Q 17Q 17
Bhopal, India: A Tragedy of Massive Proportions
We are citizens of the world. The tragedy of our times is that we do not know this.
Woodrow T Wilson (1856-1924),
28th president of the United States
At five past midnight on December 3, 1984, 40 tons of the chemical methyl isocynate (MIC), a toxic gas, started to leak out of a pesticide tank at the Union Carbide plant in Bhopal, India. The leak was first detected by workers about 11:30 p.m. on December 2, 1984, when their eyes began to tear and burn. According to AcuSafe, 1 "in 1991 the official Indian government panel charged with tabulating deaths and injuries counted more than 3,800 dead and approximately 11,000 with disabilities." However, estimates now range as high as 8,000 killed in the first three days and over 120,000 injured. 2 There were 4,000 deaths officially recorded by the government, although 13,000 death claims were filed with the government, according to a United Nations report, and hundreds of thousands more claim injury as a result of the disaster. 3 On June 7, 2010, an Indian court convicted eight former senior employees of Union Carbide's Indian subsidiary to two years in jail each for causing "death by negligence" over their part in the Bhopal gas tragedy in which an estimated 15,000 people died more than 25 years ago. While the actual numbers may be debatable, there can be no doubt that the Bhopal incident raises a variety of interesting ethical questions, including:
• Did the company knowingly sacrifice safety at the Bhopal plant?
• Did the Indian government properly oversee the functioning of the plant consistent with its regulatory authority?
• Did the company react quickly enough to avoid sustained health problems to those injured by the leak of toxic fumes?
• In the aftermath of the disaster, were the disclosures made by Union Carbide sufficiently transparent to enable a concerned public to understand the causes of the leak and the steps that the company was taking to address all the issues?
• Did the company and the Indian government reach a fair resolution of the thousands of claims filed by Indian citizens?
• Is "business risk" a valid basis on which to make business decisions?
You make up your own mind as you read about the tragedy that is Bhopal.
In the Beginning
On May 4, 1980, the first factory exported from the West to make pesticides using MIC began production in Bhopal, India. The company planned to export the chemicals from the United States to make the pesticide Sevin. The new CEO of Union Carbide came over from the United States especially for the occasion. 4
As you might expect, the company seemed very concerned about safety issues. "Carbide's manifesto set down certain truths, the first being that 'all accidents are avoidable provided the measures necessary to avoid them are defined and implemented.'" The company's slogan was "Good safety and good accident prevention practices are good business."
The Union Carbide plant in Bhopal was equipped with an alarm system with a siren that was supposed to be set off whenever the "duty supervisor in the control room" sensed even the slightest indication that a possible fire might be developing "or the smallest emission of toxic gas." The "alarm system was intended to warn the crews working on the factory site." Even though thousands of people lived in the nearby bustees (shantytowns), "none of the loudspeakers pointed outward" in their direction. Still, they could hear the sirens coming from the plant. The siren went off so frequently that it seemed as though the population became used to it and weren't completely aware that one death and several accidental poisonings had occurred before the night of December 2, and there was a "mysterious fire in the alpha-naphtol unit."
In May 1982, three engineers from Union Carbide came to Bhopal to evaluate the plant and confirm that everything was operating according to company standards. However, the investigators identified more than 60 violations of operational and safety regulations. An Indian reporter managed to obtain a copy of the report that noted "shoddy workmanship," warped equipment, corroded circuitry, "the absence of automatic sprinklers in the MIC and phosgene production zones," a lack of pressure gauges, and numerous other violations. The severest criticism was in the area of personnel. There was "an alarming turnover of inadequately trained staff, unsatisfactory instruction methods, and a lack of rigor in maintenance reports."
The reporter wrote three articles proclaiming the unsafe plant. The third article was titled "If You Refuse to Understand, You Will Be Reduced to Dust." Nothing seemed to matter in the end because the population was assured by Union Carbide and government representatives that no one need be concerned because the phosgene produced at the plant was not a toxic gas.
