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EASY PASS | PAST BIG DIG COVERAGE

Cerasoli charges Big Dig coverup

Hits Weld, Cellucci administrations

By Thomas C. Palmer Jr., Globe Staff, 03/21/2001

   
 THE SERIES

PART ONE
Bechtel's mistakes drive up cost overruns, and company profits.

Graphics
Bechtel's fee overruns
Map of major conflicts
History of the contract
Contract modifications
Cross section of roadway
Construction cost overruns


PART TWO
State officials overlook and excuse Bechtel's mistakes for a decade.

Graphic
Cost recoveries initiated


PART THREE
Powerfull allies help protect Bechtel and its bottom line.

 FOLLOW-UPS

This series has generated strong response from the state, the public, and Globe columnists.
More Globe coverage

 GLOBE DEFENSE OF SERIES

On Feb. 20, 2003, Bechtel/Parsons Brinckerhoff issued a document disputing the findings of the "Easy Pass" series. Globe editor Martin Baron responded with a defense of the Globe's reporting.
Read Bechtel's statement
Read the Globe's statement

 PHOTO GALLERY

Building a reputation
Bechtel has never shied away from big construction projects, but worldwide achievements are accompanied by controversy.
See past Bechtel projects

 FROM THE ARCHIVES

2001
Review cites flaws at Big Dig
Cerasoli charges Big Dig coverup
$1.4b overrun known in '99
Firm rejects call to offset costs
'99 memos warned of tunnel leaks

2002
Officials disclose more defects
Lawsuit raises Big Dig questions
State to reopen deal with Bechtel
Big Dig hires quality manager
US knew of hidden expenses
Big Dig overrun just plain big
SEC probers to target Big Dig
Big Dig review to target overruns
Turnpike, firm set deal on leak cost

2003
Contracts to be reviewed

 RELATED LINKS

Central Artery/Tunnel Project
www.bigdig.com

Bechtel
www.bechtel.com

Parsons Brinckerhoff
www.pbworld.com

State Inspector General reports
On the history of the Central Artery/Tunnel project's finances:
www.state.ma.us/ig/publ/cat01ex.htm
On the Central Artery/Tunnel project's attempts to recover money for mistakes:
www.state.ma.us/ig/publ/catcrex.htm

About "Scheme Z" bridge design
libraries.mit.edu/rotch/artery/

State oversight of the Big Dig
www.state.ma.us/catocc/

Mass. Turnpike Authority
www.massturnpike.com

The Artery Business Committee
www.arterybusiness.com

 ONLINE CHAT

On February 11, 2003, Globe reporter Raphael Lewis chatted with Boston.com readers about the Bechtel series.
Transcript of chat

 CONTACT THE GLOBE

Any tips? Let us know.
Phone: 617-929-3379
E-mail: bigdigtips@globe.com

 MORE BOSTON.COM COVERAGE


Beyond the Big Dig   What happens to the ribbon of land being created by the depression of the Central Artery? A joint effort between The Boston Globe, MIT, and WCVB-TV explores.
A special report


Progress updates on the Big Dig. Info
 


Shelley Murphy and Rick Klein of the Globe staff contributed to this article.

ig Dig managers in the William F. Weld and Paul Cellucci administrations knew in 1994 that the megaproject's price tag was heading for $14 billion and schemed to hide billions in costs from the public and bond investors, according to a report issued yesterday by state Inspector General Robert Cerasoli.

Managers of the Central Artery-Ted Williams Tunnel project used "a largely semantic series of exclusions, deductions, and accounting assumptions" to cover up $6 billion in cost overruns, according to the report.

And they did it with the assistance or complicity of local Federal Highway Administration officials and the state's private management consultant, Bechtel/Parsons Brinckerhoff, the report said.

Federal and state officials as well as Bechtel received the hard est criticism yet of their roles in the Big Dig's history of skyrocketing costs. And the problems may not be over.

"The current administration has yet to tell the full Big Dig story," Cerasoli wrote to state Treasurer Shannon P. O'Brien yesterday in a letter that summarized the report, "A History of Central Artery/Tunnel Project Finances 1994-2001."

He called for an independent federal investigation by Congress into the Federal Highway Administration's "role in downsizing the Big Dig cost estimate."

Meanwhile, US Secretary of Transportation Norman Y. Mineta last night ordered the department's inspector general, Kenneth Mead, to investigate Cerasoli's allegations.

The FBI and the Securities and Exchange Commission began investigations into management of the megaproject after a $1.4 billion overrun was disclosed early last year.

