Issues in Union Carbide India Limited and Bhopal Gas Tragedy

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Union Carbide India Limited

UCIL was formally subsidiary of UCC a US based company that had more than 130 subsidiaries across 40 countries. UCC's operation in India started in the beginning of the twentieth century. In 1924, an assembly plant for batteries was opened in Kolkata. By 1983 UCC had 14 plants in India manufacturing chemicals pesticides, batteries and other products. UCC held a 50.9 % stake in the Indian subsidiary. The balance of 49.1% was owned by various Indian investors. Normally foreign investors were limited to 40% ownership of equity in Indian companies, but GoI waived this requirement in the case of UCC because of the sophistication of its technology and the company's potential for export.

In 1966, an agreement was signed between GoI and UCIL. Under the agreement, UCIL would import 1,200 tons of Sevin from the parent company in the United States. UCC would build a factory in India to produce Sevin within five years. The location of the factory would be Kali Grounds in Bhopal (Madhya Pradesh). In 1969, UCC set up its pesticide unit in Bhopal. The GoI granted a license to UCIL to manufacture 5,000 tons of Sevin a year. UCIL would produce Sevin and all the chemical ingredients required in India itself. Eduardo Munoz, the Argentinean agronomic engineer, who was with UCC, was entrusted the responsibility of making the project a success. Eduardo Munoz felt that manufacturing 5,000 tons of Sevin would require considerable quantities of MIC to be manufactured and stored. He was not in favour of storing huge quantity of MIC and suggested an alternative like batch production of MIC to meet production line requirements as they rose. This would eliminate the need to store large quantity of MIC on site. This Production philosophy was against the American Industrial Culture and UCC official turned down the suggestion.

In 1966, an agreement was signed between GoI and UCIL. Under the agreement, UCIL would import 1,200 tons of Sevin from the parent company in the United States. UCC would build a factory in India to produce Sevin within five years.

The location of the factory would be Kali Grounds in Bhopal (Madhya Pradesh). In 1969, UCC set up its pesticide unit in Bhopal. The GoI granted a license to UCIL to manufacture 5,000 tons of Sevin a year. UCIL would produce Sevin and all the chemical ingredients required in India itself. Eduardo Munoz, the Argentinean agronomic engineer, who was with UCC, was entrusted the responsibility of making the project a success.

Eduardo Munoz felt that manufacturing 5,000 tons of Sevin would require considerable quantities of MIC to be manufactured and stored. He was not in favour of storing huge quantity of MIC and suggested an alternative like batch production of MIC to meet production line requirements as they rose. This would eliminate the need to store large quantity of MIC on site.

However, this production philosophy was against the American industrial culture and UCC officials turned down the suggestion, according to them Eduardo Munoz need not have to bother much about the safety issues and it would not affect the residential areas which were very close to the factory site.

Ethical Issues with the Company and Its plant:-

1] It was clost to the residential areas:

UCIL chose to store and produce MIC, one of the most deadly chemicals (permitted exposure levels in USA and Britain are 0.02 parts per million), in an area where nearly 120,000 people lived, knowing the fact and being opposed by one of the Employee of the company, still the higher official or the parent company need not took any preventive measures about it, which resulted in to massive event on December 2, 1984.

2] Inefficient Safety System:

Safety systems were grossly under-designed and inoperative. The MIC plant was not designed to handle a runaway reaction. When the uncontrolled reaction started, MIC was flowing through the scrubber (meant to neutralize MIC emissions) at more than 200 times its designed capacity.

3] Issues regarding the storage capacity:

MIC in the tank was filled to 87% of its capacity while the maximum permissible was 50%. MIC was not stored at zero degree centigrade as prescribed and the refrigeration and cooling systems had been shut down five months before the disaster, as part of UCC's global economy drive. 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.

4] Issues regarding the minimum required Workforce:

As part of UCC's drive to cut costs, the work force in the Bhopal factory was brought down by half from 1980 to 1984. This had serious consequences on safety and maintenance. The size of the work crew for the MIC plant was cut in half from twelve to six workers. The maintenance supervisor position had been eliminated and there was no maintenance supervisor. The period of safety-training to workers in the MIC plant was brought down from 6 months to 15 days.

Results of not abiding Ethics of Business:

On December 3, 1984 40 tons of poisonous toxic gasses got spread across the city of Bhopal. The company had not even provided any warning alarms neither the proper information to the Doctors to treat the victims who visited the hospitals breathless and blind. It was estimated that about 10,000 died immediately, and about 30,000 to 50,000 people were victimized so severely that they cannot return back to routine life.

According to an epidemiological study sponsored by Jawaharlal Nehru University, New Delhi, in October 1989, 70% to 80% of the people in the severely affected communities and 40% to 50% in the mildly affected communities continued to suffer from MIC exposure related illnesses five years after the disaster. A house to house symptom survey in one community, conducted as part of a doctoral dissertation in Delhi University in early 1993, showed 65.7% people suffering from respiratory symptoms, 68.4% with neurological problems and 49% with ophthalmic symptoms. Among the women in the reproductive age, 43.2% suffered from reproductive disorders.

Settlement to the event:

The Supreme Court directed UCC to pay up US $ 470 million in "full and final settlement" of all claims, rights, and liabilities arising out of the disaster. The Supreme Court of India ruled that the $470 million settlement was "just, equitable and reasonable." UCC described the court's decision as fair and reasonable, and the company's stock soared in the London market. Analysts felt that the Bhopal Gas disaster, which left thousands of people dead and injured, was settled for a mere US $ 470 million-which worked out to around Rs. 10,000 per victim which was much less then what they all went through.

Government of India was jointly responsible for the entire event happened as they were fully aware of the criticality of MIC and still they permitted UCC to build up a plant close to some residential area, moreover they haven't even checked the precautionary measures taken by the company to fight against any default nor they kept themselves ready for the any calamities, apart from this during the time of settlement also suggestions of victims were not taken. Thus it's not only UCC but Government equally responsible to the event from my understanding.