The accident occurred when a large volume of water entered the MIC storage tanks and triggered a violent chain reaction. Normally, water and MIC were kept separate, but on the night of December 2, "metal barriers known as slip blinds were not inserted and the cleaning water passed directly into the MIC tanks." It is possible that additional water entered the tanks later on in the attempts to control the reaction. Shortly after the introduction of water, "temperatures and pressures in the tanks increased to the point of explosion."
The report of consultants that reviewed the facts surrounding the accident indicates that workers made a variety of attempts to save the plant, including: 5
• They tried to turn on the plant refrigeration system to cool down the environment and slow the reaction, but the system had been drained of coolant weeks before and never refilled as a cost-saving measure.
• They tried to route expanding gases to a neighboring tank, but the tank's pressure gauge was broken, indicating that the tank was full when it was really empty.
• They tried other measures that didn't work due to inadequate or broken equipment.
• They tried to spray water on the gases and have them settle to the ground, but it was too late as the chemical reaction was nearly completed.
The Workers and Their Reaction
It was reported that the maintenance workers did not flush out the pipes after the factory's production of MIC stopped on December 2. This was important because the pipes carried the liquid MIC produced by the plant's reactors to the tanks. The highly corrosive MIC leaves chemical deposits on the lining of the tanks that can eventually get into the storage tanks and contaminate the MIC. Was it laziness, as suggested by one worker?
Another worker pointed out that the production supervisor of the plant left strict instructions to flush the pipes, but it was late at night and neither worker really wanted to do it. Still, they followed the instructions for the washing operation, but the supervisor had omitted the crucial step to place solid metal discs at the end of each pipe to ensure hermetically sealed tanks.
The cleansing operation began when one worker connected a hosepipe to a drain cock on the pipework and turned on the tap. After a short time, it was clear to the worker that the injected water was not coming out of two of the four drain cocks. The worker called the supervisor, who walked over to the plant and instructed the worker to clean the filters in the two clogged drain cocks and turn the water back on. They did that, but the water did not flow out of one drain. After informing the supervisor, who said to just keep the water flowing, the worker left for the night. It would now be up to the night shift to turn off the tap.
The attitude of the workers as they started the night shift was not good as Union Carbide had started to cut back on production and lay off workers. They wondered if they might be next. The culture of safety that Union Carbide tried to build up was largely gone, as the workers typically handled toxic substances without protective gear. The temperature readings in the tanks were made less frequently, and it was rare when anyone checked the welding on the pipework in the middle of the night.
Even though the pressure gauge on one of the tanks increased beyond the "permitted maximum working pressure," the supervisor ignored warnings coming from the control room because he was under the impression that Union Carbide had built the tanks with special steel and walls thick enough to resist even greater pressures. Still, the duty head of the control room and another worker went to look directly at the pressure gauge attached to the three tanks. They confirmed the excessive pressure in one tank.
The duty head climbed to the top of that tank, examined the metal casing carefully, and sensed the stirring action. The pressure inside was increasing quickly, leading to a popping sound "like champagne corks." Some of the gas then escaped, and a brownish cloud appeared. The workers returned to where the pipes had been cleaned and turned off the water tap. They smelled the powerful gas emissions, and they heard the fizzing, which sounded as if someone was blowing into an empty bottle. One worker had a cool enough head to sound the general alarm, but it was too late for most of the workers and many of those living in the shantytowns below the plant.
The Political Response
Union Carbide sent a team to investigate the catastrophe, but the Indian government had seized all records and denied the investigators access to the plant and the eyewitnesses. The government of the state of Madhya Pradesh (where the plant was located) tried to place the blame squarely on the shoulders of Union Carbide. It sued the company for damages on behalf of the victims. The ruling Congress Party was facing national parliamentary elections three weeks after the accident, and it "stood to lose heavily if its partners in the state government were seen to be implicated, or did not deal firmly with Union Carbide." 6
The government thwarted early efforts by Union Carbide to provide relief to the victims to block its attempt to gain the goodwill of the public. The strategy worked: the Congress Party won both the state legislative assembly and the national parliament seats from Madhya Pradesh by large margins.
