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Bhopal Gas Tragedy

Aspects of unethical global business

Presented by-Group 1



Synopsis

� In the early morning hours of Dec 3, 1984, a 40 tons of toxic 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.



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 chemicals pesticides, 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 to build up a factory in Bhopal (Kali grounds) to produce Sevinwithin 5 years.



Stakeholders

� Major stakeholders involved were:

- Government of India (GOI)

- Union Carbide Corporation (UCC)

- Union Carbide India ltd (UCIL)



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 of MIC to meet production line requirements.

� The pesticide factory was built in Kali Grounds (Bhopal)

which had a densely populated settlements.



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.



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 prescribed because 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 under repair at the time of the disaster and the scrubber contained nocaustic soda.



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



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 that All Was

Not Well with 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.



6 safety systems failed



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 accordingly both 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.



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 $ 9.3 billion

