For New Yorkers it felt like a flashback to Sept. 11. At 3:36 P.M. on Aug. 18, 2007, came a report that a skyscraper was burning about 150 feet from where the World Trade Center’s Twin Towers once stood. Thick black smoke was pouring out of the shell of what used to be the Deutsche Bank building. The structure had been badly damaged in the terrorist attack when portions of the collapsing south tower dug a 15-story gash and propelled toxic dust into it. Six years later the bank building was finally being taken down.
The fire quickly spread to 13 floors. The 100 firefighters inside the building couldn’t douse the flames because, as would become clear later, the basement standpipe that should have supplied water to the floors above had been disconnected. The scene was chaotic. Firefighters couldn’t see through the dense smoke and found their retreat blocked by a mazelike series of plywood walls and polyethylene sheeting that made it nearly impossible to locate exits. Panic was audible in the voices on the firefighters’ radios.
Eventually some 275 firemen used ropes to hoist hoses up the scaffolding on the building and tamed the seven-alarm conflagration around 10:30 that night, seven hours after the blaze began. But the struggle to extinguish the flames had cost two lives. Firefighters Robert Beddia, 53, and Joseph Graffagnino, 33, were found lying on the 14th floor near a hose line and pronounced dead at a local hospital. The cause: smoke inhalation.
The deaths of two firefighters near hallowed ground prompted rage among residents and in the media. The news that emerged – that the fire had apparently been caused by a worker’s cigarette and that a contractor had cut the standpipe – only stoked the fury and highlighted how unnecessary the deaths were. How could such a fire have occurred? More fundamentally, why was this wounded building still standing?
Six months later those questions remain a subject of bitter dispute. The Manhattan district attorney has convened a grand jury as part of a broad investigation that is probing negligence and possible kickbacks or other financial chicanery. In the meantime the often delayed deconstruction of the 40-story office tower has been stalled since August, and the structure, now 26 floors tall, stands boarded up, a macabre and depressing contrast to the building foundations that are finally beginning to rise out of the Ground Zero pit.
The story of the Deutsche Bank tower, gleaned from interviews with nearly 50 participants involved in every aspect of the process, is a tortured saga. It’s a monumental environmental, technical, and political challenge that overwhelmed the public and private mechanisms charged with resolving the building’s fate.
From a dispute between Deutsche Bank and its insurers, to battles between an overmatched agency assigned to revitalize lower Manhattan and environmental regulators, to the pressure from residents, to the brief presence of a Mob-connected contractor that was followed by a shadowy replacement with a name borrowed from an Ayn Rand novel, it’s been a miasma – a toxic project. It’s also a case study in what happens when good intentions collide with a paralyzing fear of making mistakes.
The paradoxes are endless. How did this project manage to be simultaneously hyper-scrutinized – with armies of regulators and monitors on the premises daily – and sloppy and out of control? And how is it that this skyscraper, the subject of tens of millions of dollars’ worth of environmental studies, is today described by some as a toxic nightmare and by others as only marginally contaminated? Then there’s this maddening bit of irony: Many of the calamities along the way were not only foreseeable but actually foreseen.
A Symbol of Survival
On a crisp recent March day the Deutsche Bank building, which has been largely dormant since last summer’s fire, buzzes with activity. Decontamination is about to resume, and the construction elevators on the front and back of the building are gliding up and down with workers carrying equipment. Hardhats with Starbucks cups
in hand stroll into the site past a sign that reads THIS JOB SITE WILL WORK INCIDENT AND INJURY FREE.
The area around Ground Zero is a deafening construction zone these days. Buildings are rising, streets are being repaved, and to most visitors the Deutsche Bank building is just an afterthought. At the Engine 10/Ladder 10 firehouse some 50 feet away, a guide with “9/11” embroidered on her baseball cap explains how the north tower fell as 20 tourists gawk at the pit.
One Bankers Trust Plaza, as the Deutsche Bank building was originally called, has always existed in the shadow of the World Trade Center – first literally, and then metaphorically. The skyscraper opened in 1974 (one year after the WTC), and its second-story plaza was connected by a bridge to the Trade Center’s elevated campus.
