And Dow’s response:
We have sympathy for the plight of those who were victims of the Bhopal tragedy and the fact that the site has not been cleaned up. I think we would all agree that these issues need to be addressed. The solution to this problem, however, rests in the hands of the Indian central and state governments and recent media reports indicate that they are working to get the site cleaned up. As there are those who wish to unfairly attach liability to Dow for the Bhopal issue, we are not in a position to contribute to these efforts. Dow has a fiduciary responsibility to its employees, retirees and shareholders to not take on liability risks that are not ours to bear. That said, Dow and its subsidiaries’ commitment to the communities in which we operate is significant.
I’ve provided information below that addresses the specific question of liability raised by Mr. Edwards:
Liability was settled by Union Carbide Corporation in 1989 and they have no outstanding liability for Bhopal Union Carbide Corporation and the former Union Carbide India Limited (now Eveready Industries India Limited) settled their liabilities regarding the Bhopal tragedy with the Indian government in 1989 and this settlement was upheld by the Indian Supreme Court in 1991.
Union Carbide Corporation stopped doing business in India in 1994—with the permission of the Government of India, it sold its interest in Union Carbide India Limited in 1994 and the proceeds were used to build a state-of-the-art hospital in Bhopal to treat victims of the tragedy (a bit of history here—after UCC sold its interest in Union Carbide India Limited, the new owner renamed the company Eveready Industries India Limited. Eveready was doing some remediation at the Bhopal plant when the State Government of Madhya Pradesh revoked the lease of Everyeady and took ownership of the plant site in 1998.
The site was then, and is now, under the ownership of the state government of Madhya Pradesh. As I noted earlier, this has been the case since 1998 and for whatever reason most of us do not know or fully understand, the site remains unremediated. As owners of the site, the Madhya Pradesh government is the entity that has the ability and, more importantly, the authority to ensure that the plant site gets cleaned up. And they are trying to clean up the site. Recent media reports in India indicate that the State Government is, in fact, attempting to implement their remediation plan—see Times of India article attached at end of email. Please also see Union Carbide’s web site on Bhopal for full details of the sale of UCIL).
Union Carbide Corporation remains a separate company. It has its own board of directors, its own financial reporting, its own manufacturing facilities and its own employees. And, more importantly, UCC manages its own liabilities.
Dow did not inherit nor does it manage Union Carbide Corporation’s liabilities. UCC manages its own liabilities and reports these to the U.S. Securities and Exchange Commission. You will not that there is no mention of Bhopal in Union Carbide Corporation’s report to the SEC. This is because Union Carbide settled this liability with the Government of India in 1989.
To recap: The Dow Chemical Company is not a successor-in-interest to Union Carbide Corporation. Successor-in-interest is a legal term. One legal precondition to Dow becoming a successor-in-interest is that Union Carbide would no longer exist as a separate corporation. However, UCC does exist as a separate corporation and I have provide a link to their most recent 10Q report.
I have also attached for you the link to The Dow Chemical Company’s position on Bhopal found on dow.com. This link will also attach to Union Carbide Corporations’ Web site regarding the Bhopal tragedy and I would encourage you to visit that as well.
Scot Wheeler, Spokesman, Dow Chemical Company
Sheesh.
Whatever the legal responsibilities, the moral blame attached to the Indian government for forbidding Carbide to import safety equipment.
I don't know why this is supposed to be news in 2008, but if you hotshots are going to re-report old news, at least look at the old news.
Posted by Harry Eagar on Tue 26 Aug 2008 at 01:27 PM
Re. Harry Eagar - not sure where you get your info from Harry, but the Indian goverment never prevented Union Carbide from importing anything for its Bhopal plant. I have copies of Exim Bank documents from the 1970's that prove Carbide both specified and exported the grossly under-designed safety systems that were found so wanting in Bhopal on December 2nd-3rd 1984. The only contribution from Indian government agencies was to sign technology transfer agreements with Carbide that specified the US company's responsibility for all safety and maintenance issues at its Bhopal plant. It could be no other way, as no company, organisation or individuals in India had any prior experience of working with Carbide's ultra-hazardous MIC technology.
In fact, a Union Carbide management committee meeting on - eerily - Dec 2nd, 1973, involving the the senior most executives of the company, ratified a deliberate underinvestment in these critical safety systems. The reason? A larger investment would have resulted in Carbide losing its majority share of stock in its Indian subsidiary (due to Indian investment regulations of the time that caused Coca Cola and IBM to pull out of India altogether) and with it would have gone overarching managerial control. In other words, Carbide saved money on Bhopal's safety systems in order to retain absolute control: when these inadequate safety systems allowed Tank 610 to turn Bhopal into a gas chamber, Carbide said they'd had no control.
As for how newsworthy this story is, why don't you put that criticism to the New York Times, Time Magazine and Business Week, who have each given coverage of this epic, unresolved crime in recent weeks.
Posted by Tim Edwards on Tue 26 Aug 2008 at 04:09 PM
Well, gee, I guess I'd say that if the government told me I couldn't put a smoke alarm in my house unless I gave them the house, I'd call that prohibitive.
Posted by Harry Eagar on Tue 26 Aug 2008 at 04:29 PM
Dow continues to trot out the same rationalizations for allowing Bhopal's children to be poisoned daily, slowly killed by cancer and crippling birth defects. Explain to them that responsibilities to shareholders are more important than their very lives. Poor poor ever profitable Dow. There is no legal justification for this behavior. More on Dow's current product and legacy issues at www.truthaboutdow.org
Posted by Aquene on Tue 26 Aug 2008 at 04:49 PM
I'm genuinely interested in hearing an elaboration of this opaque metaphor, Harry. In turn, I'll gladly point you to the damning, primary source documents I'm referring to.
