The Profiteers

by Sally Denton

  McCone had personally offered the million dollars in corporate funds to CIA Director Richard Helms and National Security Advisor Henry Kissinger in a private meeting. In a subsequent Senate investigation of the CIA attempts to oust Allende, McCone admitted “that he had played the key role in bringing together CIA and ITT,” as reported by Victor Marchetti and John D. Marks in their 1974 definitive work, The CIA and the Cult of Intelligence. The plot was undoubtedly discussed, if not hatched, at Bohemian Grove in the summers of 1971 and 1972, when all three men were lodged at Mandalay.

  Called to testify, Helms denied the CIA’s role in the coup; when charged later with perjury for his false testimony, he would become the first and only CIA director ever convicted of lying to Congress. Helms—dubbed “the gentlemanly planner of assassinations” by his biographer—would ultimately blame Nixon for ordering him to instigate the military coup in Chile. “The only sin in espionage is getting caught,” Helms once said. In 1975 he admitted to Congress that he had ordered the destruction of all CIA files related to the infamous Project MKULTRA mind-control experiments of the CIA, in which experiments on unwitting humans were conducted during a twenty-year period from 1953 until 1973. Thousands of subjects at dozens of American institutions, including colleges, universities, hospitals, and prisons, were unknowingly dosed with the hallucinogen LSD. The shocking testimony made Helms the target of public outrage and earned him the moniker “the man who kept the secrets.”

  As for Kissinger, for four decades, he denied US involvement in the bloody putsch. But his pivotal role in both preemptive covert planning to block Allende’s election, and then pressing Nixon to overthrow the legitimate elected government and replace it with a US-friendly dictator, was exposed in May 2014, when thousands of pages of US State Department documents on the coup and the subsequent repression were declassified. “Kissinger asked that the plan be as precise as possible and include what orders would be given . . . to whom, and in what way,” as the files recorded Kissinger’s explicit instructions to Helms.

  “In the heady days immediately following, we took pride in having helped thwart the development of Cuban-style socialism in Chile and having prevented the country’s drift into the Soviet orbit,” a former Santiago-based CIA agent wrote in Foreign Affairs magazine in 2014. Likewise, both Helms and Kissinger believed that the violent US intervention in Chile was a patriotic act that furthered America’s best interests. Kissinger saw Allende’s socialist democracy as a “virus” that might “spread contagion,” and thought that the way to deal with such a threat was to “destroy the virus and to inoculate those who might be infected, typically by imposing murderous national security states”—as an academic described his foreign policy and national security strategy. Kissinger pontificated regularly about how Allende’s Marxist regime would contaminate Argentina, Bolivia, and Peru—“a stretch of the geopolitical imagination reminiscent of the Southeast Asian domino theory,” according to one history. Helms’s hubris was on full display during a rare public lecture at Johns Hopkins University during the volatile 1970s, when a student asked him if the CIA had interfered in Chile. “Why should you care?” Helms quipped. “Your side won.”

  In any event, both Helms and Kissinger would leave government and become highly paid international consultants for the Bechtel Corporation—expanding the company’s revolving door into what would become Steve Jr.’s famous brand. “The revolving door spins so fast it is hard to keep up,” wrote a journalist of Bechtel’s vigorous mining of top-tier foreign policy and energy officials. While the links between government and the private sector had become familiar to Americans since Eisenhower’s 1961 farewell speech, it would be Steve Jr. who perfected it, with Helms and Kissinger the prototypes in a long line to come.

  “For a top job at Bechtel, former military personnel, ex-diplomats, and retired politicians need apply,” a former Bechtel employee told the London Independent. Its ties with the CIA, through its networks of associates, “has earned it the nickname ‘the working arm of the CIA.’ ” Still, as former CIA agent and author Robert Baer has written, in “Washington, to bring up the ‘revolving door’ between government and business is like discussing incest in the family.” In the case of Bechtel, it seemed more of an open door than a revolving door—where those hired were rewarded with salaries and benefits that dwarfed even the highest-level government salaries.

  For its part, Bechtel proclaimed that the implication that the company won business or a competitive advantage through political connections was false and, in any case, standard business practice. “Over the years, we have certainly built good relationships with important people,” a Bechtel spokesman would write. “We network like anyone in business or the professions. Bechtel executives have been international industry leaders for decades. Industry leaders know political leaders, the people who formulate development plans, control budgets, set the rules for contractors to enter and operate in their countries, examine credentials, authorize contracts, and pay the bills for services rendered.” Indeed.

  CHAPTER TWELVE

  The Energy-Industrial Complex

  The foreign policy backlashes, including especially the disaster that Vietnam had become, led Nixon to reevaluate the customary American reaction to insurrections against political and corporate interests. Realizing that the United States could not engage in overt and covert operations in every nationalist uprising in the world, the thirty-seventh president reversed his long-promoted domino theory, returning instead to the theme he had first aired at Bohemian Grove of the United States as a Pacific economic power. Described as “the greatest departure in American foreign policy in the postwar epoch,” central to this new Nixon Doctrine was a California-based Pacific Rim strategy spawned at the SRI think tank that concentrated on the opening of trade with China.

