Paying for Bhopal

Months after methyl isocyanate (MIC) gas escaped from the Union Carbide pesiticide plant in Bhopal, India, officials at the company's world headquarters still refer to the massive gas leak as "the incident." In India, people call "the incident" a massacre, a gassing, a catastrophe, a calamity, a disaster, a tragedy, and a holocaust. They never refer to the leak as "the incident."

Union Carbide officials employ this rhetorical device to downplay the nature of the human and social catastrophe that was and is Bhopal. It is only one of a wide range of tactics being used to implement the multinational chemical corporation's overall strategy, of diverting attention from, and evading responsibility for, the more than 3,000 killed and 100.000 injured in the world's worst industrial disaster.

Two tactics are of central importance to Union Carbide's strategy of diversion and evasion. First, Union Carbide filed a motion on July 31. 1985, to dismiss thousands of personal injury and wrongful death cases pending before a federal judge in New York on the grounds that the cases should be tried instead in Indian courts. If this fails, Union Carbide will seek a quick settlement of the cases. Legal experts estimate that such a settlement could range anywhere from 5200 million to $800 million, while total damage inflicted on the people of Bhopal has been pegged at 1310 billion-an amount that would send Union Carbide into bankruptcy.

There is little consensus among legal observers on how the court will rule on the motion to dismiss. But there is surprising unanimity, even among lawyers representing the Bhopal victims, that if the case is kept in the United States, Union Carbide will get an early settlement.

An early settlement would provide the multinational corporation the opportunity to sidestep a public jury trial and a media airing of the issues, possible punitive damages, the likely imposition of a just damage award commensurate with the damage inflicted, bankruptcy, the transfer of company assets to victims of Bhopal, and the consequent deterrent and preventive effect that a trial would generate.

Unlike asbestos victims' lawyers who were able to achieve substantial gains for their clients by confronting and then shrewdly out maneuvering major asbestos manufacturers, lawyers for the Bhopal victims seem less inclined to confront their corporate adversary and more inclined to seek an appeasing settlement.

Lawyers for the asbestos victims fought a fifteen year battle for just compensation that sent the world's leading asbestos manufacturer, The Manville Corporation, into bankruptcy. And just this week, the asbestos victims' lawyers won an unprecedented victory when Manville agreed in effect to transfer a controlling fifty percent of the company's shares into a $2.5 billion trust fund for the victims.

The U.S. lawyers representing the Bhopal victims, led by Melvin Belli, F. Lee Bailey, Stanley Chesley, and Michael Ciresi, a lawyer with the Minneapolis based law firm of Robins, Zelle, Larson & Kaplan, which is representing the Union of India in the New York litigation, are proven to be a breed of trial attorney far different from the lawyers who represent asbestos victims. The Bhopal lawyers are less confrontational and more settlement-oriented, questioning whether a strategy of seeking control of Union Carbide's assets is in the best interests of their clients.

"Do you want to bury the company, literally bury the company, put it into bankruptcy, thereby limiting the time period in which you are going to get the money and probably diminishing the amount of money you are going to receive?" asked a skeptical Michael Ciresi, the lawyer representing the government of India, during a telephone interview from his office in Minneapolis. "That's an issue you have to look at. And if your goal is to bury the company. then I think you have to look at the flip side of that: Does that serve the benefit of the victims? And can you do it? Or can they seek protection in a bankruptcy situation?"

"Bankrupt the company?"

"If that's what it takes to get just compensation to the victims," says David Rosenberg, professor of law at Harvard Law School and an expert on mass tort liability. "That's the risk Union Carbide took."

Robert Hager, a public interest attorney with the Washington, D.C.-based Christie Institute, agrees that a transfer 01 assets should be an option if that's what it takes to cover the damages. "There are two possibilities. The one possibility would be the liquidation of Union Carbide's assets ... but what would more likely happen is that the company would have a debt of S70 billion which it can't cover so it would be technically bankrupt and it would depend on the reorganization negotiations," Hager told the Monitor. "I would think that it would be more profitable for the victims it Union Carbide would remain intact as a corporation. Present bondholders and shareholders would lose what they have and new shares would be issued to the victims for their debt. The victims would be tire new owners and could sell their shares on the market if they chose to do so." (See Hager Interview)

Other signs also point to an unwillingness on behalf of the Bhopal victims' U.S. attorneys to take Union Carbide the full distance. What started out as an openly contentious, adversarial proceeding between Union Carbide and Bhopal victim lawyers has quieted down during the past few weeks. "We agreed at a meeting to tone down the rhetoric," said one plaintiffs' lawyer close to the case. "We are working very closely with Union Carbide lawyers to try to reach a settlement."