City planners feared the towers would disgorge so many people that they would gridlock the narrow streets of lower Manhattan. They dreamed up a system of second-story walkways in what was to be a redeveloped area just to the south. But then New York’s economy tanked, and the plan was abandoned.
The building’s wide base (it consumed two separate blocks) gave the structure a squat look, and the result was aesthetically uninspiring. Ada Louise Huxtable, then the New York Times architecture critic, damned the bank building with faint praise in a 1976 review. The skyscraper “achieves extraordinary levels of competence,” she wrote, calling it an edifice “that will never stir men’s souls, but will get their paperwork done.” When Deutsche Bank bought Bankers Trust for $9 billion in 1999, it acquired this very sensible structure in the bargain.
Then came 9/11. The attack on and subsequent fall of the Twin Towers not only killed some 2,800 people, but caused a chain reaction of devastation. Five other office and residential buildings were destroyed or so badly damaged that they had to be demolished soon after; another 56 structures were damaged. The towers fell so violently that the nearest seismographs, 21 miles north of the site, registered earthquakes of 2.1 and 2.3 on the Richter scale, respectively. The collapse unleashed tornado-force winds, estimated between 158 and 206 miles an hour, which shattered some 1,500 windows in the Deutsche Bank building.
Deutsche Bank declared the building unsalvageable. With a scary mix of contaminants like lead, mercury, dioxin, and asbestos exceeding safe levels. In some cases by thousands of times.
A 20,000-gallon diesel tank ignited in the basement and saturated the floor with toxic black goo. Finally, a section of facade from the World Trade Center, roughly the height of the Green Monster at Fenway Park, gouged through 15 floors of the Deutsche Bank building and effectively severed two of its structural columns. One bank employee died in the building, which had been almost completely evacuated when the towers collapsed, and a second perished in the Trade Center.
That the structure had survived struck some as miraculous. But could the building continue to stand? Engineers discovered that its construction, though not elegant, was exceptionally sturdy and could handle normal conditions. But they weren’t convinced it could survive strong winds. So the bank established an elaborate warning system. “We had electronic monitors set up in the building measuring movements,” says Jeffrey Smilow, an engineer whose firm, Cantor Seinuk, was hired by Deutsche Bank.
“We had this whole chain of communication and monitoring, people on call 24 hours a day.” There were a few tense moments during winter storms, but the building endured. In the press, the skyscraper was portrayed as a symbol of resilience. The Deutsche Bank building, it appeared, represented one speck of good news inside a horrible tragedy.
A Hazard to Human Health
Surviving was one thing. Reopening was another. Like other tenants in close proximity, Deutsche Bank was prohibited from, say, bringing workers to mount a major cleanup for two months after 9/11. The tower was simply too close to Ground Zero to allow actions that might interfere with the rescue and recovery operations. That meant that the World Trade Center dust, laden with everything from asbestos to mercury from the thousands of incinerated computers, simply sat, mixing with the rain that would occasionally blow in through the broken windows, for much of the fall. Toxic mold infested the structure.
By the end of 2002, Deutsche Bank decided the building was unsalvageable. After spending $33 million to test roughly 60,000 samples throughout the building, the bank’s experts, RJ Lee Group, concluded that, as a Deutsche Bank legal filing later put it, “a combination of contaminants known to be hazardous to human health, in quantities and concentrations unparalleled in any other building designed for office use, permeates the entire structure at levels which exceed by up to thousands of times the levels considered appropriate for Class A office buildings.”
The list was scary: asbestos, lead, mercury, dioxin, and other toxins. Even the mold, which Deutsche Bank had vanquished, reappeared.
Deutsche Bank demanded that its four insurers pay its total policy value of $1.7 billion. Two of them, Chubb
and Zurich, quickly settled, but two others, Allianz and AXA, resisted. Other buildings near Ground Zero had been cleaned and reoccupied. Why, they wondered, was the Deutsche Bank building beyond salvation? In August 2003, Deutsche Bank sued Allianz and AXA to force them to pay the full policy. The fate of the building now seemed destined to be yet another intractable fight disappearing into the maw of the courts.
Enter the Peacemaker
For Kevin Rampe, once an aide to New York’s former governor George Pataki, the Deutsche Bank building was becoming one of many headaches. Rampe had been appointed president of the Lower Manhattan Development Corp. (LMDC), an agency created by Pataki and former mayor Rudolph Giuliani to spearhead the rebuilding of Ground Zero.
