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Chemical Disaster- Cases of Bhopal(India) and Jilin (China)

Ever since the long awaited judgment in the Bhopal chemical disaster case was delivered on June 8, there was not a single newspaper, national or international, which had not reported the case without anger or disgust. It happened on that fateful night of 2 December 1984 and more than a quarter century had to pass before a court in India could convict persons found responsible for the crime. All of them are Indian managers of the plant at the time of it blew up. Sadly, the punishment is so light and disproportionate to the magnitude of the crime, it is difficult for an average person to decide whether to cry or laugh. Not that he is not aware of the long and tortuous route which the case had to traverse over the years through the dark alleys and potholes of the judicial system and how, due to the lackadaisical manner in which the governments (Centre and State) and the prosecuting agencies (CBI especially) handled the litigation, it got morphed, weakened and began to resemble a mere traffic offence! It was truly anti-climax or a non-event considering the long years taken to finalise it. Never in history have we witnessed or likely to witness another case like this. If Guinness record writers have any conscience, they may decide to leave it out of their Book. Words cannot capture the magnitude of the disaster that struck Bhopal on that the night. One author described it as “the Hiroshima of chemical industry.” A report of an International Medical Commission released in December 1986 said it was “a tragic model of an industrially induced epidemic.” Government figures estimated the immediate toll at 3500 within three days of the leak, but independent data suggest more deaths. The Indian Council of Medical Research (ICMR) said that up to 1994, 25000 people also died from the consequences of gas exposure. ICMR’s report was not published by the GOI for some years. Social activists and NGOs say that many continue to suffer. TV screens continue to portray pathetic sights of afflicted children and paralysed adults. The area around the Bhopal Plant continues to resemble a discarded graveyard. The Centre for Science and Environment (CSE) reported on June 7, 2010 (http://www.cseIndia.org – Bhopal: toxic legacy) that for over 25 years the impoverished residents of Bhopal have been silently suffering the consequences of contamination caused by a ruthless, money making multi national pesticide company. “CSE’s investigation revealed the extent of contamination in the vicinity of location of the world’s largest industrial site was unparalleled. Everything from heavy metals to pesticides were detected in soil and ground water samples at the time in very high concentration.” The Bhopal tragedy had stirred the global conscience in a manner for which there is no parallel. Hours later it struck, hundreds of ‘ambulance chasers’ from the U.S. descended on Delhi and Bhopal. In keeping with the U.S. legal tradition, they were keen to litigate and settle compensation for the victims and, in that process, fork out their whopping share as fees. Unfortunately, they had to leave soon in despair. Along side, there were global conferences and seminars on corporate responsibility for mass industrial disasters. Some of them were financed by Union Carbide indirectly! Once litigation had commenced, initially in the U.S. courts, these academics made a retreat. In later years, the initiative for issues relating to pollution, environmental damage, etc would be taken up by civil activists and this was in the coming decade when environmental issues moved to the centre stage. In the early years after the tragedy, there would be long processions and demonstrations in many parts of the world and, with the passage of time, even this interest had waned. There are still hard core activities both in Bhopal and abroad who pursue the public cause with dedication and determination. Gradually, even they could wither away. The death masks the processionists wear may flutter on poles for some more time. In a world ruled by and for multinational corporations, justice may the native of rocks. To commemorate its 25th Anniversary on 3rd December 2009, Los Angeles Times wrote, “Anguish lingers in Bhopal, 25 years after chemical disaster.” It reported the anger of the Bhopal residents with their own government, which settled with the rich foreigners for what they say was a ridiculously low sum and has failed to care for its people. “We drink poison every day, even as our government keeps promising us clean water,” said one victim. Prime Minister Man Mohan Singh issued a statement that day describing Bhopal as a tragedy that “still gnaws at our collective conscience” and he vowed continued efforts to tackle the issues of drinking water and site decontamination. CSE did not find evidence in its latest report referred to earlier! Initially, the government of India decided to agitate the matter in U.S. courts and it gave rise to issues relating to ‘jurisdiction’, that is