The Journal of History     Fall 2003     TABLE OF CONTENTS

Bechtel Falsifies the Facts on its Bolivia Disaster

by Jim Shultz
January 17, 2002

Here is the question. Can one of the world's most powerful corporations come to one of the world's poorest countries, do unconscionable damage, lie about it, and then get away with lying?

In December I sent an e-mail to Riley Bechtel, CEO and chairman of Bechtel Enterprises, calling on him to drop his company's $25 million legal action against the people of Bolivia. More than 100 other Democracy Center readers also sent e-mails to Bechtel. This forced an official response from the company's public relations department, in which the company outright lied about the enormous price hikes it imposed on people here.

Not only that, Bechtel tried to peddle the same false information to my editors at Pacific News Service in an effort to block publication of an article I wrote on events here. Despite Bechtel's efforts, that article was syndicated nationwide and ran on January 14 in the Sacramento Bee.


Not only do we know Bechtel is lying, we can prove it and we have now posted that evidence on our web site available for all who wish to view it:

There you will find actual before-and-after copies of people's water bills, documenting Bechtel's increases. You will also find a full computer analysis of Bechtel's price hikes conducted by the current water company, as well as my letter to Bechtel, Bechtel's response and a host of other documents. Believe me, this is about 10 times more detail than anyone would ever want to know about water rates in Bolivia - but in the detail lies the proof that Bechtel is willing to lie to both press and public in order to avoid responsibility for what they did here.


Here's what you can do and it will take you about 30 seconds to do it (I timed it):

1) Highlight and copy the text below:

Dear Mr. Bechtel,

I am writing to express my strong objections to your company's legal actions against the Bolivian people. The Democracy Center has now documented for all to see how your company has falsified information about the water price hikes it imposed on poor families. If you and your company have any integrity in this matter you will drop your $25 million demand against Bolivia and instead issue an apology to the Bolivian people for the damage you have caused and the public for the misinformation you have spread.


2) Click on the address link below:

This will automatically open a message to Mr. Bechtel's personal e-mail, to his public relations department and will also send a copy to The Democracy Center. Paste the text above into your message, adding a subject line, your name and any other comments you'd like to make.


As the Enron debacle reminds us how willing some corporate leaders are to falsify facts in order to fatten their profits, here is a chance for us to hold one corporate leader directly and personally accountable, before the damage is done. Please do this now and please share this note with others who might be willing to do the same. Below is the full text of my own letter to Mr. Bechtel, being delivered to him by e-mail today as well.

Thank you,
Jim Shultz

The Democracy Center

Dear Mr. Bechtel,
In December, when I wrote to you concerning your company's legal actions against the people of Bolivia, I did so in good faith. I presumed you to be a gentleman of integrity who would be willing to engage those concerned in an honest discourse about the issues at hand. The response released on your behalf by your public relations department makes it clear that such is not the case. To the contrary, what is clear is that Bechtel Enterprises is hoping to deflect this matter with deliberately false and misleading statements about the facts at hand. To be clear, this is not a difference of interpretation. What Bechtel has done in this matter is provide both the public and the media with documentably false information.


Here is what Ms. Gail Apps, your spokeswoman, claimed as fact, on your behalf, in a statement issued on January 3, 2002:

"For the poorest people in Cochabamba rates went up little, barely 10 percent."

"Unfortunately, water bills sometimes went up a lot more than rates.

That's because as Aguas del Tunari improved service, increasing the hours of water service and the pressure at which it was delivered, people used a lot more water."

Enclosed you will find a detailed comparison analysis of water rates carried out by the current public water company, using the very same computer data that your company used to calculate its water rates and bills. You will also find annotated copies of actual water bills issued by your company at the start of 2000 which clearly show rate increases for the poorest families in Bolivia not of 10% but of 60% and in some cases much higher. In summary, this documentation demonstrates the following:

1) Based on the same identical rates of water consumption (not increases as you claim) your company raised rates for the very poorest families in Cochabamba, people living well-below minimum wage, by an average of, not 10%, but 43%. In the next category, families that are still poor, but perhaps earning a minimum wage, suffered rate increases of 40%. These are averages. In some cases the rates charged were even higher, much higher.