By the fall of 2003 the entire World Trade Center redevelopment was stymied by political, emotional, and design conflicts over various redevelopment plans. There were, however, two points of agreement: Any buildings erected at Ground Zero would not be constructed on the footprint of the fallen towers, and space would be needed for a memorial. That made it natural to consider expanding the redevelopment site to include the Deutsche Bank space.
The perception of the building had shifted from inspiring survivor to derelict eyesore—a 40-story tombstone next to the grave at Ground Zero. And nobody wanted a protracted court fight to impede the rebuilding of lower Manhattan. So Rampe recruited former Senator George Mitchell, who had negotiated intractable conflicts such as the one in Northern Ireland (and is now perhaps best known as baseball’s steroid investigator), to mediate between Deutsche Bank and its insurers.
Sure enough, in February 2004, Mitchell announced a deal. The LMDC would buy the building for $90 million and assume responsibility for a $45 million contract to take it down. The insurers paid Deutsche Bank $140 million and agreed to cover 75% of any costs above the $45 million assumed by the LMDC. Politicians and planners sighed with relief. “This could’ve dragged on for years,” Pataki said at the press conference that day. “If it had ended up in the normal court process, we could be standing here three, four years from now with that painful reminder still over our shoulders. We knew that couldn’t happen.”
What had been a private failure was about to become a public liability. Meanwhile, on paper at least, the arrangement has proved to be lucrative for Deutsche Bank. Fortune’s review of six years of SEC filings, including a footnote in one dated March 27, 2007, shows that Deutsche Bank “received aggregated payments from the four insurers and the [LMDC] totaling U.S. $1 billion” for its damaged building (and one much smaller satellite office behind it).
The bank paid out massive costs for “write-offs of fixed assets, expenses incurred to replace fixed assets that were damaged, relocation expenses, and expenses incurred to secure and maintain the damaged properties.” But the final tally resulted in a total “benefit” of 215 million euros from 2004 to 2006.
Translated into dollars at the prevailing exchange rates, Deutsche Bank booked a gain of more than $250 million. “The notion that Deutsche Bank profited in any way from the tragic events of 9/11 is grossly inaccurate,” says a Deutsche Bank spokesman. He says that the footnotes are a partial accounting “covering the direct effects on our balance sheet. The footnotes do not reflect the very substantial non-balance-sheet losses sustained by the bank, such as forgone revenue and additional leased premises.”
‘No One Is in Charge’
Deutsche Bank and its insurers receded from the stage in the summer of 2004, but they left one final delay behind: The insurers agreed to cover their share of costs only if the charges stemmed from legally mandated procedures to remove 9/11 contaminants. That meant the LMDC, which officially took possession of the building from Deutsche Bank on Aug. 31, 2004, had to launch a whole new study to determine the building’s toxicity.
The report found that the ubiquitous dust in the structure contained elevated levels of asbestos. That was only the beginning: 99% of the dioxin samples taken exceeded EPA levels that would mandate a residential cleanup, as did 97% of the lead samples.
The news scared local residents. Indeed, the political climate had shifted dramatically in lower Manhattan. In the urgent days after 9/11, the authorities were willing to forgo certain regulations. There was no time, for example, to put contracts out to bid for the demolition companies that spent months removing debris from Ground Zero. But if people had been willing to err on the side of expediency shortly after the attack, by 2004 the opposite was true.
The government unintentionally contributed to that feeling. The federal Environmental Protection Agency had made what became infamous statements; in particular, its Sept. 18, 2001, press release assured residents that “the air is safe to breathe” in lower Manhattan. As the veracity of that statement became increasingly dubious, the EPA was flayed by countless critics. By the summer of 2004 the EPA had lost the trust of many New Yorkers, especially those who lived near Ground Zero.
A director of ONE firm picked to demolish the building was said to have ties to the Gambino crime family. Then the authorities chose a company named for an Ayn Rand character.
But for all the resentment toward the EPA, people were even more afraid of seeing a contaminated building come down near their homes without strong government oversight. So they pushed the EPA to play a lead role. The local congressman, Jerrold Nadler, and a long list of community groups lobbied in every way they could. The campaign succeeded – and then some.
