In keeping with his new role as America’s Mayor, Rudy Giuliani is moving to award the city’s biggest-ever emergency contract to one of America’s most politically connected corporations.
With barely a word of explanation and brushing aside four local firms that have been doing the cleanup since immediately after the attacks, Giuliani has moved to appoint the giant San Francisco-based Bechtel Group, Inc. to take over the lucrative job of cleaning up the World Trade Center site.
Since the federal cleanup funds are being allocated by a Republican administration, Washington insiders see the award as a favor to a firm long close to the GOP. But whatever the rationale, Bechtel is a dream ally for someone like Giuliani with potential national political aspirations.
The privately held contracting colossus was the fifth largest political contributor during last year’s presidential race and poured an additional $449,000 in soft money into political coffers, two-thirds of it to Republicans. Bechtel had $14.3 billion in revenues last year, making it the nation’s top-ranked contractor. It was the 13th largest federal contractor, with $1.6 billion in awards.
Worldwide, the firm has 50,000 employees, with 1100 projects ongoing in 66 countries. It is building express trains in South Korea, a gas treatment plant in Abu Dhabi, a power plant in Egypt, compressor stations in Algeria, and a telecommunications network in Germany.
At home, Bechtel’s past projects range from the construction of the Hoover Dam and the San Francisco Bay Bridge to nuclear power plants. Abroad, it helped build the Channel Tunnel, the Trans-Arabian pipeline, and Saudi Arabia’s industrial city Jubail. The firm built Kuwait’s oil fields, and in 1991, at the close of the Gulf War, it was hired to put out the oil fires.
But the company has also been dogged by controversy. In Boston, Bechtel is a co-venture partner in the “Big Dig”—the troubled, multi-billion-dollar effort to build a new underground roadway through Boston. The project’s initial $3 billion estimate has ballooned to $15 billion. Bechtel spokesmen said the increases were the result of government orders, but Jordan Levy, one of three board members of the Massachusetts Turnpike Authority, says Bechtel is also responsible. “Bechtel makes a profit and we continue to pay,” Levy told the Voice. A $45 million award to manage the reconstruction of San Francisco’s water system has also been criticized for waste—claims the company denies.
But the biggest question mark looming over Bechtel stems from its long and close ties to Arab regimes in the Middle East and its resultant lack of dealings with Israel. Those issues make the company a questionable choice to take on the cleanup of the worst terrorism incident in U.S. history.
Bechtel has always enjoyed close connections with political and governmental figures. Past top executives include former Reagan administration aides George Schultz (who remains a director of the firm) and Caspar Weinberger, as well as former Central Intelligence Agency leader John McCone. When the company wanted to do business with Iran in the late 1970s, it hired another ex-CIA chief, Richard Helms, as a consultant.
During that same period U.S. officials found Bechtel’s ties to its Middle Eastern clients alarmingly close. In 1976, the Justice Department accused Bechtel of violating the Sherman Antitrust Act by taking part in the Arab League’s boycott of Israel. Officials charged that Bechtel and several subsidiaries had refused since 1971 to award subcontracts on its Middle Eastern projects to American companies that had landed on the League’s boycott list as a result of doing business with Israel. Bechtel was the only company charged by the government with participating in the boycott.
Without admitting any wrongdoing, Bechtel settled the matter a year later by signing a consent decree pledging not to participate in the boycott. The company later tried to overturn the agreement, arguing that the boycott was beyond the law’s scope. A federal judge denied that motion.
Still, the company kept its distance from Israel, while remaining active with Arab governments. In 1986, The New Republic reported on a 1983 Bechtel memo that listed Israel, along with the Soviet Union, North Vietnam, Cuba, Lebanon, and Afghanistan, as a nation where the company would refrain from doing business for reasons of “political sensitivity and unstable conditions.”
Bechtel officials acknowledged the memo and said it reflected concerns stemming from Israel’s invasion of Lebanon. In 1994, Arab regimes in the Gulf relaxed their boycott demands, and Bechtel’s dealings with Israel have expanded since then, although the firm still has no ongoing projects in Israel while remaining busy in many Arab countries. That’s not their fault, company spokesmen insist. Officials say Bechtel has purchased millions of dollars in goods and services from Israeli companies and participated in joint venture projects with Israeli firms outside of Israel. It also spent two years planning a massive Israeli-Jordanian oil pipeline, a project that died on the drawing boards.
The company says the reason it doesn’t do business in Israel itself is because the nation just doesn’t need it. “We have heard this [anti-Israel] accusation over the years, but there is no basis for it,” said Bechtel’s Mike Kidder. “There are not many engineering companies that do business in Israel, because they are the best in the world,” he said.
“I would beg to differ,” said Jonathan Schienberg, a spokesman for the Israeli consulate in New York. “Particularly in light of the Versaille wedding hall collapse in Jerusalem, there is a clear need for engineering expertise.” (The collapse this spring killed 25 wedding partyers and was attributed to structural failures in the building.)
But Bechtel’s past problems shouldn’t be a barrier to the firm’s appointment to take over the Trade Center site, said a spokeswoman for the Anti-Defamation League, a Jewish civil rights group. “That was a different time, and this is now,” said Myrna Shinbaum. “For the most part, the Arab boycott is over,” she said. The ADL has never investigated Bechtel’s Middle East performance, but Shinbaum said the organization had no objection to the firm because “nothing has been brought to our attention.”
Although no specific dollar amount has been cited, Bechtel’s takeover of the World Trade Center site cleanup would yield an estimated $27.5 million in fees. So far, cleanup of the site has been evenly divided among four contractors—Bovis Lend Lease, Tully Construction, Amec Construction Management, and Turner Construction. The work has been overseen by some 60 city engineers in the Department of Design and Construction. Bechtel’s own engineers are expected to supplant the city workers if the firm is hired.
After word of the pending award leaked out earlier this month, local firms and labor unions protested, pointing out that work was moving along swiftly at the site where 1.2 million tons of debris from the fallen towers are being removed.
“There have been no complaints thus far,” said Paul Fernandes of the New York City Building and Construction Trades Council. “Things are not only going well, but ahead of schedule. The project isn’t in need of fixing. What is the need to bring in a new entity?”
Labor unions have long viewed Bechtel with skepticism. The firm is considered an open-shop company, although it employs union labor in some heavily union regions. A review of federal safety reports on Bechtel job sites around the country shows that while the company is operating with union personnel at a tunnel project in California, it has non-union projects under way in Las Vegas, Portland, Maine, and Everett, Washington.
But those objecting to the hiring of Bechtel to take command of the ground zero cleanup will have a tough time lodging their complaints. As an emergency contract award, the Bechtel deal can go forward with only City Hall’s OK.
Research assistance: Ari Holtzblatt