The economic impact of a disaster like the one that happened in Bhopal is staggering. The $25 million Union Carbide plant in Bhopal was shut down immediately after the accident, and 650 permanent jobs were lost. The loss of human life means a loss of future earning power and economic production. The thousands of accident victims had to be treated and in many cases rehabilitated. The closure of the plant had peripheral effects on local businesses and the population of Bhopal. It is estimated that "two mass evacuations disrupted commercial activities for several weeks, with resulting business losses of $8 to $65 million."
In the year after the accident, the government paid compensation of about $800 per fatality to relatives of the dead persons. About $100 apiece was awarded to 20,000 victims. Beginning in March 1991, new relief payments were made to all victims who lived in affected areas, and a total of $260 million was disbursed. Overall, Union Carbide agreed to pay $470 million to the residents of Bhopal. By the end of October 2003, according to the Bhopal Gas Tragedy Relief and Rehabilitation Department, compensation had been awarded to 554,895 people for injuries received and 15,310 survivors of those killed. The average amount that families of the dead received was $2,200.
Union Carbide's Response
Shortly after the gas release, Union Carbide launched what it called "an aggressive effort to identify the cause." According to the company, the results of an independent investigation conducted by the engineering consulting firm Arthur D. Little were that "the gas leak could only have been caused by deliberate sabotage. Someone purposely put water in the gas storage tank, causing a massive chemical reaction. Process safety systems had been put in place that would have kept the water from entering the tank by accident." 7
A 1993 report prepared by Jackson B. Browning, the retired vice president of Health, Safety, and Environmental Programs at Union Carbide Corporation, stated that he didn't find out about the accident until 2:30 a.m. on December 3. He claims to have been told that "no plant employees had been injured, but there were fatalities-possibly eight or twelve-in the nearby community."
A meeting was called at the company's headquarters in Danbury, Connecticut, for 6 a.m. The chair of the board of directors of Union Carbide, Warren M. Anderson, had received the news while returning from a business trip to Washington, DC. He had a "bad cold and a fever," so Anderson stayed at home and designated Browning as his "media stand-in" until Anderson could return to the office. 8
At the first press conference called for 1:00 p.m. on December 3, the company acknowledged that a disaster had occurred at its plant in Bhopal. The company reported that it was sending "medical and technical experts to aid the people of Bhopal, to help dispose of the remaining [MIC] at the plant and to investigate the cause of the tragedy." Notably, Union Carbide halted production at its only other MIC plant in West Virginia, and it stated its intention "to convert existing supplies into less volatile compounds."
Anderson traveled to India and offered aid of $1 million and the Indian subsidiary of Union Carbide pledged the Indian equivalent of $840,000. Within a few months, the company offered an additional $5 million in aid that was rejected by the Indian government. The money was then turned over to the Indian Red Cross and used for relief efforts.
The company continued to offer relief aid with "no strings attached." However, the Indian government rejected the overtures, and it didn't help the company to go through third parties. Union Carbide believed that the volatile political situation in India-Prime Minister Indira Gandhi had just been assassinated in October-hindered its relief efforts, especially after the election of Rajiv Gandhi shortly after the assassination on a government reform platform. It appeared to the company that Union Carbide was to be made an example of as an exploiter of Indian natural resources, and it suspected that the Indian government may have wanted to "gain access to Union Carbide's financial resources."
Union Carbide had a contingency plan for emergencies, but it didn't cover the "unthinkable." The company felt compelled to show its "commitment to employee and community safety and specifically, to reaffirm the safety measures in place at their operation." Anderson went to West Virginia to meet with the employees in early February 1985. At that meeting, as "a measure of the personal concern and compassion of Union Carbide employees," the workers established a "Carbide Employees Bhopal Relief Fund and collected more than $100,000 to aid the tragedy's victims." 9
Analysis of Union Carbide's Bhopal Problems
Documents uncovered in litigation 10 and obtained by the Environmental Working Group of the Chemical Industry Archives, an organization that investigates chemical company claims of product safety, indicate that Union Carbide "cut corners and employed untested technologies when building the Bhopal Plant." The company went ahead with the unproven design even though it posed a "danger of polluting subsurface water supplies in the Bhopal area." The following is an excerpt from a document numbered UCC 04206 and included in the Environmental Working Group Report on Bhopal, India. 11 It also reveals the indifferent attitude of the Indian government toward environmental safety.
