Dow Chemical is effectively being shut out of the critical Indian market, due to new public anger and legal action around the Bhopal catastrophe. Will the potential impact on the company’s bottom line force it to accept responsibility?
WASHINGTON — Three decades ago last week, in the middle of the night, the infamous U.S.-owned pesticide plant in Bhopal, India, started spraying toxic gas into the local community, killing more than 4,000 people almost immediately and directly impacting on hundreds of thousands to this day.
At the time, the plant was owned by the Indian subsidiary of Union Carbide, the U.S. chemicals manufacturer now wholly owned by Dow Chemical. On Dec. 3, 1984, the plant leaked roughly 27 tons of deadly methyl isocyanate gas, the result of a series of systems failures. Where the liability for those failures can be found remains at the heart of a contentious legal battle.
The incident is labeled by many as the modern world’s worst industrial disaster. Yet the Bhopal gas leak is also emblematic of the aftermath – in this case, the very long aftermath – of many industrial disasters, offering a paradigmatic example of the often systemic failure to achieve accountably for corporate malfeasance.
This is particularly the case for catastrophes involving the added complexities of multinational ownership, shifting liabilities, and the relatively weaker legal systems of developing countries. For victims of the Bhopal gas leak, this has meant not only a lingering sense of injustice but also ongoing chronic health problems. In the absence of formal recognition of responsibility, after all, the factory site today remains toxic and actively leaching.
Against this backdrop, the 30th anniversary of the catastrophe should have been an occasion to again voice frustrations and express little hope. However, those who have been engaged in this struggle for decades say the tide appears to be turning in their favor.
“Momentum is clearly picking up on this issue. I’ve been involved in this for 15 years, and I don’t remember ever having experienced this sense on any previous anniversary,” Tim Edwards, the executive trustee at the Bhopal Medical Appeal, a British charity that runs health services in the city, told MintPress News.
“Generally on these occasions there has been a sense of resignation or despair, but I haven’t felt that this time. What I’ve felt instead is a surge of defiance and anger and intent to bring a reckoning to this situation. This feels like a turning point in the whole history.”
In part, that shift could also be taking place within Dow Chemical’s own headquarters. Concerns are mounting about whether the company can afford to alienate India, one of the world’s fastest-growing economies.
Recognition of iniquities
This newfound optimism is the result, in particular, of multiple new legal processes in India. These have been brought about by fresh government resolve on the issue of Bhopal accountability. Yet that action has been spurred by a broad strengthening in public consciousness on the situation in recent years.
“Awareness of the terrible iniquities of Bhopal spiked in 2010, the result of a judgment in criminal proceedings against Indian accused – certain individuals were found criminally negligent and sentenced to two years in prison, though those decisions are still on appeal,” Edwards said.
“This roused an enormous sense of ire throughout the Indian population over the legacy of Bhopal, and in turn, this even became an election issue. Such a public outcry hadn’t been seen since the 1980s, and led the Indian government to attempt to devise new solutions.”
During the weeks leading up to the 30th anniversary of the gas leak, Edwards says, the domestic and international media coverage on the issue was “astonishing.” Last week, even The New York Times editorial board called for the U.S. and Indian governments, together with “substantial” contributions from Dow Chemical, to rectify the “tragic inaction” of recent decades.
“Particularly in the Indian press, they covered this issue in such depth and in such a rounded way that there’s now a fully formed consciousness of all of the dimensions of this problem,” Edwards noted. “I think that fact makes the prospect of Dow Chemical entering the Indian market without settling the Bhopal claims untenable if not impossible.”
According to local activists, the 1984 gas leak has killed nearly 25,000 people, a toll that continues to climb. In addition, some 150,000 people are dealing with chronic illnesses, including cancer, and tens of thousands of children are thought to have health issues because of the gas their parents inhaled decades ago. Unresolved water pollution issues are impacting on some 50,000 people to this day.
For its part, Dow, which purchased Union Carbide in 2001, considers the issue closed. The company points to a $470 million settlement reached between Union Carbide and the Indian government in 1989. Activists say that amount resulted in payments of just $2,200 to each victim’s family, while substantive remediation work has failed to go forward.
They also underscore the discrepancy between these payments and the significant, and mounting, fines imposed in the aftermath of the 2010 BP oil spill in the Gulf of Mexico, which killed 14 people.
“Obama made British Petroleum pay $20 billion for the Gulf of Mexico oil spill,” Balkrishna Namdeo, of the Bhopal Gas Peedit Nirashrit Pension Bhogi Sangharsh Morcha, a local advocacy group, said last week in a statement. “We would like to ask him how his conscience allows him to support two U.S. corporations that paid a tiny fraction of that amount for 2,000 times more fatalities.”
As the Bhopal Medical Appeal’s Edwards notes, eight Indian nationals, former executives of Union Carbide India Limited, were indeed convicted in 2010 of negligence by the Indian courts. Yet warrants have never been able to be carried out on U.S. nationals who headed the company. Union Carbide’s CEO at the time of the leak, Warren Anderson, died in September.
Dow, meanwhile, holds that Indian jurisdiction does not extend to the United States. The company has repeatedly refused to defend itself in Indian court, including again in early November.
Also last month, a legal team re-filed a lawsuit in New York court attempting to tie U.S.-based management to engineering-related decisions that may have resulted in the Bhopal plant failures. While the results of that process will be keenly watched, for many the most important processes are now taking place in India.
Those include criminal, civil and environmental cases undertaken by the Indian government. Indian officials have also recently agreed to revisit the original $470 million settlement, seeking an additional $1.2 billion on the acknowledgement that the 1989 agreement significantly underestimated the deaths and injuries resulting from the gas leak.
“This is really significant,” Edwards said, “and is getting [Dow] shareholders very worried.”
In late November, activist shareholders filed a resolution calling for the creation of a report on the risks that the ongoing litigation and controversy stemming from the Union Carbide liability are creating for Dow’s financial health. (The resolution was re-written after it was rejected previously on what supporters say was a technicality.)
“This resolution is asking for the company to report back to shareholders on the issue of impact, and starting to get to the question of whether we’re at the stage where the cost of settling this case is less than the damage to the company of not settling the case,” Simon Billenness, a shareholder advocate with the Unitarian Universalist Association and one of the crafters of the recent Dow resolution, told MintPress.
“There is not just risk to the company from ongoing litigation but also impact on the company’s reputation. In addition, and perhaps most serious, Dow appears to have been effectively shut out of the Indian market.”
Indeed, observers say that as recently as 2007 Dow had been placing significant emphasis on the strategic importance of the Indian market. Today, however, such rhetoric is almost completely absent.
Instead, recent years have seen the collapse of at least three major Dow investment deals in India. Advocates say these failures are due directly to intense community and political pressure stemming from the renewed public anger around the legacy of Bhopal.
President Obama is currently slated to visit India in January. In advance of that trip, advocates and representatives in both the U.S. and India are hoping that the recent momentum on this issue will lead to a bilateral agreement to clean up the Bhopal site, and assist and compensate survivors of the gas leak.
Dow Chemical’s next shareholder meeting, meanwhile, is scheduled to take place in May.