2) In clear examples, documented with the enclosed before-and-after water bills, these price hikes for individual families are made clear. Lucio Morales' household, classified among the very poorest in Cochabamba, had his water bill raised from $4.15 to $6.63, a jump of 60% and a total bill amounting to more than 10% of the monthly minimum wage at the time. This increase was based on no change in water consumption. An identical price hike by your company is shown for the Jose Aramayo household, another classified as among the city's poorest.

3) In direct conflict with your claims that the price hikes were the result of increased water use, enclosed are before-and-after water bills for the household of Mr. Saturnine Marin, in the category typical for families living at the minimum wage - less than $60 at the time. Your company raised his monthly rates from $14.75 to $21.96 (a leap of nearly 50%) even though his family's water consumption actually decreased by 18%.

4) According to a computer analysis using your company's own pricing data, your company's forced departure from Bolivia and the restoration of the prior water rates saved the residents of Cochabamba more than $3.4 million in 2001, money left in the pockets of the families that live here instead of paid out to your Bolivian water subsidiary.


Again, on your behalf, Ms. Apps seeks to mislead the press and public by minimizing Bechtel's ownership role in Aguas del Tunari:

"We cannot speak for the seven different owners of the Aguas del Tunari consortium."

Let us be clear then about the facts of Bechtel's shell game in this matter. From the inception of the Bolivian water company through this day, the controlling, majority stakeholder in the company (with 55% of all shares) has been International Waters Limited (IWL) of London. That company, as you well know, was formed in 1996, wholly owned by Bechtel.

During the time in which IWL was negotiating with the Bolivian government and in which it signed the contract to take over Cochabamba's water in September 1999, IWL was also wholly-owned by Bechtel. That means that Bechtel, not some other company, is responsible for the debacle the company instigated here. That means that you, not some other CEO, must bear responsibility for it. To be clear even further, even though Bechtel sold 50% of its interest in IWL after its takeover of water in Bolivia, your company still retains 50% ownership in IWL. Translated, that means that no other single company or investor has a larger stake, even now, in Aguas del Tunari than you do. Pretending to just be a small minority shareholder is just one more exercise in trying to avoid the responsibility that Bechtel must bear.

The additional claims made on your behalf have no more credibility. The widespread public protests that occurred here in Cochabamba in January to April 2000 - in which police killed one youth and injured hundreds of others to protect your contract - were not about coca growing or police salaries, as you claim. They were about your water rates. Bechtel's feigned concern for Bolivia's water problems is no less transparent. If
that concern were anything other than a cynical public relations ploy, Bechtel would not now be trying to squeeze from Bolivia's poor $25 million you never invested, never earned, and are not entitled to receive.

One of the most important ways in which individuals and corporations define their character is whether they tell the truth, and most especially whether they tell the truth when it is hard. Bechtel Enterprises, the company that bears your father's name, has failed that test and failed it gravely. Be assured that your company's willingness to falsify the facts in this matter will be shared appropriately with the International Center for Settlement of International Disputes (ICSID), the arbitration panel to which you have made your demand against the Bolivian people. If Bechtel Enterprises is willing to make such false claims in public, one can only wonder what it is willing to claim in a closed-door arbitration.

If integrity is of any value to you and your company, I strongly urge you to drop your legal action against the Bolivian people and to issue, not a demand for money, but an apology for the suffering and damage your company's presence has brought to the people and families who live here.

Jim Shultz

Executive Director
The Democracy Center
Cochabamba, Bolivia
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Editor's note: I highly recommend this Web site for honest information.

The Democracy Center gave written permission to reprint this article.


The Journal of History - Fall 2003 Copyright © 2003 by News Source, Inc.