A spokesman for Cerasoli's office said the staff had spoken to officials of the SEC, but he would not provide details.

Although the FBI is looking at new allegations, sources familiar with last year's probe said investigators haven't uncovered anything that would likely lead to criminal charges.

However, in its most explosive finding, the yearlong investigation by the inspector general determined that Big Dig officials and the Weld and Cellucci administrations "submitted inaccurate bond disclosure documents for bond issues between 1996 and 1999, and not just the one in 1999 currently under SEC investigation."

Late in 1999, Big Dig officials discussed the pros and cons of telling O'Brien the truth. Both for political reasons and to avoid "brutal press scrutiny," according to memorandums outlining various strategies, they "opted not to disclose the overrun."

In a statement yesterday, O'Brien said, "What's most troubling to me . . . is that political considerations were allowed to override the timely disclosure of complete and accurate information."

Calling that "an egregious violation of the public trust," O'Brien said she would immediately schedule a meeting with project officials to see if further cost adjustments are needed.

Yesterday's report adds significant detail to what has been previously reported about internal Big Dig cost documents, which drastically differed from public statements being made by top Big Dig chief James J. Kerasiotes and his staff.

At the Big Dig, there were "official" cost estimates, prepared by consultants to meet a target set by state officials; a more candid monthly management report that was closely held; and a highly confidential "Armageddon" chart that detailed unacknowledged but expected cost increases.

The report says that Cellucci, who in 1994 was lieutenant governor and head of the administration's Big Dig Oversight Task Force, "likely knew" about the consultants' prediction that the cost would reach $14 billion.

The president of Bechtel Corp. and "a key senior partner" flew to Boston for a Dec. 1, 1994, meeting and disclosed directly to Weld that the consultants' forecast -- even then -- was about $14 billion, the report said.

Weld, in an interview with the Globe last summer, acknowledged that the meeting occurred, but he said then he could not recall what number Bechtel officials had given him.

Cellucci yesterday denied withholding information related to Big Dig cost overruns and said the report was vindictive, apparently a response to the governor's January proposal that the inspector general's office be eliminated.

"This being Massachusetts and Massachusetts politics, retaliation is probably what is at the basis of that report," Cellucci said. "Some of the stuff is just pure fiction."

Gregory W. Sullivan, who headed Cerasoli's investigation, fired back, saying, "They took steps to block access of key information, even going so far as to try to close this office."

Turnpike spokesman Joe Landolfi called the report's suggestion that information is being withheld "disingenuous. I don't think we could have been more candid."

While Kerasiotes, project director Patrick J. Moynihan, and others lost their jobs last spring after admitting to $1.4 billion in overruns on the project, Cerasoli's report is also highly critical of the roles played by the Federal Highway Administration and Bechtel/

Parsons in "a cooperative effort to maintain the fiction of an `on-time' and `on-budget' $8 billion project."

Because federal officials were aware of the state's misleading accounting procedures since 1995, Cerasoli argues, the US government's cap on Big Dig funds is unfair.

"Based on this review, this office concludes that the imposition of the federal funding cap for the Big Dig is unjustified and that the Federal Highway Administration should reinstate the Commonwealth's funding status for Big Dig expenses," Cerasoli said in the letter.

Following criticism of continually rising project costs since construction began late in 1991, the federal government capped its contribution at about $8.5 billion.

Cerasoli notes that "the Commonwealth's taxpayers and tollpayers will foot a bill for the remaining $9 billion . . . equivalent to $1,500 for each" of the state's 6 million residents.

Cerasoli's report said that the project, now officially at $14.075 billion, "will likely total more than $18 billion," but he includes in that figure almost $4 billion in interest on bonds that are not considered part of the bottom line.

In other details, the 52-page report said:

Consultant Bechtel/Parsons Brinckerhoff has "remained virtually immune from any criticism or blame for this crisis" but actively participated "in the promulgation of misleading reports to the state Legislature."

Despite Bechtel/Parsons' 1994 disclosure to Weld of the project's true cost, the Cerasoli report said, "In fact, documents reviewed by this office illustrate B/PB's efforts to develop and maintain the mechanisms used to obscure Big Dig costs."

The governor, the Turnpike Authority, and the state transportation office failed to conform to a 1997 state law that requires twice-a-year finance reports "that disclosed the true nature of project costs and project finances."

Big Dig files are said to be missing, computer hard drives destroyed, and "many documents continue to be shielded from the public by attorney-client privilege."

This story ran on page A1 in the Metro/Region section of the Boston Globe on 03/21/2001.
© Copyright 2002 Globe Newspaper Company.


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