"The systems described have received provisional endorsement by the Public Health Engineering Office of the State of Madhya Pradesh in Bhopal. At present, there are no state or central government laws and/or regulations for environmental protection, though enactment is expected in the near future. It is not expected that this will require any design modifications."
"The comparative risk of poor performance and of consequent need for further investment to correct it is considerably higher in the [Union Carbide-India] operation than it would be had proven technology been followed throughout... the MIC-to-Sevin process, as developed by Union Carbide, has had only a limited trial run. Furthermore, while similar waste streams have been handled elsewhere, this particular combination of materials to be disposed of is new and, accordingly, affords further chance for difficulty. In short, it can be expected that there will be interruptions in operations and delays in reaching capacity or product quality that might have been avoided by adoption of proven technology.
[Union Carbide-India] finds the business risk in the proposed mode of operation acceptable, however, in view of the desired long-term objectives of minimum capital and foreign exchange expenditures. SO long as [Union Carbide-India] is diligent in pursuing solutions, it is their feeling that any shortfalls can be mitigated by imports. Union Carbide concurs."
As previously mentioned, there were one death and several accidental poisonings at the Bhopal plant before December 3, 1984. The International Environmental Law Research Center prepared a Bhopal Date Line showing that the death occurred on December 25, 1981, when a worker was exposed to phosgene gas. On January 9, 1982, 25 workers were hospitalized as a result of another leak. On October 5, 1982, another leak from the plant led to the hospitalization of hundreds of residents. 12
It is worth noting that the workers had protested unsafe conditions after the January 9, 1982, leak, but their warning went unheeded. In March 1982, a leak from one of the solar evaporation ponds took place, and the Indian plant expressed its concern to Union Carbide headquarters. In May 1982, the company sent its U.S. experts to the Bhopal plant to conduct the audit previously mentioned.
Union Carbide's reaction to newspaper allegations that Union Carbide-India was running an unsafe operation was for the plant's works manager to write a denial of the charges as baseless. The company's next step was, to say the least, bewildering. It rewrote the safety manuals to permit switching off of the refrigeration unit and a shutdown of the vent gas scrubber when the plant was not in operation. The staffing at the MIC unit was reduced from 12 workers to 6. On November 29, 1984 three days before the disaster, Union Carbide completed a feasibility report and the company had decided to dismantle the plant and ship it to Indonesia or Brazil.
The Indian government has acknowledged that 521,262 persons, well over half the population of Bhopal at the time of the toxic leak, were "exposed" to the lethal gas. 13 In the immediate aftermath of the accident, most attention was devoted to medical recovery. The victims of the MIC leak suffered damage to lung tissue and respiratory functions. The lack of medical documentation affected relief efforts. The absence of baseline data made it difficult to identify specific medical consequences of MIC exposure and to develop appropriate medical treatment. Another problem was that malnourishment of the poor Indians affected by the tragedy added to the difficulty because they already suffered from many of the postexposure symptoms such as coughing, breathlessness, nausea, vomiting, chest pains, and poor sight. 14
In a paper on the Bhopal tragedy written by Pratima Ungarala, a student at Hindu University, he analyzed the Browning Report and characterized the company's response as one of public relations. He noted that the report identified the media and other interested parties such as customers, shareholders, suppliers, and other employees as the most important to pacify. Ungarala criticized this response for its lack of concern for the people of Bhopal and the Indian people in general. Instead, the corporation saw the urgency to assure the people of the United States that such an incident would not happen here. 15
Browning's main strategy to restore Union Carbide's image was to distance the company from the site of the disaster. He points out early in the document that Union Carbide had owned only 50.9 percent of the affiliate, Union Carbide India Ltd. He notes that all the employees in the company were Indians and that the last American employee had left two years before the leak.