This accelerating movement by a united front of Union Carbide and victim lawyers toward what many legal observers predict will be an unjust settlement has raised serious questions about the adequacy of current American legal mechanisms to bring just compensation to victims of corporate wrongdoing, and moved activists in the United States and India to organize Bhopal victims in an effort to gain a public trial of the issues in civil or criminal forums.

Union Carbide, on the other hand, wishes to avoid, public trial at all costs. Union Carbide Corporation owns i(1 _s1 percent of Union Carbide India Ltd. (UCIL), the subsidiary- that operated the pesticide manufacturing plant in Pin Evidence from Bhopal indicates that a high degree of recklessness bordering on criminal behavior characterized the operation of the Bhopal plant. Four serious accidents, including one that killed a plant operator, occured between December 1981 and October 1982. In 1983, two workers were hospitalized following exposure to gas at the plant. (See Box One)

Despite a wealth of news accounts focusing on Union Carbide's culpability in the Bhopal disaster, the full story has yet to be told. India's Central Bureau of Investigation (CBI), the Indian equivalent of the U.S. Federal Bureau of Investigation, seized corporate documents from the plant immediately after the disaster and refuses to rclease the documents pending a criminal investigation. With a settlement o( the New York lawsuits on the horizon. the lid could be kept on these documents forever.

In traditional settlement agreements. the corporation agrees to pay money to the victims, (an amount that is most often much less than the actual damage, much less than what a jury would have awarded had the case been successfully brought to trial, and devoid of punitive damages), and the victims agree to forgo a public trial and to drop any and all claims against the corporation. The trial lawyers representing the victims then take a percentage of the money settlement.

But an early settlement agreement maybe inappropriate in a case where the issue of liability is so clear cut, as it is in the Union Carbide case and as it was in the asbestos litigation.

Nevertheless, attorneys representing (lie Bhopal victims appear to have their minds made up, and if they move for a quick settlement with Union Carbide, the burden of justice will fall increasingly upon the criminal prosecutors in both India and the United States. In India, the CBI's investigation continues, with no progress reported since government officials arrested Carbide's Chairman of the Board, Warren Anderson, and two local Carbide officials four days after the gas leak and charged them with criminal negligence. Six hours after his arrest, Anderson was released on $2,000 bail, but only after intervention from the U.S. State Department.

In the United States, John Kelly, Connecticut's Chief State's Attorney, has yet to initiate a preliminary criminal investigation into the possibility that one of the state's largest corporate citizens, or any of its executives, may have violated the state's criminal laws. (See Box Two)

While Union Carbide has a reputation within the chemical industry of having relatively clean legal, workplace, and environmental records, a closer look indicates otherwise. From brain cancer deaths among workers in Texas, to kidney disease among workers at a Carbide battery plant in Indonesia, Carbide's corporate character fails to live up to the Mr. Clean image created by the American business press. (See Box Three) The Bhopal disaster is exceptional, not because corporate negligence and recklessness are unusual at Union Carbide, but because of the magnitude of the suffering in this case.

Even without the benefit of primary documents held by investigators in India, evidence unearthed in recent months presents a solid case for the initiation of a preliminary criminal investigation into the activities of Union Carbide in connection with the Bhopal disaster.

The UCIL plant in Bhopal was storing MIC, the highly volatile and deadly gas used to make pesticides that leaked into the atmosphere on the evening of December 2, 1984. Installed at the plant was a refrigeration unit designed to keep the MIC storage tank at a temperature low enough to prevent runaway chemical reactions. But the unit was not working at the time of the accident, and the MIC in the storage tank was warmer than allowed by the plant's operating manual. "The refrigeration unit had been down over five months," Union Carbide officials admitted to a crowded March 20. 1985 press conference at corporate headquarters in Danbury, Connecticut.

With the refrigeration unit out, it was crucial that instruments designed to measure the temperature and pressure of the gas in the storage tank be in good operating order. But the Temperature Indicator Alarm had been giving faulty readings for years. And the Pressure Indicator Control, which one journalist has likened to a "joke prop in a vintage Mickey Mouse movie," was similarly faulty.

The plant also had an emergency scrubber system to neutralize gas in the event of a leak. But the scrubber system had been out of use for six weeks. The flare tower, designed as the final line of defense to burn off excess MIC, also was closed down ten days before the fatal leak because, due to neglected maintenance, the line to the flare tower had corroded.

