Tube Lines: The Gory Details
Water Wars: Bechtel’s Bloody Hands in Bolivia

Bechtel, a member of the Tube Lines consortium (London Underground), was awarded the USAID contract to reconstruct Iraqi water, sewage and electricity supplies on 17 April. Media attention immediately focused on the company’s political connections and whether they had swung the deal (see e.g. Bechtel wins contract prize). Former company President George Shultz, now back on the Bechtel board, was Secretary of State during the Reagan administration.

But whether or not Bechtel has used its political clout to land yet another contract, what exactly were they up to when Shultz was in Washington?

Helping, unwittingly or not, with the Iraqi chemical weapons programme - according to the 12,000 page weapons dossier submitted by the Iraqi government late last year. The US deleted all company names before distributing the dossier, but the uncensored version was seen by Andreas Zumach, whose exposé appeared in the German newspaper Die Tagezeitung and was widely reported. See e.g. US Corps in Iraq. A translation of excerpts from the Die Tageszeitung article appears at The Corporations That Supplied Iraq’s Weapons Program

It includes 24 US companies and their area of involvement. Number 21 is Bechtel, shown as involved in the chemical weapons programme.

Whether or not the dossier is accurate, the Bechtel story originally broke in Financial Times 12 years ago, during the ongoing investigation of the notorious Banca Nazionale del Lavoro, the Italian bank clandestinely funding the arms-to-Iraq programme with the secret involvement of sections of the then Bush administration.

Bechtel was the lead contractor for the PC2 petrochemical complex, producing chemicals with dual civil-military use including a precursor used in mustard gas. The deal was up and running after the Kurds were gassed at Halabja in 1988, the incident frequently cited as justification for this year’s war to topple Saddam.

Warning Forced Bechtel Out of Iraq Chemical Project

Financial Times, Feb. 21, 1991
ALAN FRIEDMAN

Bechtel, the California construction group, withdrew from an Iraqi petrochemicals project on the advice of Mr. George Shultz, the former US secretary of state, who joined the company’s board of directors after leaving the Reagan administration in 1989. Mr. Shultz disclosed his role in an interview with the Financial Times.

Bechtel has also revealed, separately, that it was instructed by the government of Iraq to obtain payment for work it did on the petrochemicals project from the Atlanta, Georgia, branch of Banca Nazionale del Lavoro (BNL).

BNL is the Italian bank caught up in the scandal over $3bn (£1.5bn) of Iraqi loans made in 1988-89 by its Atlanta branch. Indictments of US bank employees and Iraqi officials implicated in the scandal were due to have been announced last week, but they have been delayed after a fresh round of consultations in Washington.

The disclosures by Bechtel come amid allegations by US chemical weapons experts that Baghdad planned to use intermediate products from the apparently civilian Iraqi project) known as PC2–for the manufacture of mustard gas.

Mr. Shultz, who had served as president of Bechtel before joining the Reagan administration in 1982, said he first learned of Bechtel’s work as project manager of the Iraqi petrochemicals complex in 1989 when he `spent a little time at Bechtel’s London office and found there was work going on in Iraq’.

Mr. Shultz said he checked into the PC2 project in 1989 and was given assurances that it had nothing to do with chemical weapons. `But I thought about it a little more and I gave my advice they should get out, ‘ said the former secretary of state.

He recalled that at a Bechtel meeting in the Spring of 1990, as work was continuing, `I really hit it very hard and I said something is going to go very wrong in Iraq and blow up and if Bechtel were there it would get blown up too. So I told them to get out. ‘

The revelations by Bechtel, which says it had no knowledge of any plans by Iraq to apply the petrochemical plant’s products for military use, mark the first time a U. S. company has provided details of the direct involvement of Iraqi officials in the BNL Atlanta affair.

Western intelligence officials say that a substantial portion of the $3bn of BNL money was used by Iraq to finance its development of unconventional weapons systems, including the Condor-II ballistic missile project and nuclear and chemical weapons projects.

The Iraqi project was handled by Bechtel Overseas of Hammersmith Road in London, the company’s U. K. affiliate. The Financial Times has obtained a copy of a 1988 telex instruction from the central bank of Iraq to BNL’s Atlanta branch, asking that Bechtel’s U. K. subsidiary be paid $10m.

Mr. Tom Flynn, a senior vice-president at Bechtel, said the company never knew there was anything suspect about the $10m of BNL funds, provided in the form of two letters of credits that were issued in September 1988 and amended three months later.

`We were hired by the government of Iraq to be the project manager for an ethylene plant. Our client, the government of Iraq, told us we would be paid through letters of credit from the BNL Atlanta branch. ‘

The Bechtel official also said that the company received `direct encouragement’ for the PC2 project from the U. S. Department of Commerce. A spokeswoman for the Commerce Department said `we were aware of Bechtel’s work in Iraq through the U. S. embassy in Baghdad, but our role was a passive one’.

Bechtel said there was no suggestion at the time about the final use that Iraq might make of ethylene oxide, a product that has multiple civilian applications, but also has military uses.

Mr. Seth Carus, an expert on Iraq’s chemical weapons programmes who is a fellow at the Washington Institute for Near East Policy, said the PC2 Iraqi project was intended for several purposes, both military and civilian.

