By Richard A. Oppel Jr. and Diana B. HenriquesNew York Times
April 18, 2003
The company that will lead the reconstruction of Iraq had its beginnings in 1898, when Warren A. Bechtel and his pack of mules were hired to grade railroad beds in the Oklahoma Territory. A century later, his company, which is still controlled by his descendants, is one of the world's largest and most politically connected construction companies. It has a long history of doing business in Iraq, including an unsuccessful pipeline deal that at one point involved a meeting between Donald H. Rumsfeld, now the secretary of defense, and Saddam Hussein. That project later drew scrutiny from a special prosecutor looking into allegations of impropriety involving Edwin A. Meese III, the former White House counsel and attorney general in the Reagan administration.
With 47,000 employees worldwide, the Bechtel Group already has about 1,000 people on projects in the Middle East and Persian Gulf region, where the company maintains five offices and a procurement center. In a statement, Tom Hash, the president of Bechtel National, the subsidiary that will carry out the work of rebuilding Iraq's roads, power plants, water systems, seaports and airports, said the company was "honored to have been selected through a competitive process" to take on the work of "humanitarian assistance, economic recovery and infrastructure." The deal provoked some disappointment at the Parsons Corporation in Pasadena, Calif., which confirmed tonight that it was the second finalist in the bidding. "We learned from the press that we were not selected," said Erin Kuhlman, vice president for corporate relations for Parsons. The United States Agency for International Development, which awarded the contract to Bechtel today, had been in discussions with Parsons as recently as last Friday, she said. Ms. Kuhlman said it was too early to say whether the company would challenge the award, as it is allowed to do under federal regulations. Parsons had identified the Kellogg Brown & Root unit of Halliburton as a subcontractor in its bid. But Ms. Kuhlman said she did not know whether the controversy that has surrounded Halliburton â€” where Vice President Dick Cheney served as chief executive until 2000 â€” was a factor in the decision to reject Parsons. "I hope not," she said.
Congressional Democrats have questioned the involvement of Halliburton in postwar Iraq, prompting the General Accounting Office, the investigative arm of Congress, to open a wide-ranging inquiry. But while Halliburton's involvement in Iraq has drawn the most attention, Bechtel has longstanding ties to the national security establishment â€” both for the work it has done as well as the men who have served in its executive ranks. One director is George P. Shultz, who was secretary of state under President Ronald Reagan. Before joining the Reagan administration, Mr. Shultz, who also serves as a senior counselor to Bechtel, was the company's president, working alongside Caspar W. Weinberger, who served as an executive at the San Francisco-based company before his appointment as defense secretary. This year, President Bush appointed Bechtel's chief executive, Riley P. Bechtel, to serve on the President's Export Council. Bechtel's history in Iraq goes back to 1950, when it was hired by the Iraq Petroleum Company to build a 556-mile crude oil pipeline linking the oil fields in Kirkuk, in the Kurdish sector of northeastern Iraq, to the port of Baniyas in Syria.
Most recently, from 1983 until the early 1990's, Bechtel teamed up with Turkey's Enka construction group to help build the Bekme hydroelectric dam near the Turkish border. But perhaps its most controversial dealings with Iraq surrounded a project that was never built. In 1983, Bechtel was negotiating to build an oil pipeline from Iraq to the Jordanian port of Aqaba, and the project was discussed privately by Mr. Hussein and Mr. Rumsfeld, who was in Baghdad in December 1983 as the president's Mideast peace envoy. A secret State Department cable, released by the National Security Archives and obtained by the Institute for Policy Studies in Washington, detailed the meeting between Mr. Rumsfeld and the Iraqi leader. "In response to Rumsfeld's interest in seeing Iraq increase oil exports, including through possible new pipeline across Jordan to Aqaba, Saddam suggested Israeli threat to security of such a line was major concern and U.S. might be able to provide some assurances in this regard," the cable stated. Mr. Shultz, who was secretary of state at the time, has said that he recused himself from any discussions involving the proposed pipeline.
Bechtel later brought in as a partner Bruce Rappoport, a Swiss executive with ties to Israel, who sought to secure a promise from Israel not to attack the pipeline. Mr. Rappoport then retained E. Robert Wallach, a lawyer who was close to Mr. Meese, then the attorney general. Mr. Wallach later wrote a memo to Mr. Meese saying that some proceeds from the pipeline would go to Israel's ruling Labor Party. Mr. Meese's involvement was later investigated by a special prosecutor as part of a broader inquiry into Mr. Meese. He was not prosecuted but later resigned.
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