The EPA signed on, along with eight other regulatory agencies from the city, state, and federal governments. Together they jumped right into the fray, greeting the LMDC’s plan to decontaminate and demolish the building with 23 pages of comments and criticisms. The plan, the EPA wrote in January 2005, didn’t ensure against a “significant potential for releases of contamination.”
Residents reacted even more harshly, and some of their ominous words would prove prescient. “LMDC is in over their heads,” said Kimberly Flynn of activist group 9/11 Environmental Action at a public forum with the LMDC in January 2005. “The demolition is staggeringly complex and risk-ridden. Responsibility and accountability are currently diffuse, distributed across the patchwork of contractors and subcontractors and a list of regulators. Everyone is in charge, and no one is in charge.”
Joel Kupferman, who heads the New York Environmental Law and Justice Project and was serving as environmental counsel to New York’s firefighters union, also warned of danger, particularly to the firefighters in the Engine 10/Ladder 10 firehouse across the street from the building. “It’s the firefighters and the ambulance people that have to go in and pull people out if there are accidents,” Kupferman said at the January 2005 forum. The LMDC, he charged, was keeping them in the dark. The firemen are “really, really scared… to enter that building.”
Who Is John Galt?
In fairness, the cleanup and demolition was a daunting project, especially for a government entity with no construction experience. “We were a planning agency,” says Rampe, the LMDC president at the time. “This really didn’t fall into our mission statement.” But with Deutsche Bank, the insurers, and other government agencies backing away, the LMDC volunteered to tackle the myriad obstacles.
For starters, the proximity of other structures meant the building would have to be taken apart piece by piece – “deconstructed” – rather than demolished or imploded. But that was simple compared with the cleanup. There are established protocols for removing asbestos in, say, pipe insulation. But how to remove the World Trade Center dust, laden with contaminants that had been blown into the walls, the elevator shafts, and the innards of the heating system, was quite another matter. It was something that neither the LMDC and the contractors nor the EPA knew much about.
Not surprisingly, the process bogged down again. The first half of 2005 slipped by as the LMDC selected a new contractor for what was clearly going to be a more demanding mission than originally conceived. In August 2005, LMDC announced that Bovis Lend Lease, the U.S. subsidiary of the Australian property company Lend Lease, would lead the project. Bovis was no stranger to Ground Zero. It was one of four construction managers that oversaw the speedy dismantling of the colossal pile of debris.
Soon after, a bizarre drama began to unfold. Bovis wanted to hire Safeway Environmental, a New York operation with experience in asbestos demolition, as its main subcontractor. It seemed a logical choice: The LMDC had already hired the firm to do asbestos-related preparatory work on the building.
But a construction accident in July of 2005 brought intense scrutiny to Safeway, which was already under a monitoring agreement with the city’s Department of Investigation (DOI). The terms required, among other things, that Safeway sever ties to a former owner who was a convicted felon.
Safeway was later banned from city contracts for failing to abide by its agreement with the DOI, including the fact that the former owner was still a director and had been fingered in the trial of John Gotti Jr. as “an associate” of former Gambino family hit man Salvatore “Sammy the Bull” Gravano. (A lawyer for Safeway declined to be interviewed.)
The DOI advised against hiring Safeway and suggested several alternatives. Finally, early in 2006, Bovis chose an unknown entity called John Galt Corp. Beyond the oddness of its name – John Galt is the protagonist in the Ayn Rand novel Atlas Shrugged – the company was little more than a shell. It did, however, have as two of its key figures executives who had until that moment worked for Safeway. And Galt would be leasing Safeway’s construction equipment. To the DOI, Galt appeared to be Safeway in new clothing. (Greg Blinn, Galt’s president, declined to be interviewed, as did a lawyer for the company.)
But according to Bovis, Galt was the only bidder that fulfilled all qualifications, so Galt was in. The choice rankled residents, who marched in front of the LMDC in May 2006 carrying placards that read NO MOB ON THE JOB and WHO IS JOHN GALT? (the latter quoting the opening words of Atlas Shrugged).
