Case study

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INVESTIGATING THE CAUSE OF THE MIC LEAK In the days following the gas leak, there was world- wide interest in pinning down its precise cause. A team of reporters from The New York Times inter- viewed plant workers in Bhopal. Their six-week in- vestigation concluded that a large volume of water entered tank 610, causing the accident.f The Times re- porters thought that water had entered when R. Khan failed to use a slip blind as he washed out piping. Water from his hose simply backed up and eventually flowed about 400 feet into the tank. Their account was widely circulated and this theory, called the "water washing theory," gained currency. However, it was not to be the only theory of the accident's cause.

Immediately after the disaster, Union Carbide also rushed a team of investigators to Bhopal. But the team got little cooperation from Indian authorities operating in a climate of anti-Carbide popular pro- test. It was denied access to plant records and work- ers. Yet the investigators got to look at tank 610 and took core samples from its bottom residue. These samples went back to the United States, where more than 500 experimental chemical reactions were un- dertaken to explain their chemical composition. In March 1985 Carbide finally released its report. It stated that entry of water into the tank caused the gas release, but it rejected the water washing theory.

Instead, Carbide scientists felt the only way that an amount of water sufficient to cause the observed reaction could have entered the tank was through ac- cidental or deliberate connection of a water hose to piping that led directly into the tank. This was possi- ble because outlets for compressed air, nitrogen, steam, and water were stationed throughout the plant. The investigators rejected the water washing hypothesis for several reasons. The piping system was designed to prevent water contamination even without a slip blind. Valves between the piping being washed and tank 610 were found closed after the

8 The team wrote a series of articles. SeeStuart Diamond, "The Bhopal Disaster: How It Happened," The New York Times, January 28, 1985; Thomas J. Lueck, "Carbide Says Inquiry Showed Errorsbut IsIncomplete," TheNew York Times, January 28, 1985; Stuart Diamond, "The Disaster in Bhopal: Workers Recall Horror," The New York Times,January 3D, 1985; and Robert Reinhold, "Disaster in Bhopal: Where Does Blame Lie?" The New York Times, January 31, 1985.

accident. And the volume of water required to create the reaction-l,OOO to 2,000 pounds-was far too much to be explained by valve leakage.

The Carbide report gave a plausible alternative to the water washing theory, but within months an in- vestigation by the Indian government rejected it. This study, made by Indian scientists and engineers, con- firmed that the entry of water into the MlC tank caused the reaction but concluded that the improper washing procedure was to blame (see Exhibit 3).

There matters stood until late 1985,when the Indian government allowed Carbide more access to plant records and employees. Carbide investigators sought out the plant's employees. More than 70 interviews and careful examination of plant records and physical evidence led them to conclude that the cause of the gas leak was sabotage by a disgruntled employee who in- tentionally hooked a water hose to the tank.

Here is the sequence of events on the night of December 2-3 that Carbide set forth. At 10:20 p.m. the pressure gauge on tank 610 read 2 ppsi. This meant that no water had yet entered the tank and no reaction had begun. At 10:45 the regular shift change occurred. Shift changes take half an hour, and the MlC storage area would have been deserted. At this time, an operator who had been angry for days about his failure to get a promotion stole into the area. He unscrewed the local pressure indicator gauge on tank 610, hooked up a rubber water hose, and turned the water on. Five minutes would have sufficed to do this.

Carbide claimed to know the name of this person, but it has never been made public. Its investigative team speculated that his intention was simply to ruin the MIC batch in the tank; it is doubtful that this worker realized all that might happen. The inter- views revealed that the workers thought of MIC chiefly as a lacrimator, a chemical that causes tearing; they did not regard it as a lethal hazard.

Now the plot thickens. A few minutes after mid- night, MlC operators noted the fast pressure rise in tank 610. Walking to the tank, they found the water hose connected and removed it, then informed their supervisors. The supervisors tried to prevent a cata- strophic pressure rise by draining water from tank 610. Between 12:15 and 12:30 a.m., just minutes be- fore the explosive release, they transferred about 1metric ton of the contents from tank 610 to a holding tank. Water is heavier than MlC, and the transfer was made through a drain in the tank's bottom: thus, the

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EXHIBIT 3 Two Theories Clash on Water Entry into MIC Tank According to the water washing theory of the Indian government, water was introduced through a hose into bleeder A at filter pressure safety valve lines. As the hose kept running, water proceeded through the leaking valve in that area and rose up into the relief valve vent header line (RVVH).It took a turn at the jumper line, B, and moved into the process vent header line (PVH), filling it in the reverse direction all the way to the slip blind, C. When PVH was completely filled, water rose at line D and proceeded into MIC storage tank 610.

