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December 2, 1984 made the entire world mourn. At around 11 in the evening, while the town of Bhopal in India slept, around a ton of water entered Tank 610 of Union Carbide’s Bhopal plant and reacted with methyl isocyanate (MIC) leading to an increase in pressure and discharging toxic gas into the atmosphere. As pressure from the tank built, heavy toxic discharges filled Bhopal with a deadly plume in the early morning. In just a few hours, over 3,800 people died along with the carcasses of buffaloes, cows, and dogs. The local hospital was flooded with people who fainted upon inhalation of the gas or who were injured as hysteria and mass panic led to stampedes as the locals ran for their lives. Authorities have placed the immediate and subsequent casualties of the Bhopal disaster at 15,000 (Broughton, 2005). Bhopal would be known as “the worst industrial catastrophe of all time” (Anand, 2005, p. 1).
Almost immediately, Union Carbide, a multinational company (MNC) based in the United States but operating its subsidiary plant, Union Carbide India Ltd. (UCIL) in India, attempted to deny responsibility for the disaster. After years of legal wrangling, Union Carbide, incorporated subsequently by Dow Chemical Company, settled with the victims’ families for $470 million or roughly $2,200 per family, obviously a measly sum compared to the health and psychological damage inflicted upon the victims (Dinham & Sarangi, 2005). On 2010 June 24, heads rolled when the Supreme Court of India convicted seven individuals, including the former UCIL chief executive Warren Anderson, of causing death by negligence and sentenced them to a prison term of two years and a fine of $2,000 each (Broughton, 2005). Investigations leading up to this day revealed how the toxic leakage was caused by a series of industrial neglect because of UCIL’s emphasis on cutting manufacturing and operating costs in producing Sevin, its pesticide (Kurzman, 1987; Cassels, 1993). The Bhopal Gas Disaster reflected how multinational corporations’ thirst for profit at the expense of corporate social responsibility (CSR) contributed to massive loss of life and environmental destruction. Had Union Carbide poured its financial resources to ensure that its subsidiary company in Bhopal, India was structurally safe, the personnel adequately trained, and equipment compliant to safety regulations, a large-scale disaster would have been mitigated, if not averted.
Saving Dollars at the Expense of Lives
Despite Union Carbide’s attempts at dissociating itself from moral responsibility, the fact that 15,000 people died needlessly and the global outrage over the disaster prompted indignation over the irresponsible management of MNCs on their Third World subsidiaries and over India’s leniency on regulating the operations of UCIL. Numerous investigations have revealed the extent that UCIL, and by command responsibility, parent company Union Carbide, have neglected to ensure that their operations adhered to safety and regulatory standards required by law because it needed to cut costs to achieve financial profitability (Cassels, 1993; Kovel, 2002). Union Carbide’s decision to export its operations in a Third World Country was motivated by cheap labor and raw materials. Industrial outsourcing is always driven by corporate profit. Outsourcing one’s manufacturing operations in a developing nation, as in the case of UCIL, leads to an improved balance sheet because it leads to a reduction of costs since the outsourcing partner overseas can be depended upon on guaranteeing operation of the plant, maintenance, and equipment handling.
Cutting manufacturing costs
Saving up on manufacturing costs was the primary reason why UCIL was built and MIC was chosen as the intermediate chemical despite the hazards that are associated with it. Union Carbide incorporated its subsidiary company in Bhopal, India in 1969 and its MIC production plant in 1979. During this time, the company made the trademarked pesticide Sevin (carbaryl) with MIC as an intermediate chemical. MIC had previously been imported from the U.S. mother company but the subsidiary decided to cut cost and manufacture its own MIC to produce its carbamate pesticides. Union Carbide competed with Bayer in producing carbaryl but the latter did not use MIC as an intermediate chemical at a more expensive manufacturing price (Kovel, 2002). Instead of going for less hazardous chemicals as intermediates, UCIL went for MIC which was less expensive. To cut costs, the chemical route in the carbaryl production also deviated from the usual routes taken in chemical companies. Instead of MIC-free routes which scientists opined was the safer manufacturing order, the Bhopal facility produced carbaryl by reacting methylamine with the chemical phosgene to produce MIC then reacting MIC with 1-napthol to form the finished product (Kovel, 2002). While pesticide demand fell during the 80s, MIC production still continued, eventually leading to a buildup of the toxic substance.
Inadequate employee training and irresponsible management
Cost reduction policies of Union Carbide severely affected the workers’ morale and forced some of the company’s most skilled workers to look for work elsewhere, leaving untrained and unqualified personnel ill-equipped to handle sensitive equipment. Kurzman (1987) related an interview with one employee that the overall professional climate at UCIL was not conducive for professional development because promotions were few, trainings were not in the agenda, and employees were even discouraged to replace broken pipes. The company also overlooked the cultural barriers as workers had to make do with manuals written in English when most of the employees were not very fluent. Due to the slump caused by low demand in carbaryl, Union Carbide laid off half of the supervisory personnel and operators so that at the year of the leakage, only 12 operators remained. The expenditures cut also caused more loose regulations in maintenance. Instead of the hourly instrument readings required under the company’s safety procedures, readings were made every two hours with no maintenance supervisor in sight. An investigation also revealed that before the disaster, there had been complaints among the workers because of safety concerns but the management instead fined the bickering workers (Cassels, 1993). According to the TED Case Studies (1987), the U.S.-based Union Carbide used a hands-off approach in the management of the Indian subsidiary which overlooked the critical safety aspects of management. The report also indicated the existence of communication problems and cultural barriers which prevented both companies from coming up with unified and decisive actions especially in relation to earlier signs of gas leakages and equipment failure. This management style made its most promising and skilled workers leave to pursue other more lucrative and less hazardous jobs.