Meanwhile, tensions escalated between the regulators and the regulated. “It was like they were just talking past each other,” says one source who represented a government entity other than the EPA. “To say it was antagonistic would be an understatement.”
The EPA had approved the LMDC’s deconstruction plan in the fall of 2005, but now the two sides traded accusations. The “LMDC is now planning a deconstruction which apparently has significant differences since our review and acceptance of LMDC’s abatement plan last September,” the EPA wrote to the agency in March 2006.
If anything, the Galt and Bovis team was more incensed than the EPA. In their view, the regulators weren’t being clear about what they wanted. The contractors viewed the regulators as white-gloved butlers, ignorant of construction realities, scrutinizing every corner for stray dust specks and treating a demolition site as if it were a clean room in a microchip-manufacturing facility.
The contractors were charged with cleaning all the World Trade Center dust from the building. But how do you define “clean”? The regulators insisted that the structure be completely free of dust. The contractors countered that there is no such thing as no dust when you are demolishing a 30-year-old building.
Finally, the sides compromised on a so-called dime standard: A floor would be deemed acceptable as long as no spot of dust larger than a dime remained. But even that definition didn’t solve the conflict, and time after time workers would be sent back to clean some more and win the regulators’ blessing – sometimes despite the fact that air-testing revealed no dangerous levels of contaminants. Each time, as many as 50 workers on a floor, all of them in double-layer Tyvek suits with respirators, were deployed with toothbrushes and pipe cleaners to scrape away at every exposed inch of bolt, pipe, or conduit.
While the regulators and the LMDC battled largely behind the scenes, unnerving accidents were occurring. At least twice, panes of glass fell from the tower, and in March 2006 a worker was injured after falling 40 feet.
In April 2006 came new trauma: The entire project had to be halted when pieces of human bones were discovered on the roof. A handful of fragments had been found before. But a comprehensive search had never occurred. Now a team descended on the site in full Hazmat gear to comb through the dust for remains of 9/11 victims. By the fall, 784 bone fragments had been removed from the building.
Start and Stop
In September 2006 the country marked the five-year anniversary of the 9/11 tragedy. But the deconstruction of the Deutsche Bank building still hadn’t begun. That month regulators approved a “revised implementation plan,” and the full-fledged decontamination work finally got underway. But no sooner was the good news announced than yet another problem cropped up. Because of the stringent decontamination procedures (or perhaps because Galt had submitted an artificially low bid to win the job), Galt had to deploy many more workers than it had anticipated.
That meant Galt’s original fee – $60 million – wouldn’t come close to covering the necessary man-hours. The company would go bankrupt, its president warned, unless the fee was increased.
As the fall of 2006 progressed, the dispute intensified into a crisis. Officials from the LMDC, Bovis, Galt, the city, and the state shuttled into and out of meetings for weeks. To no avail: In December some 180 of the 200 Galt workers simply walked off the job.
The warnings about Galt had long been forgotten, according to three people involved in the negotiations. Galt was viewed as doing a good job, they say, and officials were loath to let the company bow out.
Once again, high-ranking officials were brought in: In January 2007, New York City mayor Michael Bloomberg and the state’s then-new (and now former) governor, Eliot Spitzer, convened a meeting to hammer out an accord with the contractors. The resulting deal essentially deferred the argument till later: The LMDC agreed to raise Galt’s compensation by $10 million, with the proviso that it could negotiate or sue at the end of the project to “recapture” any portion that it challenged.
Regulators insisted that the building be completely free of dust. Contractors countered that there’s no such thing as no dust when you are demolishing a 30-year-old building.
Galt returned to the job early in 2007 and the speed of work picked up. On March 19, 2007, the quest to bring the building down reached a milestone: Workers began disassembling the 40th floor. During the next four months, Galt removed 13 more.
But accidents continued to occur. One of the most menacing came on May 17, when a 15-foot length of pipe fell from the 35th floor, plunged through the roof of the adjacent firehouse, and mildly injured two firefighters. The accident triggered a new round of bad press. That mishap and others caused the issuance of dozens of violations against the contractors. Of course, with multiple regulators combing the site every day, it wasn’t entirely surprising that problems would be detected. New York’s Department of Buildings, just to cite one example, had one or more inspectors on the premises every single day.
