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DEMOCRACY CENTER ON-LINE: BECHTEL VS. BOLIVIA

THE DEMOCRACY CENTER ON-LINE

"BECHTEL CORP. VS. BOLIVIA'S POOR"

Volume 41 - December 18, 2001

Dear Readers:

This holiday season many of us will once again see or read Charles Dickens' "A Christmas Carol" and the tale of that symbol of selfishness and greed - Scrooge. Below is the tale of a real-life, modern day Scrooge - Bechtel Enterprises. Most of you will remember that two years ago a Bechtel subsidiary took over control of the water system here in Cochabamba. The company doubled and tripled water rates for the poor and was finally forced to leave after a wave of protests that left a 17-year-old boy dead and hundreds of others injured. Well, the Scrooges at Bechtel are back for more. Last month the company initiated a $25 million legal action against the people of Bolivia for what it says are its losses from the Bolivian water revolt.

Below is a letter which I am sending today to Mr. Riley Bechtel, the company's chief owner and CEO. I hope you will read it and pass it along. If you feel moved to let Mr. Bechtel (and his public relations department) know how you feel about the corporation's latest action against the poor of Bolivia, you can send him a quick note yourself at (just click on the link below):

mailto:[email protected],[email protected]

Please also "cc" us at: [email protected]

Happy holidays to all!

Jim Shultz The Democracy Center

An Open Letter To Mr. Riley Bechtel CEO, Bechtel Enterprises

Dear Mr. Bechtel,

Having heard from your public relations department I have decided to write to you directly, from Cochabamba, Bolivia, a city you know well. It was here two years ago that a Bechtel subsidiary took over the public water system and, within weeks, doubled and tripled water rates for some of the poorest families in South America. Your company ordered mothers living on minimum wage of $60 per month to pay $15 or more just to keep water running out of the tap. Faced, quite literally, with a choice between water or food, people took to the streets to demand that rates be lowered. Your company refused. The Bolivian government sent soldiers into the streets to defend your contract. A 17 year old, Victor Hugo Daza, was shot in the face and killed. More than a hundred others were seriously wounded. I was there. I saw it happen.

In the end, in April 2000, your company left. It had to. The protests and the government's violent response wouldn't end until you were gone. Your subordinates didn't leave empty handed. They took the hard drives from the computers, the cash left in the company's accounts, and sensitive personnel files from before their time. They also left behind an unpaid electric bill for $90,000. Now your company says it wants more. Last month you filed a demand of $25 million against the Bolivian people. Your lawyers are claiming as losses the millions of dollars in potential profits you had hoped to make and weren't allowed to.

I understand that, overlooking the glorious San Francisco Bay from your Beale Street headquarters, you have a different perspective. Your company paid lawyers some large, undisclosed sum to set up a company in the Cayman Islands and then to represent you in a behind-closed-doors, one-bidder competition. You then paid some water managers from England to come here and run things. They served you more poorly than you can imagine, creating a social crisis so severe that your company was forced to leave. Now Bechtel and its affiliates want cash.

Imagine, if you will, how the situation appears to the Bolivians who experienced it directly. Your company came here, charged people rates they could never afford and which your company knew in advance would create just the sort of violent convulsions that it did. As one of your associates euphemistically said to me in a letter, "a rapid increase [in water prices] would be difficult socially." When asked reasonably to lower rates, your company refused. When those rates sent the entire city into a violent crisis, your managers hid out in a five star hotel, content to let soldiers fire live rounds at those protesting your presence here. Now, after all the death, harm and suffering it has already caused here, Bechtel has the arrogance to add on to that a claim of financial damages against these same people.

Few here doubt that Bechtel is capable, through legal trickery and firepower, of squeezing millions of dollars out of the Bolivian treasury. Once again, you will sit down behind closed doors with Bolivian government officials, this time in a World Bank-sponsored arbitration. The government here has budgeted $50,000 to hire U.S. lawyers to represent them, probably not quite what you have at your disposal. The Bolivian President, desperate to look friendly to foreign investment, will be eager to write your company a check and bring things to an end. Your losses, however you may calculate them, are numbers on a ledger. Mrs. Daza's loss is buried in a cemetery. No one will be representing her in your arbitrations.

For Bechtel, with revenues of more than $14 billion annually, $25 million is what you take in before lunch on any given workday. What does your legal action mean for the people of Bolivia, for the families that already suffered so deeply once because of Bechtel's involvement in their lives? Here in Bolivia $25 million is the annual cost to hire 3,000 rural doctors, 12,000 public school teachers, or hooking up 125,000 families who don't have access to the public water system. Which of these are you suggesting Bolivia should do without in order to pay you?

Your public relations department denies Bechtel responsibility in this matter, claiming that you are only a minority shareholder in the subsidiary that did business here. That is convenient. The whole company is owned by minority shareholders. Bechtel, however, is the largest among them. Surely, one of the most important lessons that we, as parents, try to teach our children is about taking responsibility for our actions. Corporations should be held to no less a standard. If the buck does not stop with you Mr. Bechtel, the head of the corporation with the largest stake, then who is responsible?

So, you have a choice. You can direct your public relations staff to make glib statements about fairness, while your lawyers take aim at Bolivia's poor, or you can do something extraordinary. You can decide that the Bechtel has already done enough damage here and you can rescind your demand and your legal action. You could even do so on condition that the Bolivian government agrees to dedicate that $25 million to directly serving the poor. From out my window, Mr. Bechtel, I see the old man who has been bent over building a new street curb all week. He couldn't afford to pay your water rates and now he and his children can't afford to pay your demand for compensation. Your corporate mission statement declares Bechtel's commitment to work with communities, "to help improve the standard of living and the quality of life." In Bolivia, by any definition imaginable, Bechtel has failed that standard miserably. The decision is yours as to whether to repeat that mistake again.

Sincerely,

Jim Shultz Cochabamba, Bolivia

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