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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 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.
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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 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.
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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 of MIC 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 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.
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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 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.
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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 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.
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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 $ 9.3 billion
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