`I think it is very clear, however, that the Iraqis understood what they were doing. It is evident that they wanted to limit their import dependence on chemicals that are used for weapons. ‘

A key feature of the PC2 project was the plan to manufacture ethylene oxide, a precursor chemical that Mr. Carus said `is easily converted to thiodiglycol, which is used in one step to make mustard gas’.

Mr. Shultz, asked about the possible production of mustard gas, said he was not `a technically proficient person’ but that `I kept going back and saying these things could be converted pretty easily’. Bechtel subsequently followed the advice of Mr. Shultz, just months before the invasion of Kuwait.

Bechtel is currently one of several U. S. and U. K. firms seeking contracts for the eventual reconstruction of Kuwait.

Just exactly how far Bechtel went with PC2 before pulling out is not clear from the Financial Times article or the lengthy and highly informative US Congressional investigation into BNL chaired by Rep. Henry Gonzalez in 1991-92.

But in 1998, a group of Gulf War veterans sued Bechtel and other US companies for allegedly helping Iraq to produce the chemical weapons which they claimed had caused their illness.

“... Additionally, several other companies were sued in connection with their activities providing Iraq with chemical or biological supplies: subsidiaries or branches of Fisher Controls International, Inc., St. Louis; Rhone-Poulenc, Inc., Princeton, NJ; Bechtel Group, Inc., San Francisco; and Lummus Crest, Inc., Bloomfield, NJ, which built one chemical plant in Iraq and, before the Iraqi invasion of Kuwait in August 1990, was building an ethylene facility. Ethylene is a necessary ingredient for thiodiglycol.

“In 1994, a group of twenty-six veterans, suffering from what has come to be known as Gulf War Syndrome, filed a billion-dollar lawsuit in Houston against Fisher, Rhone-Poulenc, Bechtel Group, and Lummus Crest, as well as American Type Culture Collection (ATCC) and six other firms, for helping Iraq to obtain or produce the compounds which the veterans blamed for their illnesses. By 1998, the number of plaintiffs has risen to more than 4, 000 and the suit is still pending in Texas....”

Anthrax for Export
U.S. companies sold Iraq the ingredients for a witch’s brew

Bechtel had another finger in the Iraqi pie during the 1980’s. They sought, without suceess as it turned out, to build an oil pipeline via Jordan to Aqaba, intended to carry a million barrels per day of Iraqi exports. The deal was to be financed through the US Exim Bank. The current Defense Sec. Donald Rumsfield lobbied Saddam for permission while the White House pressured the Exim Bank.

Details are given in a new report from the Institute for Policy Studies, which “reveals that the diplomatic pressure from Rumsfeld and the Reagan administration happened during and despite Hussein’s use of chemical weapons. Behind the scenes, these officials worked for two years attempting to secure the billion dollar pipeline scheme for the Bechtel corporation.”

See Rumsfeld Ignored Weapons Of Mass Destruction In Pursuit Of Oil Pipeline

Rep. Gonzalez had also investigated the pipeline.

The Case Of Iraq And The Export-Import Bank

reproduced at http://www.fas.org/spp/starwars/congress/1992/h920224g.htm

... Over the next 7 years the State Department and the White House would pressure the Eximbank repeatedly to gain access to guaranteed financing for Iraqi projects.

The most prominent of these projects was an Iraqi oil pipeline with an outlet at the Red Sea Port of Aqaba, Jordan. This contract alone was worth $1 billion for its contractor, Bechtel, the California engineering conglomerate. Secretary of State George Shultz and Bechtel had a longstanding business relationship. As a matter of fact, Secretary Shultz came from Bechtel, and he came back from Bechtel. He worked at Bechtel prior to becoming Secretary of State and, as I say and repeat, he went back immediately upon leaving the State Department.

Other high officials in the Reagan administration involved in this project including President Bush, the current Deputy Secretary of State, Lawrence Eagleburger, former Attorney General Ed Meese, former NSC Director Robert McFarlane, and former CIA Director William Casey. At various times, every one of them contacted the Eximbank to obtain financing for the Aqaba pipeline project. These officials all had one thing in common–they saw Eximbank financing as crucial to United States-Iraq relations...

Clearly, the highest levels of the administration placed tremendous importance on the Aqaba pipeline project. On June 19, 1984, the Eximbank’s Board met and not surprisingly approved a preliminary commitment of $484 million for the Aqaba pipeline for Bechtel. As a side note, the report read:

Under normal peaceful circumstances, this project would not be economically viable.

Can you imagine that? Under normal circumstances this project would not be viable. Oh, but it involves Bechtel. But Bechtel, as President Eisenhower said, is a mighty component of this great industrial defense complex, which in effect has been determining policy for our country, and particularly in the last two administrations.

Gonzalez also investigated another Iraqi pipeline project involving Brown and Root. Now known as Kellogg Brown and Root, KBR is a subsidiary of Halliburton, the Texas oil industry service contractor formerly headed by US Vice President Dick Cheney. KBR’s other exploits include Camp X-Ray (Guantanamo Bay) and now an IT upgrade management project for the NHS (see Quid pro Quo?: from Cheney, Camp X-Ray, and Iraq to the NHS). Like Bechtel they have their own post war reconstruction contract, dealing with oil fires.

This is liberation?