The Boys From Bechtel
Only one subject rankled the new secretary of state. For two days before the Senate Foreign Relations Committee, he had been bland and reassuring, providing artful non-answers to the senators’ fuzzy questions on every aspect of foreign policy. Then, for a moment, George P. Shultz lost his temper.
The subject was Bechtel, the awesomely large and secretive construction company in San Francisco that Shultz served as president. Senator Alan Cranston of California, recounting Bechtel’s global adventures, suggested that the company makes its own foreign policy, sometimes in contravention of the U.S. government’s.
“I resent what I regard as a kind of smear on Bechtel,” Shultz declared in a heavy voice. “I think it is a marvelous, honorable, law-abiding company that does credit to our country here and all over the world.”
His injured outrage succeeded in intimidating most of the senators at the confirmation hearing. Let the record reflect their consensus: George Shultz is an honorable man. And Bechtel is a marvelous company. There were no dissenting votes.
Still, the facts that Cranston patiently recited might be troubling to some citizens. In 1975, it seems, the Ford administration was belatedly attempting to prevent the specter of worldwide trade in plutonium – the essential ingredient for nuclear bombs –– which could be derived from reprocessing spent uranium fuel from nuclear power plants. Specifically, the U.S. government was trying to persuade West Germany not to sell uranium enrichment technology to Brazil. Meanwhile, unknown to Washington, a Bechtel executive was trying to sell Brazil the same technology.
The letter to the Brazilian minister of mines and energy was from John A. Damm, a Bechtel business development manager working for Uranium Enrichment Associates (UEA), a Bechtel-led firm selling nuclear fuel processes invented and held under tight government control. “UEA can offer Brazil,” Damm wrote, “… the entire gamut, from the development of the mine, ore processing, enrichment, fuel processing, through the design and construction of the nuclear power plants themselves.” An all-service builder.
Shultz dismissed the episode as the errant behavior of an “overenthusiastic” salesman. Cranston asked: “Were you aware of the U.S. policy of keeping sensitive nuclear technology out of Latin America?”
“I was generally aware of this issue,” Shultz replied. “I thought this effort was improper, and I stopped it.”
But what Shultz did not say –– and none of the senators really pressed the matter –– is that Bechtel’s nuclear salesmen are again busy in the world, eager to open a new generation of global commerce in which sensitive technology will become a product for U.S. export. Those deals will require the blessing of the Reagan administration, but that should be no problem. Bechtel already has a zealous advocate for nuclear trade in the Department of Energy (DOE), Deputy Secretary W. Kenneth Davis, formerly Bechtel’s vice-–president for nuclear development. And the policy decisions on such fateful questions as how to prevent every tin-pot republic from having its own bomb will ultimately reach George Shultz’ in-basket at State.
Of course, Shultz has complied with all of the standard conflict-of-interest rules. He sold his stock in Bechtel and has formally promised to withdraw from any decisions directly involving his old company. However, Shultz told the senators he does intend to be directly involved in making policy on nuclear proliferation –– one of many issues on which Bechtel’s business opportunities will depend. “If I’m not qualified to deal with that subject,” he told them, “then I’m not qualified to be secretary of state. You need somebody else.” No one took him up on that.
The question of the plutonium trade is the most obvious –– probably the most dangerous –– aspect of what’s developed as Reagan’s “Bechtel Cabinet.” It isn’t a legalistic question about conflict of interest, whether Davis or Shultz or their fellow Bechtellian, Defense Secretary Caspar Weinberger (formerly the firm’s general counsel), are mixing their private interests with their public obligations. Nor is it fevered imaginings of a conspiracy. These men do not need telex messages from the Bechtel headquarters to tell them what to think about America and the world. They already think it.
The problem with the Bechtel Cabinet is more basic: It is an obscene expression of how narrow economic interests dominate our government. Surely it distorts democracy when one corporation sends three like-minded executives to fill these three crucial positions. But this economic domination of government no longer seems to shock most people. As Ronald Reagan said recently, “The business of business is America.” And vice versa, as his hero Calvin Coolidge put it originally. Still, it was scandalous that the Senate accepted this distortion of representation so meekly. If Mobil Oil had put three executives in the Cabinet, maybe the senators would have asked tougher questions.
One reason they didn’t, no doubt, is the appealing nature of Bechtel, a truly extraordinary organization. Anyone who played with an Erector Set as a child has to like this company. Bechtel builds. Everything from bridges and dams to hotels, hospitals, oil refineries, railroads, airports, mines, paper mills and nuclear plants. Half of the nuclear power plants in the U.S. are Bechtel projects. In the Arabian desert, Bechtel is building an industrial city nearly the size of Toledo. In Papua New Guinea, it is mining a mountain of gold and copper. It built the oil pipeline in Alaska and the new subway in Washington D.C. (both with horrendous cost overruns). During 1981, it managed 111 major projects around the world (each larger than $50 million), employed 120,000 engineers, managers and laborers and did $11.4 billion worth of work. It owns part of Peabody Coal, Mesa Petroleum and a Wall Street brokerage, Dillon, Read. Former chairman Stephen Bechtel is said to have declared years ago: “We will build anything, anywhere, anytime.”
The Boys From Bechtel, Page 1 of 3