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Bhopal Gas Tragedy and Its Ethical Issues

SUMMARY
Bhopal Gas Tragedy was a gas leak incident in India, considered one of the world’s worst industrial
catastrophes. It occurred on the night of the last year of 1984 at the Bhopal Union Carbide
Corporation (Union Carbide India Limited – UCIL) pesticide plant in Bhopal, Madhya Pradesh, India.
A leak of methyl isocyanides gas and other chemicals from the plant resulted in the exposure of
hundreds of thousands of people. It also causes environmental issues such as pollution of soil and
water. The gas leak in India was caused by bad maintenance and failure of several safety systems to
cut off the expenses.

HISTORY
Bhopal is a city in central India with population of 800,000 people in 1984. At that time, home to the
largest mosque in India, Bhopal was a major railway junction. Its main industries consisted of
manufacturing heavy electrical equipment, weaving and printing cotton cloth, and milling flour.

In 1969, American Union Carbide Corporation, a company headquartered in Danbury, Connecticut,

reached an agreement with the Indian government for the construction of a Union Carbide plant in
Bhopal. Union Carbide would hold a 51 percent interest in the plant through its share of ownership of
an Indian subsidiary of American Union Carbide. The agreement was seen as a win–win situation.

India would have the plant and its jobs as well as the production of produce pesticides, a product
needed badly by Indian farmers in order to increase agricultural productivity. In addition, Union
Carbide also agreed that it would use local managers, who would be provided with the necessary
skills and management training so that the plant would be truly locally operated.

The plant used methyl isocyanides (MIC) gas as part of the production process for the pesticides.
MIC is highly toxic and reacts strongly with other agents, including water. Operation of a plant with
MIC processes requires detailed monitoring as well as security processes to prevent sabotage.

While the plant began operations with high hopes, by 1980 the relationships were strained because
the plant was not profitable. Union Carbide had asked the Indian government for permission to close
the plant but the government felt the products from the plant as well as the jobs were needed for the
Indian economy.

Sometime in the early morning hours of December 3, 1984, MIC stored in a tank at the Bhopal plant
came in contact with water, and the result was a boiling effect in the tank. The back-up safety
systems at the plant, including cooling components for the tanks, did not work. The result was the
toxic mixture began to leak and workers at the plant felt a burning sensation in their eyes. The boiling
of the water and MIC caused the safety valves on the tank to explode. Following the explosion, the
white smoke from the lethal mixture escaped through a smoke stack and began to spread across the
area to the city of Bhopal.

As the gas spread, it wove its way through the shanty towns that were located near the plant. The
occupants of these shanty towns were Bhopal’s poorest. As the gas floated through these makeshift
neighborhoods, 3,500 lives were lost and 200,000 were injured. The injuries included blindness,
burns, and lesions in the respiratory system.

The initial deaths and injuries were followed by long-term health effects. Of the women who were
pregnant and exposed to the MIC, one-fourth either miscarried or had babies with birth defects.
Children developed chronic respiratory problems. Smaller children who survived the toxic gas were
sick for months and, weak from a lack of nutrition and ongoing illnesses, also died. MIC also
produced strange boils on the bodies of many residents, boils that could not be healed. The problem
of tuberculosis in the area was exacerbated by the lung injuries caused by the leaking MIC.

In the year following the accident, the Indian government spent $40 million on food and health care
for the Bhopal victims. Warren M. Anderson, Union Carbide’s chairman of the board at the time of the
accident, pledged that he would devote the remainder of his career to solving the problems that
resulted from the accident. However, by the end of the first year, Mr. Anderson told Business Week, “I
overreacted. Maybe they, early on, thought we’d give the store away. [Now] we’re in litigation mode.
I’m not going to roll over and play dead.”

Following the accident, Union Carbide’s stock fell 16 points and it became, in the go-go 80s, a
takeover target. When GAF Corporation made an offer, Union Carbide incurred $3.3 billion in debt in
order to buy 56 percent of its own stock to avert a takeover. Through 1992, Union Carbide remained
in a defensive mode as it coped with litigation, takeover attempts, and the actions of the Indian
government in seeking to charge officers, including Anderson, with crimes.

U.S. lawyers brought suit in the United States against Union Carbide on behalf of hundreds of Bhopal
victims, but the case was dismissed because the court lacked jurisdiction over the victims as well as
the plant. Union Carbide did settle the case with the Indian government for a payment of $470 million.
There were 592,635 claims filed by Bhopal victims. The victims received, on average, about $1,000
each. The ordinary payment from the Indian government, as when a government bus harms an
individual, is $130 to $700, depending upon the level of the injury. Individual awards were based on
earning capacity, so, for example, widows of the Bhopal accident received $7,000.

The Indian government also pursued criminal charges, including against Mr. Anderson. Lawyers for
the company and Mr. Anderson continued to fight the charges, largely on the basis that the court had
no jurisdiction over Mr. Anderson. However, to be on the safe side, Mr. Anderson did not return to
India because of his fear of an arrest.
In May 1992, the Indian government seized the plant and its assets and announced the sale of its 50
percent interest in the plant. When the sale occurred and Union Carbide received its share of the
proceeds, it contributed $17 million to the Indian government for purposes of constructing a hospital
near Bhopal. The plant now makes dry-cell batteries.