  Nixon also engaged Bechtel in megadeals binding the country’s enemies in oil-rich lands to his envisioned world economy. Bechtel “moved quickly in the Middle East,” according to one account, “through huge construction projects to soak up the billions in American dollars that went to pay for the new OPEC prices of oil.” As part of this foreign policy and economic doctrine, Nixon also sought to improve US relations with the Soviet Union, as well as to find new markets for American exports—the two goals interwoven with multibillion-dollar loans from the Ex-Im Bank. The unlikely mastermind of Nixon’s grand plan to boost exports from $5 billion to $50 billion during his one and a half presidential terms was a California car salesman, GOP fund-raiser, and erstwhile citrus grower named Henry Kearns. Nixon had rewarded his longtime political patron by appointing him president of Ex-Im Bank—a powerful position for an unqualified political party functionary with no lending experience. It had been Kearns who suggested Steve Sr.’s appointment to the bank’s advisory committee—with an eye toward bolstering Kearns’s and the bank’s credibility as they were embarking on a staggeringly large lending program. As much as any American businessman, Steve Sr. understood the intricacies and complexities of federally guaranteed loans, for they had built his, and his father’s, company. Under the close tutelage of Steve Sr., who would assume a central role in directing Kearns toward worldwide projects for Bechtel to build—projects that had been researched and selected by SRI—Kearns served as the company’s private banker, with seemingly unlimited access to funds.

  Ex-Im dispensed hundreds of millions to Bechtel customers and projects: $13.5 million for a nickel-production facility in the Philippines; $100 million for the planned Sumed pipeline in Egypt; $157 million for fertilizer plants in Algeria; and $294 million to finance Bechtel’s construction of liquefied natural gas facilities for Sonatrach—the Algerian state-owned oil company, to name a few. Among the more controversial Ex-Im/Bechtel deals was a series of proposed plants to be built in Russia by Bechtel and Armand Hammer’s Occidental Petroleum—a $20 billion “twenty-year chemical fertilizer deal, promising U.S. technology for a Soviet fertilizer complex to be built by Oxy and Bechtel at Kuibyshev,” acc
ording to an explanation of the plans. Heralded as the largest single transaction ever conducted between the Russian government and a private firm, the deal made Bechtel purveyor “of oilfield and fertilizer technology to [Soviet leader] Leonid Brezhnev, by Nixonian fiat,” wrote a former Bechtel employee. There was also the proposed $10 billion development of natural gas fields in western Siberia for which Kearns had promised the financing for a partnership with the Soviets, Bechtel, Hammer, and El Paso Natural Gas—a deal that congressional investigators contended had been sweetened with Hammer’s $100,000 campaign contribution to Nixon ($54,000 of which was illegal). “You must be out of your cotton-pickin’ mind to dream up something like that,” Democratic senator Henry “Scoop” Jackson told a Nixon administration official upon hearing of the Russian and Bechtel scheme, and maneuvered to block the Ex-Im loans and credits. Senators were further galvanized against Bechtel when a senior executive announced the firm’s intention to go forward with the project with or without congressional approval, though Bechtel would back down.

  The Soviet setback was offset for Bechtel by the shift toward international nuclear power. Lobbying fellow members of the advisory committee, Steve Sr. made the case for the Ex-Im financing of nuclear-energy-producing facilities abroad. “Any company which purchases U.S. equipment and services for a nuclear power plant should be able to obtain financing for the fuel required to operate that plant,” Kearns announced. There followed a flurry of superdeals, wherein Ex-Im financed Bechtel-built nuclear plants around the globe.

  The Ex-Im/Bechtel gravy train paused with Kearns’s sudden resignation under a cloud of suspicion. The bank had made insider loans that enriched Kearns personally, and members of Congress were scrutinizing Kearns. Steve Sr. faced withering criticism as well. “Obviously, Bechtel’s firm benefited while he [Kearns] was Ex-Im Bank president,” charged Congressman Les Aspin of Wisconsin. “Bechtel’s conflict of interest raises questions about the integrity of the bank’s entire fiscal operation.” Aspin cited the unambiguous impropriety of Ex-Im’s approving $157 million for “an Algerian construction project coordinated by a San Francisco engineering firm while the firm’s senior director served on the bank’s advisory committee.”

  Ultimately, neither Kearns nor the Bechtels would be hampered by the flurry of bad publicity. Kearns would escape criminal charges when assistant U.S. attorney general Richard L. Thornburgh determined there was insufficient evidence against him. Like so many other scandal-ridden government officials of then and now, he would quietly steal away from Washington, only to turn up later as a high-priced consultant working the other side of the aisle. He would house his new consulting firm, Kearns International, in the Bechtel Corporation’s San Francisco offices. His first major client was Sonatrach of Algeria, which paid him $350,000 to lobby Congress.