whether it should be heard in the US or Indian courts. Issues relating to ‘forum of convenience’ were argued before Justice Keenan. Ultimately, the case was remitted back to India. It may be shocking to recall the arguments advanced by some of our own senior advocates explaining to U.S. judges how Indian courts were unsuited for the purpose! Indian Law Institute has covered the case in a valuable compilation. (Inconvenient Forum and Convenient Catastrophe: The Bhopal Case, N.M. Tripathy Pvt. Ltd., 1986.) In a way, it was early and the world was still grappling with the new era of multinational growth and issues governing corporate liability and accountability for mass disasters. Corporate responsibility for environment protection and pollution avoidance was also in emerging modes. Against this background, issues governing ‘jurisdiction’ had become alibis for evading responsibility, especially in the absence of a globally binding code of conduct for multinationals. The International Bar Association (IBA) dealt with these legal issues in a learned article by Adrienne Margolis. (http://www.ibanet.org/Article/Details.aspex?ArtilcleUid=6c239cc2-bcc8-479f-a5bb-o52073c0) As the author explains, “The problems often arise because multinational corporations operate seamlessly across national boundaries, without sufficiently strong regulations to ensure that they respect human rights. There are many examples of the same multinational operating sensitively in one country while violating human rights in another.” When it comes to litigation, companies tend to use their financial power to over-litigate which is why cases can take a very long time. Finally, “When victims seek redress, they often fail to get anywhere in local courts, but discover that the head office abroad is a separate entity. This problem – the ‘corporate veil’ – means strong evidence is needed to hold a parent company liable.” In short, there are too many grey areas and all the issues have not been resolved. However, pressure for spread of multinational corporations is stepped by advanced countries, especially the U.S. and with suggestions that strong regulatory measures would disincentivise foreign investment. The case of Union Carbide is one such and reveals the bind corner in which the Indian government found itself. Truly, as L.A. Times explained, “Over the years, “Bhopal” has become shorthand for corporate irresponsibility, fuelling debates over multinational morality, the environment and codes of conduct.” These are the issues which we wish to analyse in this piece, particularly with reference to the relationship between Union Carbide of U.S.A. and Union Carbide India Limited (UCIL). A side show is Dow Chemical Company which acquired Union Carbide, USA, in February 2001. Within hours after the delivery of the judgment, Dow Chemical issues a statement that it had sold its entire stake in UCIL in 1994 and the company was renamed Eveready Industries. “All the appropriate people from UCIL have appeared to face charges. Union Car5bide and its officials were not part of this case since the charges were decided long ago into a separate case.” It goes on, “Furthermore, Union Carbide and its officials are not subject to the jurisdiction of the Indian court as they did not have any involvement in the operation of the plant which was owned and operated by UCIL.” There is nothing new in the latest disclaimer from the U.S. Company. It has been its standard refrain dating back to the first day of the tragedy. In its earliest press release by Union Carbide (www.unioncarbide.com/bhopal) it made this claim: “The Bhopal plant was owned and operated by Union Carbide India Limited (UCIL), an Indian company. The other stockholders included Indian financial institutions and thousands of private investors in India. The plant was designed, built and managed by UCIL, using Indian consultants and workers.” The company would also elaborate how UCIL was sold to another Indian company and “as a result of their sale of shares in UCIL, Union Carbide retained no interest in … or liability for .. the Bhopal site.” Dow Chemical would also chip in and maintain, “While Dow has no responsibility for Bhopal, we have never forgotten the tragic event and have helped to drive global industry performance improvements.” Never was such an insult added to any injury! The plea all along has been that UCIL was an autonomous entity that had freedom of operation and that Union Carbide Corporation (UCC) had no responsibility over it, and thus not accountable or liable for any misdemeanour of subsidiaries. This is indeed the fig leaf which all multinationals wear when they meet with legal problems in host countries. It is the essence of multinational corporation operations that there should be central control and direction. It is claimed that this is necessary to protect the proprietary nature of high value technology which they develop. The degree of control may vary in individual cases. In the case of UCC, the manner and extent of control over subsidiaries was detailed in 1300 pages of UCC’s Corporate Policy