21176772 Union Carbide Case Study

7/31/2019 21176772 Union Carbide Case Study

1/10

Case StudyCase Study


2/10

The Bhopal plant was owned and operated by Union Carbide India,Limited (UCIL), an Indian company in which Union CarbideCorporation held just over half the stock (50.9 %).

The other stockholders included Indian financial institutions andthousands of private investors in India. Union Carbide India Limited designed, built and managed the plantusing Indian consultants and workers.

In 1994, Union Carbide sold its entire stake in UCIL to MacLeodRussell (India) Limited of Calcutta, and UCIL was renamed EvereadyIndustries India, Limited (Eveready Industries).

From feb-2001 it was wholly owned by The Dow ChemicalCompany.

Bhopal plant history


3/10

Bhopal Gas TragedyBhopal Gas Tragedy

key issueskey issues Leakage of deadly methyl-isocyanate gas from the pesticide plant whichLeakage of deadly methyl-isocyanate gas from the pesticide plant whichresulted in the death of 2000 people and about 150000 people wereresulted in the death of 2000 people and about 150000 people werehospitalized for respiratory and eye damage.hospitalized for respiratory and eye damage.

Shortly after the gas release, Union Carbide launched an intensive effort to

identify the cause. An initial investigation by Union Carbide experts and acommittee of experts, working on behalf of the Indian government, conductedits own investigation and concluded that :

Factors leading to this huge gas leak include:

The use of hazardous chemicals (MIC) instead of less dangerous ones Storing these chemicals in large tanks instead of over 200 steel drums. Possible corroding material in pipelines Poor maintenance after the plant ceased production in the early 1980s Failure of several safety systems (due to poor maintenance and regulations). Safety systems shut down to save money - including the MIC tank

refrigeration system which alone would have prevented the disaster.


4/10

Key issues contd.Key issues contd. Lawsuits brought by American lawyers on behalf of theLawsuits brought by American lawyers on behalf of the

victims asked for billions of dollars in compensatoryvictims asked for billions of dollars in compensatoryand punitive damages and threatened to send theand punitive damages and threatened to send thecompany into bankruptcy.company into bankruptcy.

There were protests against Union Carbide in otherThere were protests against Union Carbide in other

parts of the world.parts of the world. Morale of the company was low, production at manyMorale of the company was low, production at many

plants dropped temporarily.plants dropped temporarily. Top management was worried with the companysTop management was worried with the companys

crushing problems and its uncertain future.crushing problems and its uncertain future.

Right to know programmes to head off publicRight to know programmes to head off publicsentiment for government regulations.sentiment for government regulations.


5/10

Union Carbides Response to theUnion Carbides Response to the

victims of Bhopal disastervictims of Bhopal disaster In the wake of the release, Union Carbide CorporationIn the wake of the release, Union Carbide Corporation

provided immediate and continuing aid to the victims andprovided immediate and continuing aid to the victims andset up a process to release their claims.set up a process to release their claims.

In the days, months and years following theIn the days, months and years following the

disaster, Union Carbide took the following actions to providedisaster, Union Carbide took the following actions to providecontinuing aid:continuing aid: Immediately provided approximately $2 million in aid to theImmediately provided approximately $2 million in aid to the

Prime Ministers Relief Fund.Prime Ministers Relief Fund. Immediately and continuously provided medical equipmentImmediately and continuously provided medical equipment

and supplies.and supplies.

Sent an international team of medical experts to Bhopal toSent an international team of medical experts to Bhopal toprovide expertise and assistance.provide expertise and assistance. Funded the attendance by Indian medical experts at specialFunded the attendance by Indian medical experts at special

meetings on research and treatment for victims.meetings on research and treatment for victims.


6/10

Response contdResponse contd....

Provided a $2.2 million grant to Arizona State UniversityProvided a $2.2 million grant to Arizona State Universityto establish a vocational-technical center in Bhopal, which wasto establish a vocational-technical center in Bhopal, which wasconstructed and opened, but was later closed and leveled by theconstructed and opened, but was later closed and leveled by thegovernmentgovernment

Offered an initial $10 million to build a hospital in Bhopal; the offerOffered an initial $10 million to build a hospital in Bhopal; the offerwas declined.was declined.

Provided an additional $5 million to the Indian Red Cross.Provided an additional $5 million to the Indian Red Cross.

Established an independent charitable trust for a Bhopal hospitalEstablished an independent charitable trust for a Bhopal hospital

and provided initial funding of approximately $20 million, andand provided initial funding of approximately $20 million, and

Upon the sale of its interest in UCIL, and pursuant to a court order,Upon the sale of its interest in UCIL, and pursuant to a court order,provided approximately $90 million to the charitable trust for theprovided approximately $90 million to the charitable trust for thehospital.hospital.


7/10

Long term effects of theLong term effects of the

disaster on union Carbidedisaster on union Carbide Legal action against Union Carbide has dominated the aftermath of theLegal action against Union Carbide has dominated the aftermath of the

disaster. However, other issues have also continued to develop. Thesedisaster. However, other issues have also continued to develop. Theseinclude the problems of ongoing contamination, criticisms of the clean-include the problems of ongoing contamination, criticisms of the clean-up operation undertaken by Union Carbide.up operation undertaken by Union Carbide.

The Chairman and CEO of Union Carbide, Warren Anderson, had beenThe Chairman and CEO of Union Carbide, Warren Anderson, had beenarrested and released on bail by the Madhya Pradesh Police in Bhopal onarrested and released on bail by the Madhya Pradesh Police in Bhopal onDecember 7, 1984.Beginning in 1991, the local authorities from BhopalDecember 7, 1984.Beginning in 1991, the local authorities from Bhopalcharged Warren Anderson, a crime that carries a maximum penalty of 10charged Warren Anderson, a crime that carries a maximum penalty of 10years in prison.years in prison.

However, the Indian Government passed the Bhopal Gas Leak Act inHowever, the Indian Government passed the Bhopal Gas Leak Act inMarch 1985, allowing the Government of India to act as the legalMarch 1985, allowing the Government of India to act as the legal

representative for victims of the disaster.representative for victims of the disaster. In February 1989, the Supreme Court of India directed a final settlementIn February 1989, the Supreme Court of India directed a final settlement

of all Bhopal litigation in the amount of $470 million.of all Bhopal litigation in the amount of $470 million.


8/10


9/10

Right to know Law Right to know Law

American legislators passed the Emergency Planning andAmerican legislators passed the Emergency Planning and

Community "Right to Know Act" in 1986. Among other things,Community "Right to Know Act" in 1986. Among other things,

this law required industries to disclose the volume of certainthis law required industries to disclose the volume of certain

chemicals released annually by them into the environment.chemicals released annually by them into the environment.

The Community Right to Know Act's approach providesThe Community Right to Know Act's approach provides

citizens with access to information.citizens with access to information.

As the 1992 World Summit on Environment and DevelopmentAs the 1992 World Summit on Environment and Development

held in Rio de Janeiro affirmed, for citizens to truly play a roleheld in Rio de Janeiro affirmed, for citizens to truly play a role

in environmental governance, they must not only havein environmental governance, they must not only haveaccess to environmental information but also be able toaccess to environmental information but also be able to

participate in the decision-making process and have publicparticipate in the decision-making process and have public

access to redress and remedy.access to redress and remedy.


10/10

Thank

you

21176772 Union Carbide Case Study

Documents

Transcript of 21176772 Union Carbide Case Study