On February 8, 1985, two months after the leak, India's Central Bureau of Investigation drilled a hole in the PVH line at point E to drain any water left in the line. No water emerged. Carbide says this fact alone disproves the water washing theory. The fact that various valves in the pathway to the tank were closed also disproves the theory, according to Carbide.

Carbide espouses an alternative theory: The company says it has proof that water was introduced by a "disgruntled employee" who removed pressure gauge F, attached a hose to the open piping, and ran water into theMfC tank. Gas then escaped through a rupture disk and proceeded through the RVVH and out the vent gas scrubber.

Source: Courtesy of Union Carbide.

supervisors hoped to remove the water. They failed, and within 15 minutes the relief valve blew.

The investigators had physical evidence to sup- port this scenario. After the accident, the local pres- sure gauge hole on tank 610 was still open and no plug had been inserted, as would have been normal for routine maintenance. When the MIC unit was ex- amined, a crude drawing of the hose connection was found on the back of one page from that night's log book. Also, operators outside the MIC unit told the investigation team that MIC operators had told them about the hose connection that night. In addition, log entries had been falsified, revealing a crude cover-up effort. The major falsification was an attempt to hide the transfer of contents from tank 610.

Why did the supervisors and operators attempt a cover-up? The Carbide investigators gave this explanation.

Not knowing if the attempted transfer had exacer- bated the incident, or whether they could have otherwise prevented it, or whether they would be blamed for not having notified plant management earlier, those involved decided on a cover-up. They altered logs that morning to disguise their involve- ment. As is common in many such incidents, the re- flexive tendency to cover up simply took over.?

9 Ashok5. Kalelkar,"Investigationof Large-Magnitude Incidents:Bhopalas a CaseStudy,"paperpresentedat the Instititutionof ChemicalEngineersconferenceon Preventing MajorChemicalAccidents,London,England,May1988,p. 27.

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EXHIBIT 4 A Breakdown of the $470million Settlement The settlement was based on calculations about the number and size of payments in a range of categories.

Source: Kim Fortun, AdVOCllC!J after Bhopal (Oticago: University of Chicago Press, 20(1), p. 38. 0...-(.-';"" ~"-~

A SETTLEMENT IS REACHED The theory of deliberate sabotage became the centerpiece of Carbide's legal defense. However, the case never came to trial. In 1989 a settlement was reached in which Carbide agreed to pay $470 mil- lion to the Indian government, which would distrib- ute the money to victims (see Exhibit 4). In return, India agreed to stop all legal action against Carbide, VCIL, and their executives. India agreed to this set- tlement, which was far less than the $3.3 billion it was asking for, because a trial and subsequent ap- peals in the Indian court system would likely have taken 20 years. Carbide paid the settlement using $200 million in insurance and taking a charge of $0.43per share against 1988net earnings of $5.31per share. Victims' groups were upset because they thought the settlement too small, and they chal- lenged it. In 1992the Indian Supreme Court rejected these appeals but permitted reinstatement of crimi- nal proceedings against Warren Anderson and eight VeIL managers. to

In 1993India issued an arrest warrant for Anderson on charges of "culpable homicide not amounting to murder," but it has never been served. At the trial of the remaining VCIL defendants Indian prosecutors argued the managers were criminally negligent be- cause they knew of lax operating procedures but failed to improve them to avoid costs. After 18 years,

10 Union Carbide Corp. v. Union of India, AIR 1992 (S.c.) 248.

186 witnesses, and various delaying motions, the court convicted seven managers (one had died) of a reduced charge, "causing death by negligence."!' They were sentenced to two years in prison, and fined the equivalent of $2,100.All appealed and were released on bail. Victims and the Indian public found the punishment outrageously modest.

