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    Bhopal Gas Tragedy

    Aspects of unethical global business

    Presented by-Group 1

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    Synopsis

    In the early morning hours of Dec 3, 1984, a 40 tons oftoxic gases from Union Carbide India Limited (UCIL's)pesticide plant at Bhopal spread throughout the city.

    The killer gas spread through the city, sending residentsscurrying through the dark streets.

    The entire city stood still without having any clue aboutthe disaster.

    Approximately 10,000 died immediately and 30,000 to50,000 became victims of the killer gas.

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    Inception of UCC in India

    Union Carbide Corporation's operations in India started in1924 in Kolkata.

    By 1983 it had 14 plants in India manufacturing chemicalspesticides, batteries and other products.

    UCC held a 50.9 % stake in the Indian subsidiary namedUnion Carbide India Ltd (UCIL). The balance of 49.1% was

    owned by various Indian investors.

    In 1966, an agreement was signed between GOI and UCIL tobuild up a factory in Bhopal (Kali grounds) to produce Sevinwithin 5 years.

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    Stakeholders

    Major stakeholders involved were:

    - Government of India (GOI)

    - Union Carbide Corporation (UCC)

    - Union Carbide India ltd (UCIL)

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    Unethical issues associated with GOI

    Foreign investors were limited to 40% ownership of equity in

    Indian companies, but GOI waived this requirement in the case

    of UCC because of its sophisticated technology.

    GOI granted a license to manufacture 5,000 tons of Sevin a

    year overlooking the storage capacity of MIC of UCIL.

    The situation demanded an alternative like batch production ofMIC to meet production line requirements.

    The pesticide factory was built in Kali Grounds (Bhopal)

    which had a densely populated settlements.

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    Unethical issues associated with UCC

    There were asymmetry of information between GOI and UCC: UCCofficials did not mention that their proposed factory would be making

    pesticides out of the most toxic gases available in the chemical industry.

    The quantity of pesticides manufactured in 1983 was only 33.14% of its

    licensed capacity: UCC was losing its interest in India.

    UCC did not have any kind of emergency plans pertaining to health at its

    Indian subsidiary UCIL.

    UCC argued that the day-to-day working of UCIL was independent of the

    parent company however investigations revealed that this was not really

    true.

    UCC tried to defend its position by saying that it had only a 50.9% stake in

    UCIL.

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    Unethical issues associated with

    (UCIL) The MIC plant was not designed to handle a runaway reaction.

    Over storage of the tank till 87% (50% permissible)

    MIC was not stored at zero degree centigrade as prescribedbecause the refrigeration system was shut down to reduceenergy cost.

    Vital gauges and indicators in the MIC tank were defective.

    The flare tower meant to burn off MIC emissions was underrepair at the time of the disaster and the scrubber contained nocaustic soda.

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    Adverse working conditions of UCIL

    Workers were forced to use English manuals even though only a few had a

    grasp of the language.

    In 1983, Warner Woomer, the managing director was asked to retire and

    Mukund was appointed to devote all his energy in cost cutting.Consequently:

    - Two hundred skilled workers and technicians were asked to

    resign

    - In the MIC unit alone, the manpower in each shift was cut

    down by 50% including elimination of the maintenancesupervisor position.

    - The period of safety training to workers in the MIC plant was

    brought down from 6 months to 15 days.

    Workers made complains about the cuts but were ignored

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    Countdown to extinction of UCIL

    1980: the Bhopal plant had caused death and injury to many.

    December 1981: one plant operator was killed by a phosgene gas leak.

    Two other workers were injured.

    In May 1982: three American engineers reported to UCC thatAll Was

    Not Wellwith Bhopal Plant. Their report revealed :

    - the proximity towards danger in working condition

    - inadequately trained staff

    - Unsatisfactory instruction methods and sloppy

    maintenance

    October 1982: An incident effected four workers and causing eye

    irritation and breathlessness among people in the nearby communities.

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    6 safety systems failed

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    Aftermath of the disaster

    Months after the disaster, the GOI issued an ordinance appointingitself as the sole representative of the victims.

    Although, GOI was investing, but UCC moved more quickly into

    the investigation.

    March 1985, UCC shifted blame to a disgruntled worker and 'an act

    of sabotage' by a Sikh terrorist.

    November 1985, UCC agreed to provide $5 million and accordinglyboth the parties agreed to channel the money through the American

    Red Cross to the Indian Red Cross.

    December 1987, a Bhopal District Court Judge passed an order

    directing UCC to pay INR 3.5 billion as interim relief.

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    Aftermath of the disaster

    UCC described the court's decision as fair and reasonable, and thecompany's stock soared in the

    London market.

    The victims were settled for a mere US $ 470 million-which workedout to around INR 10,000 per victim (if it was divided equally).

    1991, the Bhopal court summoned Warren Anderson to appear on acharge of 'homicide in a criminal case.' However, he did not turnedup.

    September 1993, UCC sold its entire 50.9% stake in UCIL to theKolkata based Mc Leod Russell India Ltd.

    August 1999, UCC was sold out to Dow Chemicals for US $ 9.3billion

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