years in the 1960's. And today, the president of Bechtel's work in the Middle East, Southwest Asia, Europe and Africa is Chuck Redman, a former United States ambassador to Sweden and Germany.

    A Bechtel memo in answer to questions raised about the revolving door between company executives and government, says it all.

    "Bechtel executives have been international industry leaders for decades," the memo explains. "Industry leaders know political leaders, the people who formulate development plans, control budgets, set the rules for foreign contractors to enter and operate in their countries, examine credentials, authorize contracts, and often pay the bills for services rendered. In many cases they are the client."

    Equal Opportunists

    Bechtel's best buddies have generally been Republicans but they never let party affiliations get in the way of business. For example the company contributed heavily to the Democratic Party right at the time that U.S. Commerce Secretary Mickey Kantor invited them to join him on a trade mission to Bosnia and Croatia in July 1996. Between May 3rd and August 23rd of that year the company suddenly gave the Democrats $125,000, more than they had given the party in the past five years combined. Questioned about the donations. Kantor, a long-term lobbyist himself, said he was "stunned" insisting that the trips and the contributions were entirely unrelated.

    But two years later the U.S. Export-Import Bank (ExIm), on whose board Kantor served as an ex-officio member, approved a long-term financial guarantee for Bechtel to provide $250 million of procurement, construction and project management services to build a 72- mile highway from Croatia's northern border through Zagreb to the Bosnia-Herzegovina border. In a press release at the time the ExIm Bank said the guarantee enabled Bechtel to win the Croatia Roads Authority contract over several European and local competitors. Bechtel says, however, that there is no connection between the Democratic campaign contributions and the contracts.

    ExIm has long been an easy touch when Bechtel needs financing. Bechtel asked the 65-year old agency for funding in 1946 when it got the contract to build the Trans-Arabian pipeline, laying one of the cornerstones for the Saudia Arabian oil export boom. ExIm also backed Bechtel's aborted role in the Aqaba pipeline in Iraq in the 1980's.

    Two of ExIm's presidents have worked for Bechtel after quitting the bank. Henry Kearns, who was appointed to head up ExIm by Richard Nixon in 1969, asked Steve Bechtel Senior to serve on the bank's advisory committee. Kearns played a crucial role in helping Bechtel find funding for the Freeport gold mine in New Guinea when it was constructed in 1970, overriding misgivings from ExIm's engineering department about the feasibility of the project.

    Kearns suddenly resigned from his job in 1973 when the U.S. Department of Justice launched an inquiry into possible conflicts of interest because Kearns had financial interests in a Thai company that had received loans from ExIm. Although the investigation was later dropped, Kearns did not have to worry about losing his federal salary because he landed softly into a job in Bechtel's San Francisco offices.

    The other ExIm president who found employment with Bechtel is John Moore, who was appointed to head up ExIm in 1977. Moore joined Bechtel in 1984 as executive vice president of Bechtel Financing Services, and eventually was appointed to the company's board of directors in 1989.

    And today Daniel Chao, a Bechtel senior vice president, serves on the very same advisory committee of the Export-Import Bank of the United States while Ross J. Connelly, a 21- year veteran of Bechtel Group, is the chief operating officer for the Overseas Private Investment Corporation (OPIC), the other major source of funding from the federal government for American companies overseas.

    Despite periodic questions raised about the propriety of these symbiotic relationships, there is no indication that either Bechtel or the US government are likely to change the way they do business any time soon.



    Back to Bechtel Wins Iraq War Contracts.

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