Following the accident, Union Carbide reduced its workforce by 90 percent. Because of the share
purchase, Union Carbide had a debt-to-equity ratio of 80 percent. In addition, the Union Carbide
brand was affected by the accident and the company could not seem to gain traction. Dow Chemical
would acquire the company in 1999 for $11.6 billion.

In 2008, a study revealed that pesticide residues in the water supply for the area surrounding the
plant were at levels above permissible ones. There are about 425 tons of wastes buried near the
former plant. Advocates continue to appear at Dow shareholder meetings in order to demand clean-
up. Dow’s response is, “As there was never any ownership, there are no responsibility and no
liability—for the Bhopal tragedy or its aftermath.”

ETHICAL ISSUES
In Bhopal Union Carbide Corporation, a one of subsidiaries of Union Carbide Corporation has so
many failures in working condition issues such as bad maintenance of the machinery, lack of safety
and environmental standard to save money, and also had not concern of the natural environment.
Sadly the case was dismissed because the court lacked jurisdiction over the victims as well as the
plant. The insufficiency of scientific knowledge is inseparable from the inadequacy of justice. In 1999,
Dow Chemical acquired Bhopal Union Carbide Corporation and as publicly owned corporation, the
company is unable to accept any responsibility for the Bhopal catastrophe due to share price. Then
the government of India sold the company’s assets to construct hospitals near Bhopal to take care the
victims.

There is dilemmatic problem for Bhopal Union Carbide Corporation, since they knew that the
business was not profitable but the Government asked it to run to support Indian farmers’ productivity
and also Indian Economy through the plant. Because of that dilemma, The Bhopal Union Carbide
Corporation disregard the Environmental Responsibility to save the money by ignored the work
condition issues and keep the business run.

KEY PARTIES TO UNETHICAL ISSUES

There are four key parties occurred to Bhopal Gas Tragedy. There are:

Environments.

The ring one which impacted by the tragedy is environment around the pesticide plant. The ring one
consists of: (1) civilizations around the pesticide plant – Shanty Towns, and (2) Ecosystems – such as
trees, water, and soil.

Government of India.
The one who is control the environmental issues for industries and business. Government of India
responsible to makes the policies to compromise between business and environment safety.

Bhopal Union Carbide Corporation (UCIL).

The one of subsidiaries of Union Carbide Corporation, who had a business of pesticide plant in India
– Bhopal with Indian Management, was responsible because of unfriendly environmental business or
we could say that they are not pay attention to Corporate Social Responsibility (CSR).

Union Carbide Corporation. (UCC)

The Parent Corporation of Bhopal Union Carbide Corporation. The chairman is the one who is most
responsible of the Bhopal Gas Catastrophe. The chairman name is Anderson, he arranged with the
government of India to build the pesticide plant.

CONTRIBUTING FACTORS TO UNETHICAL ISSUES

Attempts to reduce expenses affected the Bhopal Union Carbide Corporation’s (UCIL) employees and
their conditions, they did several things below:

1. Less stringent quality control and thus looser safety rules;

2. Less training in controlled the factory. It means the employee didn’t exactly know what to do and
what not to do;
3. Promotions were halted. It seriously affecting the employee morale and driving the skilled
employee finding another job/factory.
4. Workers were forced to use English Manuals Book, while only a few of the employee had a
grasp of the language.

Because of that situation, UCIL affecting several situations such as:

1. The MIC tank alarms had not worked for four years.
2. There was only one manual back-up system, compared to a four-stage system used in the
United States.
3. The flare tower and several vent gas scrubbers had been out of service for five months before
the disaster.

Only one gas scrubber was operating: it could not treat such a large amount of MIC with sodium
hydroxide (caustic soda), which would have brought the concentration down to a safe level. The flare
tower could only handle a quarter of the gas that leaked in 1984, and moreover it was out of order at
the time of the incident. To reduce energy costs, the refrigeration system was idle. The MIC was kept
at 20 degrees Celsius, not the 4.5 degrees advised by the manual.

The steam boiler, intended to clean the pipes, was out of action for unknown reasons. Slip-blind
plates that would have prevented water from pipes being cleaned from leaking into the MIC tanks
through faulty valves were not installed. Their installation had been omitted from the cleaning
checklist. The water pressure was too weak to spray the escaping gases from the stack. They could
not spray high enough to reduce the concentration of escaping gas. According to the operators, the
MIC tank pressure gauge had been malfunctioning for roughly a week. Other tanks were used, rather
than repairing the gauge.

The build-up in temperature and pressure is believed to have affected the magnitude of the gas
release. UCC investigation studies have disputed this hypothesis. Carbon steel valves were used at
the factory, even though they corrode when exposed to acid. UCC admitted in their own investigation
report that most of the safety systems were not functioning on the night of December 3, 1984. The
design of the MIC plant, following government guidelines, was "Indianized" by UCIL engineers to
maximize the use of indigenous materials and products. Mumbai-based Humphreys and Glasgow
Consultants PVT. Ltd. were the main consultants, Larsen & Toubro fabricated the MIC storage tanks,
and Taylor of India Ltd. provided the instrumentation.