Posted by Tim Edwards on Tue 26 Aug 2008 at 04:49 PM
Opaque? What part of confiscation don't you get?
The government of India set the rules. Carbide decided, unwisely, to play by them. If the GoI had thought safety equipment was important, there were lots of ways to make sure it was there. Just getting out of the way would have done it.
More people die on the Indian National Railways each year for lack of elementary industrial safety equipment than died or ever will die as a result of the sabotage of the Carbide plant. Why aren't the Times etc. writing about that?
Posted by Harry Eagar on Tue 26 Aug 2008 at 08:01 PM
Harry, if Carbiders (and you seem to be one) claim that the dastardly Indian government went to the trouble of confiscating safety equipment from the Bhopal plant, then why on earth wasn't this used as a defence by Carbide during civil proceedings? Did the Indian government stop Carbide installing a crucial Vent Gas Scrubber (VGS), for example? Or confiscate it?
Apparently not. Rather, Union Carbide Corporation (UCC) installed one of a size not up to the job. This chief safety system in Bhopal was designed to take a feed rate of 190 pounds per hour, with a maximum pressure of 15 psig. When the disaster ensued, MIC poured through the VGS at 40,000 pounds per hour, with an average pressure of 180 psig. By contrast, the emergency VGS at the Institute, West Virginia sister plant, with a capacity of 60,000 pounds per hour, could have neutralized the escaping gases. How did the Indian government force Carbide to cut this particular corner?
The answer is of course that they didn't. The legislative environment in India (1974 Foreign Equity Regulation Act - FERA) certainly caused Carbide to reconsider its investment in Bhopal, because each injection of capital was subject to regulations. Under FERA, UCC had to reduce its share in Union Carbide India (UCIL) to no more than 40%. High technology inputs at Bhopal were enough to gain UCC some exemptions, but they were insufficient to prevent its stake dropping below 50%. To keep its majority share, therefore, UCC would have to "reduce the amount of investment... to $20.6 million", with the cuts "mainly on the Sevin project". To achieve the cuts, as I said earlier a UCC management committee ratified a plan to send inferior, unproven technology to Bhopal.
The result was underdesigned safety systems, not up to the job of preventing a disaster that was foreseen through at least two different safety audits, one in Bhopal and one in West Virginia. As I said before, I have the documents that prove Carbide specified them and exported them.
In the 1980's, installing safety devices could cost between 15-30 % of outlay at a plant's inception. In respect of UCC's $20 million investment, this amounts to between $3 & $6 million. Thanks to the documents linked above, we know that UCC saved $8 million simply in order to retain managerial control of UCIL.
Why would Carbide take such risks with an ultra-hazardous plant? Because it was Carbide's corporate policy to keep managerial control of all its subsidiaries, and this was only possible through retention of 51% or more equity. Through management control, UCC was able to extract dividends, royalties and service fees from its subsidiaries. UCC's control extended over UCIL's board, budgets, marketing plans and the proprietary MIC technology in Bhopal. Technical control – realized through keeping the technology proprietary – extended over plant design, build, safety, training and operational practices.
Finally – and leaving aside the lack of evidence for your allegation - you contradict yourself. Your argument implicitly accepts that the quality of safety systems in Bhopal was a determining factor in the disaster. You then toss in the thoroughly discredited 'sabotage theory', which itself makes the question of safety systems redundant. On top of that, you suggest that the volume of deaths in Bhopal was anyway not out of the ordinary in India by making an (unsupported) comparison with Indian railways mortality rates. Given that you're trying to establish that the Indian government /and/or a single worker caused the disaster I wonder why you then have any interest in trying to downplay its magnitude. It reeks of desperation. Not only that, it's specious – would you downplay the deaths from September 11 by referring to annual US road death statistics?
Posted by Tim Edwards on Wed 27 Aug 2008 at 03:10 AM
The two links I tagged above didn't carry, so here they are again:
Carbide's reduced investment
Installation of unproven technology in Bhopal
Posted by Tim Edwards on Wed 27 Aug 2008 at 03:16 AM
I am not downplaying the impact, merely pointing out that the GoI has a record of not caring whether safety equipment is installed or not.
If the GoI had wanted safety equipment installed, I can think of at least 10 ways to have done it without requiring Carbide to let itself be robbed. From your own posts, it is obvious that the deal for the GoI was to extort ownership of the plant, at the expense, if necessary, of any number of its own citizens.
Carbide was willing to install better equipment, as proven by the fact that it did in the US, where it was not subject to losing its property for doing so.
Carbide managers were fools, they should have taken the colonialist route like the other companies and refused to play the game. Instead, the company chose to cooperate on equal terms with indigenous governments. That was considered progressive policy in those days.
But it appears I was naive. You really don't understand property, do you?
Posted by Harry Eagar on Thu 28 Aug 2008 at 12:54 AM
Thanks for doing the digging. I also noticed how the Times reporter treated Bhopal like some ancient dispute, along the lines of the Dome of the Rock. It's more like Agent Orange, of course, though without a U.S. veterans' constituency to push the issue and force deeper reporting.
Posted by Chris Lombardi on Fri 29 Aug 2008 at 05:37 PM
Thank you, Tim Edwards. (Some of the links still don't work though.*) The Indian railways might not be entirely safe (they do, however, provide cheap and affordable transportation for millions of Indians across the country every single day): that is no argument -- or analogy -- to condone Carbide's proven criminal negligence.
*Note from CJR webmaster: The links in both the above comments which were broken have been fixed.
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