Neglecting to address previous leakage issues
Hours after the gas leakage in December 4, 1984, a Union Carbide denied responsibility and claimed, “Our safety procedures are the best in the country” (Bingham & Sarangi, 2002, p. 89). However, interviews with its employees after the disaster revealed that in its campaign to reduce expenses and pump up profits, Union Carbine failed to address previous complaints by the workers on MIC-related incident since 1976. The unions working within the plant had protested against pollution in 1978 (Kurzman, 1987). Five years later in 1981, a worker died almost immediately after a worker inhaled phosgene. Another phosgene leak occurred in 1982 which affected 24 employees who were found to not have been told to don protective masks. Accidents related to MIC leakages occurred since 1982 but the management ignored the warning signs. Eighteen workers inhaled MIC and a chemical engineer suffered burns because of contact with liquid MIC (Kovel, 2002). Another supervisor suffered from chemical burns after attempting to prevent a MIC leakage. From 1983 to 1984, several leakage incidents involving chlorine, MIC, carbon tetrachloride and phosgene were reported but ignored by management. There was also evidence that Union Carbide in the U.S. ignored the report its experts presented after conducting an inspection in the Bhopal site, which concluded there was “a serious potential for sizeable releases of toxic materials in the MIC unit either due to equipment failure, operating problems, or maintenance problems” (Weir, as cited in TED Case Studies, 2007).
The cost-cutting strategies of Union Carbide meant compromising the maintenance of its equipment which could have avoided chemical leakages like the Bhopal disaster. The double standard that goes with industrial outsourcing was revealed in the investigations. Weir (as cited in TED Case Studies, 1997) stated that Union Carbide maintained a lower definition of safety in its Bhopal plant compared to a similar facility in West Virginia. In this regard, because of the absence of stringent environmental laws and industrial safety standards required by the Indian government, Union Carbide was able to operate a deteriorating plant without restrictions. Union Carbide admitted in its own internal investigation that its safety system were not operational at the time of the disaster (TED Case Studies, 1997). The investigations which followed showed that the alarms in the MIC tanks had been non-functional for four years. Compared to the four-stage back-up system which was enforced in the U.S. plant, the Bhopal plant only had one back-up system. The vent gas scrubber which could have neutralized the escaping toxic gas with caustic soda and reduce the concentration to a non-hazardous level had been decommissioned for almost five months. The flare tower which could have held a significant volume of escaping gas was found to be of unsuitable design. The piping system turned out to be years behind in maintenance and cleaning because of a defective steam boiler. Union Carbide’s attempt at reducing operating costs required the refrigeration system to store idle MIC at room temperature rather than the 4.5 degrees Celsius, causing the enhanced volatility of the toxic substance. Investigators also found out that Tank 610 had malfunctioned weeks prior to the disaster but instead of repairing the tank, management decided to leave it to stew (TED Case Studies, 1997). A recent account of the Bhopal disaster by one of the company’s engineers revealed that in order to reduce costs, the design of the MIC facility had been “Indianized” or indigenized to maximize the utilization of Indian products (D’Silva, 2006).
The Bhopal disaster was a clear case of a failure of corporate social responsibility in line with the industrialization in developing nations. It demonstrated how industrial hazards and environmental destruction are tied with the dynamics of globalization. From a critical perspective, MNCs capitalize on exploiting low-cost resources, labor, and operating expenses in the developing world to derive maximum bottomline savings and to expand markets. The receiving developing country in turn accommodates the MNCs fearful of the backlash that might ensue if the MNCs withdraw its investment in the country. Baker (2001) defined social responsibility in terms of two aspects: 1) the quality of in which a company manages its people and processes; 2) the nature of the company’s impact on society. Clearly, Union Carbide failed to uphold to both these responsibilities. It was evident that the safety standards being enforced by its mother company in the U.S. was not consistent with its management of the Indian subsidiary. The drive to maximize its profits was achieved with several cost-cutting mechanisms in the safety aspects, which proved to be disastrous for the people of Bhopal. The government of India also deserve blame because of the non-enforcement of more stringent environmental regulatory standards especially with industries handling toxic substances. One glaring error is that the government allowed the construction of the MIC facility in a densely populated area. The techniques and procedures for CSR were not in place to reduce the risk of an industrial catastrophe like Bhopal. The exaggeration on bottomline savings compromised the maintenance of equipment and the safety procedures required to keep hazardous substances safe and leakage-free. The company itself was not capable of handling toxic accidents and even the locals and the hospitals within Bhopal did not know what they were dealing with. If CSR was dutifully applied, thousands of lives and the environment could have been saved.
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