Besides that, there were also serious communication problems and management gaps between
Union Carbide Corporation and its Indian operation.

OPTIONS TO FINISH THE UNETHICAL ISSUES

Anderson at the very start should have a feasibility study and environmental study for build up Bhopal
Union Carbide Corporation, pesticide plant in India, to calculate the requirement of the plants related
to India’s demand of pesticide and environment safety.

If the plant is already built and it’s not profitable, Anderson should have closed the plant. But because
of the Government demand to support the Indian Economy, Anderson should have to negotiate the
government of India to take the plant as India’s state-owned company. So basically, all of the
operational requirement will be the problems of India’s Government.

Since Bhopal Gas Tragedy was already happened in India, there are few options to take the unethical
issues done:

1. Union Carbide Corporations’ Chairman, Anderson, have to solve all of the problems causes by
Bhopal Carbide Corporation’s Operation mistakes. It may take a lot of money to gather
consultant and built infrastructure to help the victims such as Rehabilitation Center, Hospital,
and also the compensation since the disaster begins would shut down the economics around
the plant.
2. Anderson can also ask the India’s Government to contribute in solving all of the problems
causes by Bhopal Carbide Corporation’s Operation mistakes since the Government of India was
asked of helps to support Indian Economy and didn’t have regulation for Safety of Industrial
policies.
3. Anderson use Point 2 plus ask the international media to regain his name due to the bad Indian
management which “Indianized” U.S. Industrial safety to environment.

FREQUENTLY ASKED QUESTIONS

Should the Bhopal plant have been operated using U.S. safety and
environmental standards?

As a company operating outside the country, American Union Carbide Corporation should apply a
U.S. safety and environmental standards because country where they operate (India) has not
implemented a safety and environmental standard. The company should apply with the more strictly
standard.

In 1973, the Indian parliament had passed the Foreign Exchange Regulation Act (FERA), which
aimed to increase state control over foreign business ventures. The act reduced the amount of equity
that a foreign corporation could provide to any given project, in order to dilute foreign ownership of
Indian-based firms. The bill also strongly encouraged the transfer of proprietary production technology
to Indian firms, rather than just the formulation and sale of products, so that it could lay the
groundwork for eventually nationalizing such technologies.

In the case of the Bhopal plant however, UCC wanted to retain control of both the project and the
technologies they had invented. While FERA did not allow foreign corporations to be the majority
stakeholder in a project, an exception was made for UCC on the grounds that it was bringing in
“special technology.” In order to retain their 50.9 percent stake in the undertaking, UCC cut the cost of
construction from $28 million to $20 million dollars, primarily by using substandard technology and
cheaper materials.

Although UCC claims that its plant in Bhopal was built to the same safety specifications as its
American facilities, when it was finally constructed there were at least eleven significant differences in
safety and maintenance policies between the Bhopal factory and its sister facility in Institute, West
Virginia. For example, the West Virginia plant had an emergency plan, computer monitoring, and
used inert chloroform for cooling their MIC tanks. Bhopal had no emergency plan, no computer
monitoring, and used brine, a substance that may dangerously react with MIC, for its cooling system.
The Union Carbide Karamchari Sangh (Workers’ Union), a union of Bhopal workers that formed in the
early 1980s, recognized the dangers at the factory but their agitation for safer conditions produced no
changes.

What would the U.S. policy be on the shanty towns?

Should the case have been moved to the United States for recover?

Since Anderson is American, and the 51% shares of UCIL was owned by UCC in U.S. (categorized
as Foreign Direct Investment), it should have been an U.S. – India issues to recover.

With U.S. recovery helps, it will create a good relationship between U.S. and India. And probably the
industry owned by U.S. citizen will trusted more by Indian.

List all of the costs of the accident to Union Carbide.

It is estimated 100,000 to 200,000 people have permanent injuries. Reported symptoms are eye
problems, respiratory difficulties, immune and neurological disorders, cardiac failure secondary to
lung injury, female reproductive difficulties and birth defects among children born to affected women.
The Indian Government and UCC deny permanent injuries were caused by MIC or the other gases.

The gas cloud was composed mainly of materials denser than the surrounding air, stayed close to the
ground and spread outwards through the surrounding community. The initial effects of exposure were
coughing, vomiting, severe eye irritation and a feeling of suffocation. People awakened by these
symptoms fled away from the plant. Those who ran inhaled more than those who had a vehicle to
ride. Owing to their height, children and other people of shorter stature inhaled higher concentrations.
Many people were trampled trying to escape.

A total of 36 wards were marked by the authorities as being "gas affected", affecting a population of
520,000. Of these, 200,000 were below 15 years of age, and 3,000 were pregnant women. In 1991,
3,928 deaths had been certified. Independent organizations recorded 8,000 dead in the first days.
Other estimations vary between 10,000 and 30,000. Another 100,000 to 200,000 people are
estimated to have permanent injuries of different degrees.

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