The stream of violations – particularly for the fallen pipe – seemed like warnings. But the LMDC didn’t appear to be troubled. Avi Schick, who was named chairman of the LMDC in April 2007, was pleased enough with the progress that he gave a tour of the building to a reporter from the New York Times in mid-August. The article was published one day before the blaze that killed two firefighters.
Let the Recriminations Begin
In the days after the fire, a frenzied assignment of blame erupted. Every participant was fair game. Schick, a former Spitzer prosecutor best known for leading the case against onetime New York Stock Exchange chief Dick Grasso, jumped right in. “It’s likely that the very measures that were insisted upon by the EPA to protect those on the outside had a less than salutary effect when the fire started,” Schick told the Times, referring to the plastic sheets and “negative air pressure” used to seal each floor and prevent contaminated air from escaping. “And the firefighters paid the ultimate price.”
Soon after (on the heels of yet another accident), Galt was fired. Even as Bovis cut the firm loose, it took a shot at the regulators. As a Bovis executive wrote in Galt’s termination letter, “this has been a difficult project due to inordinate regulatory interference…”
It fell to Schick, who is not noted for his diplomatic finesse, to satisfy the new concern with fire safety while still placating the environmental and other regulators. Air-testing after the blaze had revealed no contaminants. (As he puts it today, “There’ve been 20,000 tests of the air since the fire. Everything is always negative, always below the target and trigger levels of EPA.”)
Schick floated a trial balloon: Perhaps it would be worth testing the level of contaminants to determine whether a less demanding cleanup method might work? Depending on your point of view, that meant either a more rational, streamlined process (if you’re the LMDC or a contractor), or an attempt to loosen the rules and raise the chances of a toxic emission (if you’re a regulator or resident).
The EPA’s response was an unequivocal and absolute “no.” The LMDC’s proposal to “implement a new sampling plan to gather new data… and to revisit abatement procedures” is “unacceptable to EPA,” the agency’s top local official wrote on Aug. 29.
Eventually realizing that the EPA wasn’t going to back down, Schick began working with a total of 13 different regulators and government agencies through the fall and emerged with an approved new plan in early February. The result won plaudits even from some of the activists. It includes all sorts of fire protections and a change long pushed by local residents: Decontamination and deconstruction will no longer occur at the same time.
A new subcontractor has been hired, and this time it’s a well-regarded company: LVI Services, which worked on the cleanup of the Pentagon after 9/11. The Deutsche Bank building is now scheduled to be demolished by the end of 2008, a date that should be viewed with skepticism given the failure to meet virtually every other major deadline in the effort to retire it.
If the LMDC manages to meet this new target date, it will still have missed the Sept. 1 deadline for the site to be turned over to J.P. Morgan Chase
, which plans to construct a new tower there. If the delay runs more than one year, Morgan has the right to opt out of the deal. (The construction of a planned underground vehicle-security center at the site is also on hold until the demolition is complete.)
Eventually the Deutsche Bank building will come down and be replaced by a new skyscraper. By then it will have cost taxpayers at least $164 million, and probably more. And the process will echo through the legal system for years to come. Indictments seem likely, if for no other reason than that prosecutors have been working on the case for six months (and counting) and will be loath to wrap it up without charging anyone.
See also: Features on 9/11—Here’s How Much Lower Manhattan Has Changed Since the 9/11 Attacks (2016)
Investigators are examining countless aspects, including who was responsible for the severed standpipe. “But even broader,” says a source familiar with the investigation, “is how we got ourselves into this situation in the first place. What was John Galt doing on the job? Who is John Galt? How did they get the contract? Are there any irregularities in that?” Meanwhile, families of the dead firefighters have already filed suits, Galt has sued Bovis for payment of its full contract, and the chances of litigation between the LMDC and Bovis seem high.
To alter an old phrase, the building saga will play out first as tragedy and then as litigation. The civil and criminal cases will expose many new details – and perhaps some surprises – along the way. But the search for culpability may well arrive at the same conclusion as the search for leadership on the project: Everyone was responsible, and no one was responsible.
Research associates Doris Burke and Susan M. Kaufman contributed to this article.
A version of this article appears in the March 31, 2008 issue of Fortune.