Case Studies of Business Ethics & Corporate Governance

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Assignment of Business Ethics & Corporate Governance

CASE STUDIES

Module I

BHOPAL GAS TRAGEDY

December 3, 2009, marked the 25th anniversary of the world's worst ever industrial disaster - the gas leak that occurred at Union Carbide India Ltd's (UCIL) pesticide plant in Bhopal (Madhya Pradesh, India). The tragedy that instantly killed more than 3,000 people and left thousands injured and affected for life, occurred when water entered Methyl Isocyanate (MIC) storage tank No. 610 of the plant on December 3, 1984. MIC is one of the deadliest gases produced in the chemical industry and is known to react violently when it comes into contact with water or metal dust. Though the plant was closed down soon, the after-effects of the accident left an estimated 25,000 people dead and around 600,000 people affected due to gas-related disorders.| | What compounded the tragedy was that the victims failed to get adequate compensation and the generation that followed continued to suffer from health complications. However, the multinational corporation responsible for the disaster still continued to evade responsibility.

The US-based Union Carbide Corporation (UCC), the parent company of UCIL, stuck to its outrageous argument that the incident had occurred due to an act of sabotage by a disgruntled worker. It, however, failed to name the worker. It downplayed the health effects of MIC and discredited the victims and activists fighting for justice. It tried to evade responsibility by shifting the blame on to the Indian subsidiary and the Indian government. UCC claimed that it did not have any say in the operations of its subsidiary. The company engaged in lengthy litigation which led to a delay in compensation being provided to the victims. Even the people who obtained a paltry amount years later, as UCC agreed to pay US$ 470 million, had to continue residing in the surroundings of the plant that had not been cleaned up, exposed to the toxic environment. Contrary to UCC's assertion, independent experts believed that the disaster had occurred due to negligent management practices and that corporate greed had played a role in this. They also did not buy UCC's argument that the company did not have operational control over its Indian subsidiary.

In 2001, UCC tried to enter into oblivion by merging with the US-based Dow Chemical Company (Dow). After the merger, Dow too refused to take responsibility for the incident, arguing that it had never operated the plant at Bhopal and that it had insulated itself from UCC's Bhopal liabilities by virtue of how it had structured the acquisition. Not only did it contend that the compensation claim had been already settled by UCC much before it had acquired the company, but it also continued to lobby the Indian government to resolve the issue once and for all in its favor. The Indian government too came in for criticism as it was viewed as siding with the rich multinationals, more concerned about a backlash from foreign investors who had become more important players in the Indian economy following liberalization.

A quarter of a century later, toxic chemicals lay in the vicinity and children who played near the site and livestock grazing on the ground were fully exposed to it. In addition to the surroundings, the walls of the plant and the roof remained covered with toxic materials which far exceeded safety standards. Moreover, sacks of chemicals and pesticides lay scattered around the abandoned factory in a state of decomposition. The survivors residing near the plant continued to depend on groundwater sources that were highly contaminated as the heavy metals and solvents had seeped into the ground after rainfall. Survivors and their next generation continued to suffer from a number of ailments and cancers. Children were still being born with birth defects and there was an unusually high incidence of mental handicap and other ailments....
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