The report contended that the company "did not have any hold over its Indian affiliate." This seems to be a contentious issue because while "many of the day-to-day details, such as staffing and maintenance, were left to Indian officials, the major decisions, such as the annual budget, had to be cleared with the American headquarters." In addition, according to both Indian and U.S. laws, a parent company (United Carbide in this case) holds full responsibility for any plants that it operates through subsidiaries and in which it has a majority stake. Ungarala concluded that Union Carbide was trying to avoid paying the $3 billion that India demanded as compensation and was looking to find a "scapegoat" to take the blame. 16
After the government of Madhya Pradesh took over the information Web site from Union Carbide, it began to keep track of applications for compensation. Between 1985 and 1997, over 1 million claims were filed for personal injury. In more than half of those cases, the claimant was awarded a monetary settlement. The total amount disbursed as of March 31, 2003, was about $345 million. 17 An additional $25 million was released through July 2004, at which time the Indian Supreme Court ordered the government to pay the victims and families of the dead the remaining $330 million in the compensation fund.
The inevitable lawsuits began in December 1984 and March 1984, when the government of India filed against Union Carbide-India and the United States, respectively. Union Carbide asked for the case filed in the Federal District Court of New York to be moved to India because that was where the accident had occurred and most of the evidence existed. The case went to the Bhopal District Court-the lowest-level court that could hear such a case. During the next four years, the case made "its way through the maze of legal bureaucracy" from the state high court up to the Supreme Court of India.
The legal disputes were over the amount of compensation and the exoneration of Union Carbide from future liabilities. The disputes were complicated by a lack of reliable information about the causes of the event and its consequences. The government of India had adopted the "Bhopal Gas Leak Disaster Ordinance-a law that appointed the government as sole representative of the victims." It was challenged by victim activists, who pointed out that the victims were not consulted about legal matters or settlement possibilities. The result was, in effect, to dissolve "the victims' identity as a constituency separate and differing from the government." 18
In 1989, India had another parliamentary election, and it seemed a politically opportune time to settle the case and win support from the voters. It had been five years since the accident and the victims were fed up with waiting. By that time, "hundreds of victims had died and thousands had moved out of the gas-affected neighborhoods." Even though the Indian government had taken Union Carbide to court asking for $3 billion, the company reached a settlement with the government in January 1989 for $470 million; the agreement gave Union Carbide immunity from future prosecution.
In October 1991, India's Supreme Court upheld the compensation settlement but cancelled Union Carbide's immunity from criminal prosecution. The money had been held in a court-administered account until 1992 while claims were sorted out. By early 1993, there were 630,000 claims filed, of which 350,000 had been substantiated on the basis of medical records. The numbers are larger than previously mentioned because the extent of health problems grew continuously after the accident and hundreds of victims continued to die. Despite challenges by victims and activists to the settlement with Union Carbide, at the beginning of 1993, the government of India began to distribute the $470 million, which had increased to $700 million as a result of interest earned on the funds. 19
What Happened to Union Carbide?
Not surprisingly, the lawsuits and bad publicity affected Union Carbide's stock price. Before the disaster, the company's stock traded between $50 and $58 a share. In the months immediately following the accident, it traded at $32 to $40. In the latter half of 1985, the GAF Corporation of New York made a hostile bid to take over Union Carbide. The ensuing battle and speculative stock trading ran up the stock price to $96, and it forced the company into financial restructuring.
The company's response was to fight back. It sold off its consumer products division and received more than $3.3 billion for the assets. It took on additional debt and used the funds from the sale and borrowing to repurchase 38.8 million of its shares to protect the company from further threats of a takeover.
The debt burden had accounted for 80 percent of the company's capitalization by 1986. At the end of 1991, the debt levels were still high-50 percent of capitalization. The company sold its Linde Gas Division for $2.4 billion, "leaving the company at less than half its pre-Bhopal size."
The Bhopal disaster "slowly but steadily sapped the financial strength of Union Carbide and adversely affected" employee morale and productivity. The company's inability to prove its sabotage claim affected its reputation. In 1994, Union Carbide sold its Indian subsidiary, which had operated the Bhopal plant, to an Indian battery manufacturer. It used $90 million from the sale to fund a charitable trust that would build a hospital to treat victims in Bhopal.
Two significant events occurred in 2001. First, the Bhopal Memorial Hospital and Research Centre opened its doors. Second, the Dow Chemical Company purchased Union Carbide for $10.3 billion in stock and debt, and Union Carbide became a subsidiary of Dow Chemical.
