Bechtel and Shultz
Bechtel and Shultz
As it had with Kearns, the Bechtel method of winning favours by doing favours would work many times during the course of the Nixon administration, and never with better results than in the case of the man who would eventually become the company’s president, George P Shultz.
In 1974, Shultz was the Secretary of Labour, and having a difficult time of it. The most irritating thorn embedded in Shultz’s flank, as well as that of the Nixon administration, at this time was George Meany, the ageing, irascible president of the AFL-CIO. He and the rest of the Nixon administration had been under constant attack from Meany since they had come to power.
The Bechtel family had been keeping a watchful and appreciative eye on Shultz since 1967 - Steve senior had found him to be deeply conservative, and entirely friendly with business. In addition, Bechtel was also heartened by the fact that Shultz was a very “clubbable” sort, with a suitably businesslike passion for martinis and golf. Steve junior also took a liking to him.
What impressed the Bechtel’s most was Shultz’s policies. Like Nixon and themselves, Shultz was a believer in the inviolability of US trade, which, he held “should not be turned on and off again like a light switch to induce changes in the domestic and foreign policies” of other governments. He was also a supporter of Bechtel’s on-going business dealings with the Soviet Union - and indeed, with virtually any nation where the company thought it could make a profit. Taken together, these considerations were good reason for the Bechtel Corporation to lend the struggling secretary a hand.
Steve junior arranged a meeting with Shultz and flew to Washington, bringing with him an executive who would be the key to solving Shultz’s problems. That was Bechtel’s vice-chairman and labour chief, John O’Connell.
John O’Connell was also a long-time friend of George Meany. They had become friends over the bitter strike at the Joppa, Illinois atomic-energy plant twenty years before and since then O’Connell had invited Meany to his encampment at the Bohemian Grove and spent time with him elsewhere on a social basis.
Meany, in turn, had introduced O’Connell to the whole of the US labour establishment, which thereafter seldom, if ever, quarrelled with Bechtel.
O’Connell arranged for a golf get-together with Meany and Shultz and several weeks’ later the two of them met again on a social basis and thrashed out their differences - in this way Shultz got a lot done and was extremely grateful. These meetings were to become a regular occurrence and greatly improved the relationship between the Nixon administration and the AFL-CIO.
Shultz eventually became Treasury secretary and played a leading role in the Nixon administration’s effort to unlock the Soviet Union to American trade. Though frustrated by Congress, Shultz’s efforts were appreciated by the Bechtel’s, with whom he developed an increasingly close personal friendship.
The Bechtel Corporation was continuing to thrive, thanks in no small part to the efforts of a key executive named Raphael Dorman. It was Dorman, for instance, who had “opened” India for Bechtel in the middle 1960’s; it was Dorman as well who had landed the $500 million Sonatrach contract for Bechtel and it was also Dorman who had persuaded Armand Hammer to give Bechtel its Libyan business. Then in May 1974, while on a business trip to the Soviet Union, Raphael Dorman suffered a fatal heart attack.
The grief the Bechtel’s felt over Dorman’s death was matched only by their anxiety over who would replace him. Steve junior and his father began considering outside candidates. What they required was someone with all of Dorman’s skills, along with his sophistication and grounding in economic and politics. Whoever the replacement would be, he would also have to mesh well into Bechtel’s inbred corporate culture. George Shultz, John O’Connell suggested, would be ideal for the slot. Aware that Shultz was eager to leave the collapsing Nixon administration, the Bechtel’s concurred. Induced by an offer of more than $400,000 a year, six times his government salary, and a stock-purchase plan that made him a millionaire several times over, Shultz promptly accepted. He became Bechtel’s executive president in May 1974.
The appointment was a total success. Shultz pronounced himself delighted to be at Bechtel and he fitted in perfectly. He was proving adept in handling the company’s overseas clients - for example, while Steve senior had helped smooth the way by introducing Shultz to old friends like Saudi Arabia’s King Faisal and Algeria’s Houari Boumédienne, it was Shultz himself who charmed them. Domestically the new recruit was having an excellent run too, thanks in part to the contacts Steve senior had provided. Through his intercession, Shultz was soon serving an array of prestigious corporate boards, including General Motors; Sears, Roebuck; Dillon, Read; Morgan Guaranty and SRI International. One area where Shultz needed no help was in Washington - he constantly kept in touch with the members of the new administration, including President Gerald Ford, whom he informally advised on economic matters.
Steve Bechtel junior came to increasingly admire Shultz. He invited Shultz to become a member of Mandalay, his personal lodge at the Bohemian Grove. Never before had such a gesture been made to any Bechtel employee, however long or devoted his service.
Along “Mahogany Row,” the Bechtel executive suite, the invitation, which Shultz immediately accepted, was read as a portent of bigger things soon to come. The estimation was correct. In May 1975, Steve junior proposed, and the company’s board of directors unanimously approved, Shultz’s appointment as president of the Bechtel Corporation, the most important of Bechtel’s three operating companies.
Only a year had passed since George Shultz, the outsider and former academic, had joined Bechtel. Now he was but one step away from the pinnacle of company power. It had been a dizzying rise, and in Washington, another cabinet member was about to attempt to match it.