To make matters worse, the workers operating this faulty equipment at the Bhopal plant were inadequately trained. The New York Times reported in January 1985 that the leak was triggered after "a worker whose training did not meet the plant's original standards was ordered by a novice supervisor to wash out a pipe that had not been properly sealed." It was the mixture of water with the gas that triggered the chemical reaction that led to the gas leak.

"Everything that could possibly go wrong had gone wrong," commented Bruce Agnew in the most recent issue of Safety and Risk Management, the Journal of the British Safety Council. "Machinery failed; workers panicked; managers either took no decisions or the wrong decisions."

If the civil case goes to trial, the evidence indicating reckless operation of the Bhopal plant places the assets of UCIL, estimated at $100 million, in serious jeopardy. As half owner of UCIL, the loss of the Bhopal plant is of concern to the parent Union Carbide. But of much greater concern to the company is the threat of losing its own assets, estimated at 810 billion. Documentation revealed since the accident indicates that the parent company had a degree of control over UCIL that could legally identify the parent as the responsible party. If a judge makes a legal determination that Union Carbide exercised control over its Indian subsidiary, then Carbide's entire net worth is open to the claims of the victims. This could lead Union Carbide down the road to bankruptcy.

The evidence condemning Union Carbide is persuasive. The structure of Union Carbide's relations with its subsidiaries indicates strict authority and control by the parent company. Union Carbide owns more than half of UCIIL shares. UCIL is listed on Union Carbide's consolidated balance sheet. Union Carbide had direct representation on the board of UCIL.

More important is the evidence indicating direct Union Carbide involvement in the design and operation of the Bhopal plant. According to a report in the Times of India by investigative reporter Praful Bidwai, Union Carbide designed the Bhopal plant and was responsible for inspecting and approving all major equipment installed in the factory. According to Bidwai, the Bhopal plant was "grossly underdesigned." "Thus even if each piece of equipment had functioned as designed and the plant as a whole had been properly maintained and operated - which it evidently was not - it would still not have been possible to avert the disaster...," Bidwai concluded.

In February of this year Edward Munoz, a retired Union Carbide official and former managing director of UCIL, claimed in a sworn affidavit that in the early 1970s, Union Carbide insisted that large amounts of MIC be stored in Bhopal over UCIL's objections. In the early 1970s. Munoz "represented the Union Carbide India Ltd. position that only token storage (of the chemical at Bhopal) was necessary, preferably in small individual containers based both on economic and safety considerations," according to the affidavit. But Union Carbide's corporate engineering group "imposed the view and ultimately made to be built (at Bhopal) large bulk storage tanks patterned on similar Union Carbide facilities at Institute, W. Va.," Munoz asserted in his affidavit.

A growing chorus of-critics have joined Munoz in disputing Union Carbide's view that "the Indian company has nothing to do with the U.S. company." A wide-ranging, seven-week investigation of the Bhopal disaster conducted by The New York Times published in January 1985 concluded that Union Carbide "had the authority to exercise financial and technical control over its affiliate (UCIL) and the American parent often used that right." "Union Carbide Corporation had its finger on the pulse of the Bhopal plant all the time," The Times quoted Kamal K. Pareek, senior project engineer during the building of the Bhopal plant's methyl isocyanate installation. "They just didn't appreciate the information they were getting."

A report released by Union Carbide Chairman Warren Anderson supports this view. Dated May 1982, the report. submitted to Union Carbide by a team of' American experts, points out major safety concerns at the Bhopal plant, including deficiencies in instrumentation and safety valves. lax maintenance procedures, and high turnover of operating; and maintenance staff'. The report. stamped "Business Confidential," warned that the plant presented "serious potential for sizeable releases of toxic materials." The U.S. team made numerous recommendations to rectify the deficiencies at the plant, but, according to reports from union activists. not one of the recommendations was ever implemented.

After this report was sent from Union Carbide corporate headquarters to the Bhopal plant, union organizers appealed to U.S. management to improve safety conditions. Radhika Ramaseshan, writing in the Indian Economic and Political Weekly reported that a letter was sent to the agricultural products division of Union Carbide in the United States, with a plea to appoint trained superintendents in the MIC plant. "The president was said to have replied in the negative," reported Ramaseshan," in spite of the fact that the parent company had just then investigated the safety measures in the Bhopal plant and indicted the local management on every score."