Subsequent to the initial settlement with Union Carbide, the Indian government took steps to right the wrong and its aftereffects caused by the failure of management and the systems at Union Carbide in Bhopal. On August 8, 2007, the Indian government announced that it would meet many of the demands of the survivors by taking legal action on the civil and criminal liabilities of Union Carbide and its new owner, Dow Chemical. The government established an "Empowered Commission" on Bhopal to address the health and welfare needs of the survivors, as well as environmental, social, economic, and medical rehabilitation.
On June 26, 2012, Dow Chemical Co. won dismissal of a lawsuit alleging polluted soil and water produced by its Union Carbide's chemical plant in Bhopal, India, injured area residents, one of at least two pending cases involving the facility known for the 1984 disaster that killed thousands.
U.S. District Judge John Keenan in Manhattan ruled that Union Carbide and its former chairman, Warren Anderson, weren't liable for environmental remediation or pollution- related claims made by residents near the plant, which had been owned and operated by a former Union Carbide unit in India.
1. Evaluate the actions of the workers and management of Union Carbide in this case from the perspectives of System 1 and System 2 thinking that was discussed in Chapter 2.
2. The document uncovered by the Environmental Working Group Report refers to the acceptable "business risk" in the Bhopal operation due to questions about the technology. Is it ethical for a company to use business risk as a measure of whether to go ahead with an operation that may have safety problems? How would you characterize such a thought process from the perspective of ethical reasoning?
3. Evaluate management decision making in the Bhopal case from a corporate governance perspective. Compare the decision-making process used by Union Carbide to deal with its disaster with that of Ford Motor Co. in the Pinto case and Johnson Johnson in the Tylenol incident as described in this chapter. How do you assess stakeholder responsibilities in each of these cases?
1 AcuSafe is an Internet resource for safety and risk management information that is a publication of AcuTech, a global leader in process safety and security risk management located in Houston, Texas; see www.acusafe.com/Incidents/Bhopal1984/incidentbhopal1984.htm.
2 According to CorpWatch, www.corpwatch.org/.
3 United Nations, United Nations University Report (UNU Report) on Toxic Gas Leak , www.unu.edu/unupress/unupbooks/uu21le/uu211eOc.htm.
4 Dominique LaPierre and Javier Moro, Five Past Midnight in Bhopal (New York: Warner Books, 2002).
5 Ron Graham, "FAQ on Failures: Union Carbide Bhopal," Barrett Engineering Consulting, www.tcnj.edu/rgraham/failures/UCBhopal.html.
6 United Nations, United Nations University Report (UNU Report)
7 After the leak, Union Carbide started a Web site, www.bhopal.com, to provide its side of the story and details about the tragedy. In 1998, the Indian state government of Madhya Pradesh took over the site.
8 Jackson B. Browning, The Browning Report , Union Carbide Corporation, 1993, www.bhopal.com/pdfs/browning.pdf.
9 The Browning Report , p. 8.
10 Bano et al. v. Union Carbide Corp Warren Anderson, 99cv11329 SDNY , filed on 11/15/99.
11 Environmental Working Group, Chemical Industry Archives , www.chemicalindustryarchives.org/dirtysecrets/bhopal/index.asp.
12 S. Muralidhar, "The Bhopal Date Line," International Environmental Law Research Centre, www.ielrc.org/content/n0409.htm.
14 Paul Shrivastava, "Long-Term Recovery from the Bhopal Crisis," The Long Road to Recovery: Community Responses to Industrial Disaster (New York: United Nations University, 1996).
15 Pratima Ungarala, Bhopal Gas Tragedy: An Analysis , Final Paper HU521/Dale Sullivan 5/19/98, www.hu.mtu.edu/hu_ept/tc@mtu/papers/bhopal.htm.
17 Madhya Pradesh Government, Bhopal Gas Tragedy Relief and Rehabilitation Department, www.mp.nic.in/bgtrrdmp/facts.htm.
18 Michael R. Reich, Toxic Politics: Responding to Chemical Disasters (Ithaca, NY: Cornell University Press, 1991).
19 United Nations Report.