Meanwhile, the Indian government was slow and inefficient in distributing settlement funds to gas vic- tims. In 1993, 40 special courts began processing claims, but the activity was riddled with corruption. Healthy people bribed physicians for false medical records with which they could get compensation. Twelve court officials were fired for soliciting bribes from gas victims seeking payments. All told, 574,366 claims were paid, including 14,824death claims, with average compensation about $1,280. Ninety percent of all claims were settled for $550, the minimum allowed.P

Because the claims process moved at a glacial pace for years, the settlement money accrued interest and, after all claims were paid, $325 million re- mained. The government wanted to use the interest

11 India Central Bureau of Investigation, "Eight Accused Sentenced in Bhopal GasTragedy Case," pressrelease, Ne.\ Delhi, June 7, 2010. 12 Paul Watson, "Cloud of Despair in Bhopal," Los Angeles Times, August 30, 2001, p. A6; and Government of Madhyc Pradesh, Bhopal Gas Tragedy Relief and Rehabilitation Department, "Facts and Figures," www.mp.gov.in/bgtrrdrl.:Y facts.htm, accessedJune 2010.

to clean up soil contamination at the plant. But in 2004 the Indian Supreme Court ordered it distributed to the victims and families of the dead in amounts proportionate to claims already paid.P

AFTERMATH In the wake of Bhopal, Congress passed legislation requiring chemical companies to disclose the pres- ence of dangerous chemicals to people living near their plants and to create evacuation plans. The chemical industry's trade association adopted a pro- gram of more rigorous safety standards that all major firms now follow.

In 1994 Union Carbide sold its 50.9 percent equity in UCIL to the Indian subsidiary of a British com- pany for $90 million. It gave all of this money to the Indian government for a hospital and clinics in Bhopal. After the sale, the company had no presence or current legal obligations in India. Nevertheless, Bhopal had destroyed it. As it exited India, it was a smaller, less resilient company. Forced to sell or spin off its most lucrative businesses, it grew progressively weaker. In 1984,the year of the gas leak, Carbide had 98,400 employees and sales of $9.5 billion; by 2000 it had only 11,000 employees and $5.9 billion in sales. The end came when it merged with Dow Chemical Co. in 2001 and its workforce suffered the bulk of cost-reduction layoffs."

The pesticide plant never reopened. According to a recent visitor, "The old factory grounds, frozen in time, are an overgrown 11-acre forest of corroded tanks and pipes buzzing with cicadas, where cattle graze and women forage for twigs to cook their evening meal. «is Chemical waste at the site has con- taminated the groundwater. In 1998 the state govern- ment took over the plant and made cleanup plans, but never carried them out.

In 2004 the United States again denied a request by the Indian government to extradite Warren Anderson. Anderson, who is now 91, has dropped from public view. In the unlikely event of extradition, he would face a long trial. Recently, his wife told a

13 "Compensation for Bhopal Victims." The New York Times, July 20, 2004, p. A6.

14 Susan Warren, "Cost-Cutting Effort at Dow Chemical to Take4,500 Jobs," The Wall Street Journal, May 2, 2001, p. A6. IS Somini Sengupta, "Decades Later, Toxic Sludge Torments Bhopal," The New York Times, July 7,2008, p. 1.

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reporter that he had been "haunted for many years" by the accident."

The struggle of gas victims for compensation spawned an activist movement that lives on after more than 25 years. The lead organization is the Inter- national Campaign for Justice inBhopal, a coalition of gas victim groups and charities. Survivors complain of chronic medical conditions including headaches, joint pain, shortness of breath, and psychiatric prob- lems. They believe that gas exposure and toxic wastes from the plant have caused birth defects.

NEW TARGET: DOW CHEMICAL After Dow Chemical absorbed Union Carbide it became the victims' bull's-eye. Both victims and the Indian government now demand that Dow pay for cleaning up the contaminated plant site and further compensate injured survivors. In 2010 the Indian government filed a petition with the Indian Supreme Court seeking to overturn its 1989 settlement "to cure a miscarriage of justice." The petition, still pending, seeks to force Dow Chemical to pay another $1.1 bil- lion to the victims." This is justified, argues the gov- ernment, because the full extent of the disaster was unknown in 1989.

