Bechtel Enterprises: A World of Imagination

If there is one thing that Bechtel might have learned in its long and losing battle to sue Bolivia over the Cochabamba Water Revolt, it ought to be this – public relations based on falsehoods doesn’t do you any favors. And yet, today, as Bechtel drops into Bolivia once more, to drop its case, the Bechtel PR machine is back to its old tricks of spinning pure baloney.

Here are a couple of choice examples:

1) Lie About the Rate Increases Bechtel Imposed

This has always been Bechtel’s first line of defense and apparently remains so. Four years ago, shortly after Bechtel filed its World Bank case, it peddled the fairy tale that “For the poorest people in Cochabamba rates went up little, barely 10 percent [Gail Apps, spokeswoman for Riley Bechtel].” In fact, the data Bechtel left behind in the water company computers when it fled showed that, for the poorest, the corporation raised rates by 47%.

This morning they gave this specific spin a slight update, “Bechtel disputes that fees rose that high and said the Bolivian government agreed to an average increase of 35 percent to pay off old debts and to expand service [San Francisco Chronicle].” Again, the data in the computers tells a different story. The average increase that Bechtel won in their secret negotiations with Bolivian regulators was 51%, a big portion of which was to service the 16% per year guaranteed profit they also demanded and won.

Here is a painfully thorough analysis of Bechtel’s price hikes, including scanned before-and-after water bills.

2) We would have dropped the whole thing if they’d said it wasn’t our fault.

This is a new one, and really, it is a stunner. This morning, Bechtel explained that the only reason they kept everyone running up (literally) millions in lawyer bills for four years is that Bolivian officials wouldn’t issue a simple statement saying that the whole fiasco really wasn’t Bechtel’s fault. Here’s what Bechtel said this morning to the San Francisco Chronicle (the hometown newspaper we share):

"We had offered some time ago not to continue arbitration if we received a clear, unambiguous statement that Aguas del Tunari acted entirely without fault, during time of concession and released of any liabilities," said Jonathan Marshall, media relations manager for Bechtel. "Given how poor Bolivia is, Bechtel's intent was not to squeeze money out of the country. We simply couldn't accept blame for what happened."

Readers, really, just stop a moment and think about this. We are supposed to believe the following:

First, Bechtel would have dropped the whole thing years ago if the government of Bolivia has just said an easy sentence-worth of words. Second, not Tuto Quiroga, not Gonzalo Sanchez de Lozada, not Carlos Mesa – all presidents who were eager to please foreign corporations – none would issue such a simple declaration. If you belive that I have some lovely land in in Quillacollo...

Squeezing the poor is exactly what Bechtel set out to do in Cochabamba. An updated analysis shows that if Bechtel had stayed at its demanded tariffs, the people here would have spent $17 million more on water these past six years.

Some Free Advice to Bechtel’s PR Department

Truly, I would think that the public relations people at Bechtel would be, well, just a lot more competent. The years of spin only succeeded in creating what Associated Press called today, “a cause celebre for activists around the world and a public relations headache for Bechtel...” That’s not the kind of thing I would like my boss reading over their on Beale Street. All the spinning only made things worse for Bechtel.

So, here is a little free public relations advice for the good people over by my beloved San Francisco Bay. You want to cut your public relations losses and actually score some points on us? Say this:

First, the leadership of Bechtel is genuinely regretful of the suffering and even a death that happened in Cochabamba. Those results were never our intention in Bolivia. We are a business. We provide people with water and we do it with an obligation to make a profit for our shareholders. We are a business, not a charitable foundation.

Looking at it as objectively as we can, there are a number of things that should have been done differently, both by Bechtel and the Bolivian government. The contract process itself – from start to finish – ought to have been opened to public scrutiny. No deal will work if it doesn’t have acceptance from the community and that begins with genuine transparency. What happened in Bolivia was far, far from that and it is one of the reasons for the public reaction that came after.

Additionally, it is also true that the economics of water privatization just don’t work well in a very poor country like Bolivia. The poor can’t afford the full market price for water. There are too few middle class and wealthy to cross-subsidize the poor. The national government is already borrowing to pay its bills, so there aren’t really viable subsidies there either. Getting the poor access to water is going to take more than just the market. It is going to require aide as well, and a good deal of it. Infrastructure development is expensive.

There are many, many important lessons to be learned from what happened six years ago in Cochabamba, for others and us. We wish the people of Bolivia well.
posted by The Democracy Center at 8:26 PM


Dan said...
Well said, Jim.

I have always been a bit baffled by Bechtel's attempts to exculpate itself in this case. I remember at the time it all went down, Bechtel wrote public statements (available on this website, I believe) explaining why they felt they were not to blame - indeed, that they, like the Bolivian people, had been innocent victims of corrupt Bolivian political figures. What I found so astounding was that, by way of explaining this, they detailed everything about the negotiation process that, to my way of seeing it, illustrated their complicity in the abuses.

One major issue was that the deal included plans to build a crazy system of aquaducts and pipelines to bring water from the other side of the mountain - Misicuni. The World Bank and Bechtel itself had been opposed to this plan all along - it was a long-planned-never-realized, untenable money trap that local politicians had long used to line their pockets, and in which some of the same politicians had personal investments. But to me, Bechtel only proved its own corruption when it explained that it was aware of all the problems with Misicuni from the start, and of the fact that politicians' insistence on it was part of a corrupt scheme, but that, through secret, single-bidder negotiations, it arrived at a deal that included Misicuni anyway - but that guaranteed Aguas del Tunari a large return on its investment regardless of what Misicuni and the market might actually provide (there's your "free" market at work). To this day, I can't believe Bechtel wrote a letter basically saying "we kept telling our Bolivian partners what they were doing was wrong - because it was wrong and we fully recognized that - but they were dead set on doing it, (and our profits were guaranteed,) so we went along with it in the end," and they thought the letter made them look like the good guys!

Imagine explaining to the police, "All I wanted to do was go into business with my friends. It was my friends' idea to rob banks. I told them that was wrong, but they said that's all they wanted to do. So, I told them that I wanted a cut, and even if they walked out of the bank empty handed, I wanted them to pay me some other way, and that's when I decided to drive the getaway car. Then they got caught, and when they ran out of the bank with you cops in pursuit, I refused to drive away until they turned to face you, so they killed one of you and injured many more, and then I drove away. So you see, I'm innocent. In fact, the way I see it, since they didn't get me my money, you should. But if you'll just admit I'm innocent, I'll be happy with a few token coins."