Bechtel vs. Bolivia: The Democracy Center’s Response to Riley Bechtel

In December, 2001 The Democracy Center, and more than 100 others from throughout the world, wrote to Bechtel Enterprises CEO, Riley Bechtel, calling on the company to drop its $25 million legal demand against the people of Bolivia. In late December and early January, Mr. Bechtel responded with a statement from his public relations department. That statement, among other things, asserted that the water rate hikes for the poor were no more than 10%, that the company had no responsibility for the price hikes, and that the civil unrest that resulted in Bechtel’s departure had to do with illegal coca production, not water rates. Below is the response to that statement sent to Riley Bechtel by The Democracy Center.

AN OPEN LETTER TO MR. RILEY BECHTEL
CHAIRMAN AND CEO
BECHTEL ENTERPRISES
SAN FRANCISCO, CALIFORNIA

January 16, 2001

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 mater 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.

On The Price Hikes Imposed by Bechtel’s Affiliate – Aguas Del Tunari

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. Saturnino Marin, in the category typical for families living at the minimum wage – less that $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 saved 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.

On Bechtel’s Ownership of Aguas del Tunari

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 wiling 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.

Sincerely,

Jim Shultz
Executive Director
The Democracy Center
Cochabamba, Bolivia

Bechtel vs. Bolivia
The Democracy Center’s Letter to Riley Bechtel
Riley Bechtel’s Response
The Democracy Center’s Response To Riley Bechtel
Cochabamba’s Water Bills From Bechtel
Bechtel’s Legal Action Against Bolivia
The Bolivian Water Revolt