Union Carbide and Bhopal

1
Union Carbide and Bhopal

• by
• Sarah Fleming
• Mark Chapman
• David Sumpter

2
Presentation Outline

• Intro
  David
• Political and Regulatory Forces Sarah
• Stakeholder Model
  Mark
• Ethical Models
  Sarah
• Economic Environment Mark
• Social Environment
  Mark
• Technology Concerns
  David
• Recommendations
  David
• Conclusion
  David

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Intro

• Union Carbide (UC)
• US company incorporated in 1917
• Established an Indian subsidiary called Union
  Carbide India Ltd. (UCIL) in 1934
• Originally owned 60
• This was reduced to 50.9 by 1980s

4
UCIL

• UCIL is an Indian company
• Chartered in India by the Indian government
• It is not a wholly owned subsidiary of UC
• 49.1 Indian owned
• 26 owned by Indian Government
• 23.1 traded on Bombay exchange

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UCIL cont.

• UCIL is a regular public company
• Board of Directors
• CEO
• Stock traded on Bombay Exchange
• In 1980 UC was asked to leave management of UCIL
  to the Indian managers, they did

6
Who Ran UCIL 1982-1984

• Much of the engineering was done by Indians
• All managers in Bhopal were Indian
• All employees in Bhopal were Indian
• There was no regular or direct reporting to UC by
  UCIL
• UC had done safety inspections in 1982 and 1983

7
Political/Regulatory Forces

• UC had to obtain a permit from the Ministry of
  Industry in New Delhi
• UC was forced to reduce its ownership percentage
• UC was pressured to transfer management
  responsibilities from Americans to Indians

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Political/Regulatory Forces Cont.

• UCs CEO, Warren M. Anderson, was charged with
  criminal negligence and asked to leave India
• Indian political members refused UCs monetary
  assistance in fear of the reaction of Indias
  society
• UC faced Indian courts as a result of India suing
  UC on the behalf of the victims
• Warren M. Anderson and other individuals within
  UCs top management team face charges of
  manslaughter within India

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Stakeholders UC in 1969
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Stakeholders UCIL in 1969
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Stakeholders UC before Disaster
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Stakeholders UCIL before Disaster
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Stakeholders UC after Disaster
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Rights Ethic

• UCIL did not act ethically
• Lack of safety measures that UCIL used to protect
  its workers
• did not adequately train and staff its
  corporation
• did not maintain safety features within the
  corporation

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Theory of Justice

• UCIL did not act ethically
• Lack of safety measures that UCIL used to protect
  its workers
• Lack of safety measures that UCIL used to protect
  the surrounding community
• did not inform the residents regarding the real
  dangers of the chemicals being produced at the
  plant or simple measures that residents could
  take to reduce their changes of being harmed
  during a gas leak

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Utilitarian Ethic

• UCIL did not act ethically
• original intent was to better Indias economy
• UC did not ensure that their actions would
  benefit the majority of India
• Rights Ethic and the Theory of Justice can be
  used to validate why the rule of Utilitarian
  Ethic was also violated

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Economic Environment

• Demand for pesticides increased due to the "green
  revolution
• UC received tax incentives to build in Bhopal
• Benefits
• UC's distribution costs were cut
• Provided more jobs for Indian workers
• Small communities developed around the plant
• Provided farmers with more pesticides
• Helped Indian government

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Economic Environment cont.

• Costs
• Communities were put at risk
• Contributions to the disaster
• Indian economy declined
• Increased competition in pesticide industry
• Reduced number of employees working at plant
• Reduced routine maintenance

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Economic Environment cont.

• Results of years of lawsuits
• UC paid 470 million to the Indian government
• UC sold UCIL for 90 million
• UC image was tarnished
• 1984 employees 98,000
• sales 9.5 billion
• 2000 employees 11,000
• sales 5.9 billion

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Social Environment

• UC, UCIL, and the Indian government displayed
  little social concerns.
• Tax incentives were given to build plant in large
  populated city.
• UC and UCIL took advantage and selected from
  large workforce.
• Originally plant did not produce the chemicals
  only mixed imported chemicals.
• Risk increased after 1980 when plant started
  producing MIC (methyl isocyanate)

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Social Environment cont.

• Citizens were not informed of proper actions in
  the case of a disaster
• 4,037 died
• 60,000 injured
• Covering face with wet cloth would have prevented
  most injuries and deaths

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Social Environment cont.

• UCs actions after disaster
• Gave 1 million dollars to relief fund.
• Gave 5 million more but was returned by Indian
  government.
• Built training center but was bulldozed by Indian
  government.

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Technology Concerns

• Giving technology to newly developing countries
  is generally good
• This includes basic technology to third world
  countries
• More advanced technology to countries like India

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Technology Concerns cont.

• Giving potentially dangerous technology to newly
  developing countries can be problematic
• The country must understand the responsibility
• The country must have the resources to take on
  the responsibility

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Technology Concerns cont.

• Technology and original plant design by UC
• Per Indian Government regulations
• Indian engineers finished plant design
• Indian engineers finished MIC add-on
• Indian contractors built plant and MIC unit
• Indian inspectors inspected plant
• Indian managers ran plant before 1980
• One American from 1980-82, none since 1982
• MIC unit came on line in 1980

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Technology Concerns cont.

• UC did what it felt was right politically
• UC did not properly analyze Indias inability to
  take on the role of overseeing such dangerous
  technology

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Recommendations to UC

• Leave inspectors to look out for UCs interest
• Even if the host country doesnt like it
• Do a Probability/Impact Matrix
• Always look after your assets

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Probability/Impact Matrix
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General Recommendations

• Realize that all the world is potentially a
  stakeholder
• We live in a litigious world
• It is your job to CYA!

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UC and UCIL today

• UC sold UCIL and other holdings
• UC bought by Dow
• UCIL is still in business in India
• UCIL is now Eveready Industries India Ltd.
• Dow is now getting grief over Bhopal