Members of the victim's movement have repeat- edly sued in U.S. courts seeking to overturn the $470 million settlement, accusing Union Carbide of human rights violations, and trying to hold it respon- sible for cleaning up groundwater pollution at the plant site. All their efforts have so far failed, although one case still drags on.l8

Victims otherwise harass the company. They have joined with progressive religious orders and pension funds in the United States to picket its shareholder's meetings while inside, friendly shareholders introduce

16 Celeste Katz, "India Sez Bust Bhopal Yank," Daily News, August 2, 2009, p. 26.

17 Geeta Anand and Arlene Chang, "Dow Chemical Hit Again on Bhopal," The Wall Street Journal, December 4-5, 2010, p. B5.

18 The case is Janki Bai Sahu, et al. v. Union Carbide Corp., No. 04 Civ. 8825, 2010 U.S. Dist. LEXIS23860, February 11, 2010. Two previous long-running cases are In re Union Carbide Corp. Gas Plant Disaster at Bhopal, 634 F. Supp. 842 (S.D.N.Y. 1986) and Bano v. Union Carbide Corp. and Warren Anderson, No. 99 Civ. 11329,2005 U.S. Dist. LEXIS22871, October 5, 2005).

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resolutions asking Dow to acknowledge its responsi- bilities. All such resolutions have been defeated, gar- nering only single-digit percentages of the vote. Activists tried to embarrass Dow with a brand of bot- tled water named B'eau Pal containing groundwater from near the old plant. Children of gas victims once went on a 22-city U.S. tour to promote congressional hearings on Dow's responsibilities. No hearings were held.

Dow never wavers in denying any obligation. "While we have sympathy for this situation," said a company representative recently, "it is not Dow's re- sponsibility, accountability or liability to bear."19But the activists are resolute. "1 will fight until my last breath against Dow," says one gas survivor. "I will not give Up."20The fight also has ideological mean- ing. One movement leader believes that "[u]nless those responsible are punished in an exemplary mat- ter, the message that goes out to the corporate world is that you can kill and maim people and carryon with business as usual."21

POSTSCRIPT Despite the passage of time, Bhopal does not fade away. The library bookshelf on it keeps growing.22It has been the subject of at least seven films, including a drama that was a box office hit in India. A tend en-

19 Quoted in Brian Bowling, "Group from Bhopal SaysGas Still Kills," Pittsburgh Tribune Review, May 1, 2009, p. 1. 20 Hazara, a one-name activist, quoted in Mark Magnier, "Despair Lingers in Bhopal," LosAngeles Times, December 3, 2009, p. 28. 21 Satinath Sarangi, quoted in Jim Gilchrist, "Bhopal Hero," The Scotsman, July 8, 2009, p. 18. 22 A recent addition is Surviving Bhopal: Dancing Bodies, Written Texts,and Oral Testimonials of Women in the Wake of an Industrial Disaster (New York: Palgrave Macmillan, 2010).

tious book of reality fiction based on Bhopal became a best seller in Europe.P Told as a tragedy, the story stirs basic emotions. A Canadian critic reviewing a play on Bhopal found it badly written and acted, but nevertheless "a touching tale of human suffering" raising "such imposing themes as the relative worth of a human life and the intersection of greed and de- velopment in the Third World. "24 Doubtless these themes will keep the story alive.

Questions 1. Who is responsible for the Bhopal accident? How

should blame be apportioned among parties in- volved, including Union Carbide Corporation, UCIL, plant workers, governments in India, or others?

2. What principles of corporate social responsibility and business ethics are applicable to the actions of the parties in question?

3. How well did the legal system work? Do you agree with the decision to try the lawsuits in India? Were victims fairly compensated? Was Union Carbide sufficiently punished?

4. Did Union Carbide handle the crisis well? How would you grade its performance in facing uniquely difficult circumstances?

5. Does Dow Chemical Company have any remain- ing legal liability, social responsibility, or ethical duty to address unresolved health and environ- mental claims of Bhopal victims?

6. What lessons can other corporations and coun- tries learn from this story?

23 Dominique Lapierre and Javier Moro, Five Past Midnight in Bhopal (New York: Warner Books, 2002). 24 Kamal AI-Solaylee, "Bhopal: A Chemical and Theatrical Disaster," The Globe and Mail, October 25, 2003, p. R17. The play is Rahul Varma, Bhopal (Toronto: Playwrights Canada Press,2006).