UCIL officials in Bhopal initially denied that MIC was hazardous. "The gas that leaked is only an irritant, it is not fatal," one UCIL official told reporters immediately after the leak, but the MIC operating manual used at the Bhopal plant and adapted from a similar manual used at Bhopal's sister MIC plant in Institute, West Virginia tells another story. The authors of the manual, five Indian engineers, make abundantly clear the dangers of MIC: "MIC's limited exposure can be fatal. The chemicals involved in its production are highly toxic and hazardous in nature. Even the big corporations have refrained from making this lethal chemical due to the complexity involved in the operation." The manual also instructed operators to "Keep circulation of storage tank contents continuously 'ON' through the refrigeration unit." As Chairman Anderson admitted at his press conference, the refrigeration unit was "down" for five months prior to the accident.

Three months prior to the Bhopal gas leak, an internal Union Carbide memo warned that "a real potential for a serious incident exists" at the Institute. West Virginia plant and that efforts to control the problem "would not be timely or effective enough to prevent catastrophic failure of the [storage] tank." The memo warned of a" runaway reaction" at the West Virginia facility.

Anderson, during his May 1985 press conference, hinted that the gas leak may have been due to sabotage. But this view has been roundly condemned as a crude attempt by Union Carbide to escape civil liability. (The only effective defense to victims' claims that Carbide is strictly liable is the defense of sabotage.) And in an article in Safely and Risk Management magazine, Bruce Agnew reports that "changes were made to the production flow by the local management [of the Bhopal plant] and that these changes were approved by Union Carbide headquarters in the U.S." On the morning of December 2, 1984 supervisors ordered certain pressure safety valve lines to be flushed with water. "At the time, they were unaware that some were blocked and others only partially cleared," Agnew reports.

The evidence presented above, evidence that portrays a multinational corporation operating in reckless disregard of the risks posed by one of the most dangerous chemicals known was compiled without the aid of court-ordered discovery. Such discovery, including cross examination of top Union Carbide executives, if not aborted by a premature settlement, will reveal a clearer picture of who was responsible for the death and destruction at Bhopal.

Bhopal represents more than just another chemical accident and therefore deserves more than just the usual consideration given by lawyers and prosecutors to normal tort and criminal cases. In the words of Praful Bidwai, a journalist for the Times o/ India who was in Bhopal at the time of the accident: "If there ever was a wretchedly undignified hideously helpless form of mega-death after Hiroshima and Nagasaki, this is it." p

Russell Mokhiber, an attorney with Corporate Accountability Research Group, is completing a book on corporate crime.

Box One PREVIOUS ACCIDENTS AT UNION CARBIDE'S BHOPAL PLANT The alpha-napthol storage area had a huge fire on November 24, 1978, which could only be controlled after ten hours; it resulted in a loss of about Rs 6 crores ($5 million). Plant operator Mohammed Ashraf was killed by a phosgene gas leak on December 26. 1981. Another Phosgene leak in January 1982 caused 28 persons to struggle between life and death for several months. Three electrical operators were severely burned while working on a control system panel on April 22, 1982. On the night of October 5, 1982, methyl isocynate escaped from a broken valve and seriously affected four workers. Several people living in nearby colonies also experienced burning in the eyes and breathing trouble due to the exposure. Two similar incidents were also reported in 1983. Reprinted from No Place to Run: Local Realities and Global Issues of the Bhopal Disaster. Available for $6 from Highlander Research and Education Center, Rt. 3, Box 370, New Market, TN 37820.

Box Two A CALL FOR A CRIMINAL INVESTIGATION IN CONNECTICUT In Connecticut, a person is guilty of criminally negligent homicide when, with criminal negligence, he or she causes the death of another person. Criminal negligence is defined as a failure to perceive a substantial and unjustifiable risk, of such a nature and degree that the failure to perceive it constitutes a gross deviation from the standard of care that a reasonable person would observe in the situation. A person is guilty of manslaughter in the second degree when he or she recklessly causes the death of another person. Recklessness is defined as conscious disregard of a substantial and unjustifiable risk, constituting a gross deviation from reasonable conduct. On the issue of jurisdiction, The Supreme Court has recognized that jurisdiction of the states in criminal cases is not limited to acts committed inside the state of prosecution. If you believe that the facts described in this article represent, at the least, a gross deviation from reasonable conduct and deserve close scrutiny by the chief law enforcer in Connecticut, please write to him and ask for a preliminary criminal investigation into Union Carbide's involvement in the Bhopal disaster. Write or call: John J. Kelly Chief State's Attorneys Office 100 South Turnpike Rd Box 5000 Wallingford, CT 06492 Phone: 203/265-2373

