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 residents

scurrying through the dark streets.

• The entire city stood still without having any clue about the
disaster.

• Approximately 10,000 died immediately and 30,000 to 50,000

became victims of the killer gas.
 Inception of UCC in India
• Union Carbide Corporation's operations in India started in 1924 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 named Union

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 Sevin
within 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: UCC
officials 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 reduce energy 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 no caustic
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 maintenance
supervisor 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 appointing
itself 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 the
company's stock soared in the
London market.

• The victims were settled for a mere US $ 470 million-which worked out
to around INR 10,000 per victim (if it was divided equally).

• 1991, the Bhopal court summoned Warren Anderson to appear on a

charge of 'homicide in a criminal case.' However, he did not turned up.

• September 1993, UCC sold its entire 50.9% stake in UCIL to the
Kolkata based Mc Leod Russell India Ltd.

• August 1999, UCC was sold out to Dow Chemicals for US $ 9.3 billion
 Thank You

Thank U and hope we all pray for those

innocent lives who laid down their life for some
ruthless people sitting far away.
May their soul
r.i.p