ABSTRACT SUMMARY

• Case deals with a transnational corporation, Union Carbide, which established a subsidiary named, Union Carbide India Ltd. (UCIL)

• Union Carbide owned 60% shares in UCIL, but later it was reduced to 50.9%.

• Union Carbide built a pesticide plant in Bhopal in 1969.

• Disaster came from this juncture.

QUESTION 1

•   Who was responsible for the Bhopal accident? How should the blame be apportioned among the parties involved, including Union Carbide Corporation, UCIL, plant workers, governments in India, or others?

ANSWER

• Every entity is responsible for what happened in Bhopal

• Union for not forcing strong policies over its subsidiary UCIL

• UCIL for the lack of management over its employees

• Employees for not following emergency procedures

• Indian Government for not allowing Union Carbide to do a proper investigation

QUESTION 2

• What principles of Corporate Social Responsibility and Business Ethics are applicable to the action of the parties in question?

MANDATED ACTIONS

• 1975: City of Bhopal enacted a development plan requiring dangerous industries to relocate 15 miles away from population.

• Worker safety and environmental inspections by State Department of Labour employing 15 inspectors for 8000 plants.

UCIL ACTIONS

• UCIL employees did not regard MIC as a legal hazard.

• Deliberate sabotage from angry employee falsified logbook to hide transfer of contents; supervisors withheld information from upper management.

• Refrigerators that cooled the MIC tanks were shut sown for 5 months. MIC processing required these refrigerators to be on ALL time.

UNION CARBIDE U.S ACTIONS

• December 7, 1984 Chairman Warren Anderson accepted moral responsibility for the tragedy and flew out to India.

• He donated $ 1 million to emergency relief fund.

• Carbide never made public the operator to be blamed due to Privacy Act.

• n 1994, the Supreme Court of India allowed UCC to sell its 50.9 percent interest in UCIL to Eveready Industries India Limited (EIIL), which subsequently merged with McLeod Russel (India) Ltd.

QUESTION 3

How well did the legal system work? Do you agree with the decision to try the lawsuits in India? Were victims fairly compensated? Was Carbide sufficiently punished?

HOW WELL DID LEGAL SYSTEM WORK

• Arrest warrant for manslaughter was issued against Anderson, which has still not been served as on date.

• Criminal trial of several UCIL managers began in 1989, still being dragged on with no end in sight.

• Only half of the several 100 scheduled witnesses have been called.

• The court convicted 7 managers of causing death by negligence, all released on bail.

• Petition still pending, for Dow Chemicals to pay compensation of $1.1 billion to victims.

DECISION TO TRY LAWSUIT IN INDIA

We agree with the decision for the following reasons:

• Disaster site

• Evidence

• Investigation

• Victims

• Witnesses

COMPENSATION TO VICTIMS

• A settlement of $470 million was agreed upon.

• This value of money was greater 30 years ago, yet no amount can compensate for the magnitude of the disaster, and the suffering that victims endure even today.

• Victims’ group felt the compensation was too small

• But Indian government slow and inefficient in distributing settlements.

• Activity riddled with corruption.

WAS CARBIDE SUFFICIENTLY PUNISHED

• Certainly not sufficiently punished

• Several lawsuits have not gone to court.

• No action mentioned against the disgruntled employee

• Managers were let off easily, and released on bail

• Arrest warrant was issued for Anderson, which has never been served.

QUESTION 4

•   Did Union Carbide handle the crisis well? How would you grade its performance in facing uniquely difficult circumstances?

ANSWER

• Sent Emergency medical supplies, respirators, oxygen and an American doctor with knowledge of MIC.

• Dispatched a team of technical experts.

• Anderson himself went, but placed under house arrest.

• Paid respect to the fallen workers, $1 million to emergency relief fund and another $5 million.

• B+

• Showed remorse and cleaned up someone’s mess.

• Did their best to respond to the incident

QUESTION 5

• Does Dow Chemical Company has any remaining legal liability, social responsibility or ethical duty to address unresolved health and environmental claims of Bhopal victims?

ANSWERSLegal Liability: No

• Union Carbide had already paid and settled what they were supposed to pay. Hence, Dow Chemical has no pending legal responsibility.

• According to the settlement (1989), Carbide agreed to pay 470 million to Indian government for the welfare of victims and their families.

• Subsequently, India agreed to stop all legal actions against Carbide.

• Moreover, in 1994, Carbide sold its 50.9 percent of equity in UCIL to Indian subsidiary of a British company for huge 90 million $. It also gave money to Indian Govt. for building hospitals.

Social Responsibility: Yes

• Despite paying huge amount for settlement, Carbide did not fulfill its all social responsibilities which in turn created problem for Dow Chemicals.

• Chemical waste at the site had contaminated the ground water. After Carbide’s negligence, people demanded Dow to pay for cleaning up the contaminated plant site and further compensate injured survivors. Dow denied any legal responsibility for Bhopal and therefore it had to bear the opposition from local residents.

Ethical Duty: Yes

• Union Carbide did not fully enforce safety regulations.

• Faulty safety measures: not using slip blind during washing, shut down of refrigeration unit to save electricity, inoperable vent gas scrubber.

• Carbide’s employees were involved in false log entries to disguise their involvement.

Hence, the first and foremost ethical duty for Dow would be taking proper safety measures and recruiting trustworthy employees .

QUESTION 6

• What lessons can other corporations and countries learn from this story?

CORPORATIONS

• Proper safety regulations must be installed in order to prevent these catastrophic consequences.

• Safety rules must be enforced.

• Better communication must be facilitated between the parent and the sister companies in terms of

1. Day to day reporting systems.

2. Proper training programs.

3. Proper functioning safety devices must be used.

COUNTRIES

• Industrial facilities should not be allowed to be built in the urban areas. The local government should take care of this.

• As the shortage of physicians and beds in the four hospitals in the city was also a reason for high number of deaths due to delay in timely medical assistance, it is suggested that industry and local government should provide financial support to medical and other services to reduce the number of casualties and deaths in case of accidents.

• Build proper public health infrastructure like hospitals and providing ambulances near these type of industries in case of accidents in order to provide immediate medical treatment.