Manual. As Amnesty International commented, UCC’s “attempt to absolve itself of any responsibility for running UCIL is at odds with its Corporate Charter.” In the affidavits filed by the GOI before the US District Court, New York, these arguments were challenged with adequate documentation. These documents are included in the Indian Law Institute’s publication earlier referred to. In its affidavits, the GOI drew attention to UCC”s Corporate Policy Manual, which explicitly said, “Except for certain situations, it is the General Policy of the Corporation to secure and maintain effective management control of an affiliate. Normally this is accomplished through ownership of 100 per cent affiliate equity where this is consistent with laws, policies and customs of the host country.” Unfortunately for UCC, it had to wage a long battle with the Government of India to retain UCIL as its subsidiary, i.e. with 51 per cent equity holding. This became a statutory obligation with the framing of the new Foreign Exchange Regulation Act (FERA) in 1973. The new FERA contained stringent restrictions over foreign ownership of Indian companies and sought to regulate the non-resident holding with reference to the technology contributed by the parent company. Companies with higher levels of technology were allowed even up to 74 per cent equity and those at the lower ends were required to reduce their holding to 40 per cent. Some engage in very low priority areas were advised to wind up their operations. We get back to the FERA battle in a later part of this piece. Added to the FERA ghost, were its own internal (in house!) struggles among various departments over finance, technology, scale, marketing, exports, etc. Though UCIL had obtained the approval of the government to establish the methyl isocynate (MIC) based project in 1972 for the manufacture of SEVIN, it was apparent that UCIL and its parent had to face several problems connected with its establishment in India. SEVIN was considered to be a pesticide of great value and one involving high technology and required to boost the green revolution. UCIL was under constant pressure from Indian officials to speed up the setting of the project. UCIL needed assurances from UCC over the project design, safety, etc. It entered into separate technical services agreement with the parent company. There were doubts about the capacity planned and also the designs to keep huge quantities of MIC in storage. In their book (It was five past midnight in Bhopal, Dominique Pierre & Javier Moro, Full Circle, 2001) the authors refer to the advice of German engineers at Bayer with the caution “never risk keeping a single liter for more than ten minutes” and to UCC/UCIL planning for storage of several hundred litres! By the winter of 1978, when the project was half way through, there were worries about overruns and potential demand for pesticides in India, particularly for SEVIN. The feasibility of scaling down the plant was discussed in a meeting in New York. As the project had already reached an advanced stage, it was decided to go ahead with it. There were inter-department conflicts. The Ag Product Division was keen to continue with its exports to India as it had over capacity built in the U.S. plant. Both were over sized plants with under sized markets. Thus, export to India was ruled out and, in any case, it would eat into the global profits of UCC. A Bhopal Task Force was formed to deal with the problems. It had earlier refused permission to export to India. Other options such as making different carbaryl items were not found commercially attractive. The Sevin project could not be scraped for more strategic reasons. It became vital for survival in the FERA battle. UCIL had a non-resident equity of 60 per cent and under the FERA Guidelines initially laid down, it became eligible to retain 40 per cent non-resident equity. A provisional order was issued by the Reserve Bank of India on the decision of the FERA Advisory Committee. Such a holding would be contrary to its Corporate Policy and Manual! UCC mounted its pressures on the Indian government as also in Washington. It was known that UCC has its clout with the U.S. government as a generous campaign donor. In its Report, Amnesty referred to these efforts and said, “The Finance Plan, referring to negotiations with the government of India on the extent of equity, clearly reveals that UCC never intended to reduce its equity holding to less than what would give it controlling stake in UCIL” Ultimately, the Government of India succumbed to the pressures of companies such as UCIL and relaxed its guidelines – it was named “amplified guidelines!” Under the relaxed guidelines, UCIL was able to maintain its subsidiary status with UCC. SEVIN saved the days for the company as it was considered high technology status. The approval was given by the RBI on July 5, 1980. It was truly a long battle and worthy of celebration. Unfortunately for UCIL and UCC, it came late. In the intervening years, the company had lost the market for pesticides, Sevin in particular. Demand for