Box Three UNION CARBIDE: NOT SO CLEAN West Virginia In 1982 a West Virginia State Department of Health study found that residents downwind from Carbide's North Charleston plant suffered from cancer at a rate twice the national average. Indonesia In 1981, a U.S. newspaper. Newsday reported that 120 kidney disease cases had been reported among workers at Carbide's battery plant in Cimanggis by the end of 1977 and 402 workers had developed kidney disease by the end of the 1978. Tests showed very high mercury levels in the plant's well water. The company's health officer persuaded the company to stop using the contaminated wells and to switch to bottled water for drinking and preparing workers meals. "But they [Carbide] said I may not tell the workers that there is mercury in the drinking water," the health officer told Newsday. "They said the workers would become anxious." Texas In 1981, a government study found 22 deaths from brain cancer among twenty-year workers at the company's Texas City, Texas vinyl chloride plant - a rate three times the national average. Puerto Rico In December 1980, Carbide was fined $550,000 for polluting the air at the company's plant in Yabucoa, Puerto Rico. Residents of the area sued Carbide for $380 million in damages charging that the pollution adversely affected their health. West Virginia In 1976, six cases of angiosarcoma, a rare cancer associated with vinyl chloride, four times the expected rate of leukemia, and twice the expected rate of brain cancer, were found among workers at Carbide's South Charleston vinyl chloride plant. West Virginia Between 1930 and 1932 an estimated 476 workers died and 1,500 were disabled from the lung disease silicosis while building a tunnel in Gauley Bridge, West Virginia. The deaths were the result of callous negligence on the part of the contracting company, a subsidiary of Union Carbide.

Box Four A NEW LEGAL CLAIM: MULTINATIONAL ENTERPRISE LIABILITY Corporate law in the United Stares holds that when the stock of one corporation (the subsidiary) is substantially owned by another (the parent, the subsidiary will be treated us an entity separarate from the parent. There are situations. however. where the parent will be held responsible for the contractual obligations and tort liabilities of the subsidiary, for example, when the parent controls the operations of the subsidiary or when the two operations are substantially intermingled. Lawyers representing Bhopal victims and the Indian government claim that this was the case in Bhopal: that Union Carbide controlled the operations of Union Carbide India Ltd. (UCIL). But they also argue that even if UCIL operations were not controlled from Union Carbide headquarters in the United States. they should have been. They put forth this argument in a novel legal claim, which the lawyers call "Multinational Enterprise Liability." This claim, count one of the consolidated complaint on behalf of' the Bhopal victims and of the complaint filed for the Indian government is reprinted below: Multinational Enterprise Liability Multinational corporations by virtue of their global purpose, structure, organization, technology, finances and resources have it within their power to make decisions and take actions that can result in industrial disasters of catastrophic proportion and magnitude. This is particularly true with respect to those activities of the multinationals which are ultrahazardous or inherently dangerous. Key management personnel of multinationals exercise a closely-held power which is neither restricted by national boundaries nor effectively controlled by international law. The complex corporate structure of the multinational, with networks of subsidiaries and divisions, makes it exceedingly difficult or even impossible to pinpoint responsibility for the damage caused by the enterprise to discrete corporate units or individuals. In reality, there is but one entity, the monolithic multinational, which is responsible for the design, development and dissemination of information and technology worldwide, acting through a forged network of interlocking directors, common operating systems, global distribution and marketing systems, financial and other controls. In this manner, the multinational carries out its global purpose through thousands of daily actions, by a multitude of employees and agents. Persons harmed by the acts of a multinational corporation are not in a position to isolate which unit of the enterprise caLISCA tile harm, yet it is evident that the multinational enterprise that caused the harm is liable for such harm. The multinational must necessarily assume this responsibility, for it alone has the resources to discover and guard against hazards and to provide warnings of potential hazards. This inherent duty of the multinational is the only effective way to promote safety and assure that information is shared with all sectors of its organization and with the nations in which it operates. A multinational corporation has a primary, absolute and non-delegable duty to the persons and country in which it has in any manner caused to be undertaken any ultrahazardous or inherently dangerous activity. This includes a duty to provide that all ultrahazardous or inherently dangerous activities are conducted with the highest standards of safety and to provide all necessary information and warnings regarding the activity involved. Defendant multinational Union Carbide breached this primary, absolute, and non-delegable duty through its undertaking of an ultrahazardous and inherently dangerous activity posing unacceptable risks at its plant in Bhopal, and the resultant escape of lethal MIC from that plant. Defendent Union Carbide further failed to provide that its Bhopal plant met the highest standards of safety and failed to inform the Union of India and its peoples of the dangers therein. Defendent Union Carbide is primarily and absolutely liable for any and all damages caused or contributed to by the escape of lethal MIC from its Bhopal plant.