  Meanwhile, Bechtel also won billions of dollars in government contracts for domestic projects, including the Washington, DC, Metro subway system. Questions about conflicts of interest would surface in all of these projects as well, including one blatant citation of Bechtel preparing a $418,000 research report for the government on the feasibility of a coal slurry pipeline at the same time that the company was participating in a slurry pipeline venture of its own, as the Washington Post reported. Still, Bechtel successfully lobbied congressional supporters to introduce legislation granting its pipelines the right of eminent domain across Wyoming’s federally owned land—rights-of-way easements previously granted almost exclusively to railroad companies.

  A native Californian and the first president from the West since Herbert Hoover, Nixon inherited what one account described as a “complex web of relationships between the federal government and the western corporations.” These historic bonds—epitomized by generations of massive government subsidization of the western economy—would form the basis of Nixon’s domestic energy policy. A centerpiece of this policy would be his commitment to develop America’s public energy resources for private companies—especially the utilities and energy and construction companies of California. Nixon, who sent to Congress the first message on energy policy ever submitted by a US president, had issued a call to arms to the nation’s utilities to build a thousand nuclear power plants by the year 2000. In response to the Mideast oil crisis of the early 1970s, when the Arab cartel raised prices by 100 percent, Nixon advocated for the private sector’s role in developing nuclear energy—including the commercial production of enriched nuclear fuel such as plutonium. Bechtel would be at the forefront of the burgeoning new government-subsidized market, obtaining contracts to build more than half of the thirty-one nuclear plants on the drawing board.

  In November 1972, the federal government gave tentative approval for a $5.7 billion nuclear fuel plant at Dothan, Alabama—the world’s first privately owned nuclear facility of its kind—to a Bechtel subsidiary called Uranium Enrichment Associates (UEA) in partnership with the mega chemical company Union Carbide. The corporatization of uranium enrichment—which had been the government’s sole province since the Manhattan Project—ushered in what journalist Jonathan Kwitny described as the beginning of “what may be the largest commercial undertaking in history.” Despite fierce lobbying by Bechtel, Congress rejected the plan that would have broken the Atomic Energy Commission’s monopoly on the enrichment of uranium, and would have given UEA a series of subsidies and guarantees to meet the needs of commercial nuclear power plants—with the US government assuming most of the risk.

  At the same time, and armed once again with SRI research, Steve Jr. began an aggressive resource strategy to meet the needs of the explosive growth of the Southwest. Bechtel and a loose consortium of utilities, mining, and construction companies moved to “cover the Colorado Plateau with an elaborate complex of strip mines, power plants, and coal-gasification projects,” as an environmental history of the West described it.

  All in all, in coalition with the government, and especially under the aegis of Richard Nixon, Bechtel had shaped a powerful new energy-industrial complex to rival that of the military. Though no president warned the nation about it—the term had not been coined, nor had the Department of Energy been created yet—the network of contracts and money flow between the government agencies and the companies that implement the policies that drive the contracts was every bit as “disastrous [a] rise of misplaced power” as Eisenhower had envisioned.

  So it was with a stunning sense of revisionist history that Steve Jr. wrote in Dædalus, the journal of the American Academy of Arts and Sciences, “the U.S. government has not had a major role in the success of our business.” Espousing that the “ ‘private sector,’ with free and open markets, creates the wealth of a country” and that excessive government “can easily lead too many people to believe that ‘the government owes them a living,’ ” Steve Jr.’s philosophy stretched credulity.

  Still, as was becoming a pattern, Bechtel was merely a shadow of what it was destined to become. As one of the biggest corporate beneficiaries of government financing—and by the 1970s, the largest privately held corporation in the world—Bechtel’s political and economic authority rivaled that of policy makers. Working in tandem to further Nixon’s foreign and domestic agendas, both Steve Sr. and Steve Jr. established close relationships with powerful Cabinet secretaries and high-level members of the administration—many of whom would join them at Mandalay Lodge, sometimes along with Nixon, where the personal bonds were tightened. (Though later, Nixon would be heard on the Watergate tapes calling Bohemian Grove “the most faggy goddamned thing you could ever imagine.”)

  Two Nixon men in particular captured the Bechtels’ attention: Treasury Secretary George Shultz and Secretary of Health, Education, and Welfare (HEW) Caspar Weinberger. As the company had become expert at doing, it would lure both men away from government to top executive positions at corporate headquarters in San Francisco. It would be a history-changing action—for Weinberger and Shultz, for Bechtel, and for the United States.

  “Hiring people in h
igh places to deal with others in high places is nothing new for American corporations,” journalist Mark Dowie wrote of the revolving door between big business and government. “But Bechtel seems to hire higher. When it needs financial connections it hires the secretary of the Treasury. When it needs nuclear technology, it hires the general manager of the Atomic Energy Commission. When it needs international clout, it hires an undersecretary of state. And when it needs expertise to run the bureaucracy it is becoming, it hires the secretary of Health, Education, and Welfare.”

  * * *

  PART TWO

  THE BECHTEL CABINET

  1973–1988

  * * *

  Every gun that is made, every warship launched, every rocket fired signifies, in the final sense, a theft from those who hunger and are not fed, those who are cold and are not clothed. This world in arms is not spending money alone. It is spending the sweat of its laborers, the genius of its scientists, the hopes of its children.