Sevin did not pick up and stocks began to accumulate in Bhopal. UCC had neither studied the Indian market nor the psychology of the Indian farmer. Sevin may be efficacious in large U.S. farms, but not in small patches of land in India. Insects fleeing from farms treated with Sevin ravaged neighbouring untreated farms. The Indian farmer was unwilling to switch over to a hazardous pesticide. Moreover, the country faced sever drought and farming was substantially reduced. The Bhopal Plant became sick and seemed beyond redemption. Savage cost-cuts were imposed. Many studies done later clearly reveled that the unwise and imprudent steps taken by UCIL to cut on safety systems. Critical air-conditioning for MIC tanks was shut down. These are in many ways comparable to the cost cutting down by BP in its offshore operations in the Gulf of Mexico! Net result was that across the Bhopal plant, there were signs of neglect and indifference. As Lapierre and Moro describe, “Quite naturally there had come a point where people preferred card games in site canteens to tours of inspection around the dormant volcano.” Even if the hyperbole is discounted, it was known that UCIL was rudderless. By 1981 several instances of neglect leading to gas poisoning and deaths had come to notice. A special team sent from the U.S. drew pointed attention to several lapses and suggested rectification. The warnings of a local journalist, Mr. Keshwani, went unheeded. It was very poor satisfaction for him that he got a young journalist award months after the disaster. By October 1984, the possibility of dismantling the plant and shipping it to another developing country such as Brazil or Indonesia was considered and abandoned. One important factor which worked against the idea was that the MIC plant was so corroded that it would not be dismantled! A week before the tragedy, a decision was taken to sell the plan to a willing Indian buyer. Within days, the disaster struck. UCC blamed it on sabotage by Indian workers and stuck to the story for a long time. It was later that it began to wear the convenient corporate veil. The above factual narration establishes that at the time the disaster struck, UCIL was a subsidiary of UCC. UCC fought a royal battle to retain it as a subsidiary within in its fold. Its operations were manualised and controlled from headquarters. Every decision was taken by or with the approval of the parent company. It would be an act of irresponsibility to claim that UCIL was an Indian company and was operated by Indians and UCC had no role or responsibility. It was later, much later, that Dow took over UCC. Many analysts suggest that the intention behind this sale was, among other things, to pull more cloud over the responsibility of the original owner. It was playing on the weakness of successive Indian governments. The Guardian (8 June) puts it more carpingly when it said, “The difference between BP and Union Carbide is not just a matter of location of the disaster… It is down to the fact that successive national and state governments of India have rolled over time and time again to the realpolitik of dealing with Dow Chemicals’ other investments in India.” Given the statements already made by spokesmen from the U.S. on the extradition of Anderson or on the reopening of the case, there is nothing that seems possible now. One only hopes that if this tragedy and the shock its finale has created awaken us to work on newer laws on corporate responsibility and accountability, it would be a gain. World has to be ruled by men and not by or for corporates.

Remarks of Director, Chennai Centre for China Studies: It will not be out of place to make a quick comparison between the Bhopal tragedy in India and the one witnessed in Jilin in China in November 2005; a blast in a Chinese chemical plant spilled large amount of Benzene into Songhua river cutting water supply to Harbin city with 3.8 million population, for four days. At least five people in the affected areas were killed and more than 10000 residents had to be evacuated. Eruption of hepatitis and cancer was feared.Premier Wen Jiabao himself visited the areas;also , Beijing formally apologised to Moscow as the Russian border city of Khabarovsk came under threat.China promptly appointed an investigation committee to look into the causes and by December 2005, two top officials, the Director of the State Environmental Protection Administration, Xie Zhenhua and the Head of the Jilin branchof the China National Pteroleum corporation, Yu Li, were sacked for their lapses. Two points distingush the Bhopal and Jilin cases- Unlike in Bhopal, no multinational corporation was involved in the operation of Chinese plant at Jilin and under the Chinese system, no time was lost in punishing officials found responsible for the disaster.

(The writer of the article, Mr K.Subramanian, is a former Joint Secretary in the Ministry of Finance, Government of India, New Delhi.He is presently Associate of the Chennai Centre for China studies.Email: subrabhama@gmail.com).

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