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Bhopal Liability issue linked to the fate of Liability from Nuclear Damage Bill

Written By Gopal Krishna on Thursday, June 24, 2010 | 5:24 AM

Press Release

Civil Society Condemns Lobbying for non-liability of Independent Directors like Keshub Mahindra

Indira Gandhi’s Govt gave Industrial License to Union Carbide’s Pesticide Plant & Dubious Research & Development Centre

Bhopal Liability issue linked to the fate of Liability from Nuclear Damage Bill

GoM guided by CEO Forum going the Telangana Way

Making India ‘safe' for foreign investors, ‘unsafe’ from hazardous chemicals, asbestos and nuclear industries


New Delhi: The deafening silence of Confederation of Indian Industry (CII) so far in the matter of industrial disaster of Bhopal and Gulf of Mexico was intriguing. Now that it has spoken out with a press release, it has revealed itself as a lobby group which is callous towards victims of Bhopal and public interest and ignores the lessons to be learnt from oil spill disaster in Gulf of Mexico. Its views are an expression of blind obsession with unsound profit alone. All its views on safety, health and environment appear to be an insincere expression and a mere lip-service.

It took the mild sentencing of Keshub Mahindra in the Bhopal Gas tragedy case for CII to react, not the disaster or the plight of the victims and pollution due to hazardous industries. CII’s request to the government “to treat non executive members of the Board including Non Executive Chairmen, differently when it comes to Directors’ liabilities” is misplaced. The Companies Act 1956 is right in not differentiating between different categories of directors in terms of liabilities. It rightly envisages trial for non-executive directors as well. They too should be made to undergo the ordeal of a trial for offence of non-compliance with a statutory provision. CII’s lobbying to ensure exemption from vicarious criminal liability under the applicable statutes for non-executive directors is motivated and must be rejected.

If there is indeed rule of law that governs both natural and artificial persons like companies, the proposed Companies Bill 2009 must ensure that non-executive directors remain liable for vicarious criminal liability for offences committed by the company. Independent directors are duty-bound to raise the red flag when he/she spots an inherent issue which the others could not do merely because they possess a non-independent status. Had Keshub Mahindra done so, the disaster in Bhopal could have been prevented? Is there anything on record to show that Mahindra or anyone in other corporate scandals documented their dissent? The limited liability clause in the Companies Act under which subsidiary of Union Carbide Corporation was formed must be re-examined.

With regard to Board of Directors of UCC’s Board of Directors and their role, the circumstances of their historic industrial betrayal must be probed along with those of its subsidiary. Absence of rigorous liability regime for hazardous chemicals, asbestos and nuclear industries during their entire life span reveals that nothing has changed despite the disaster. How is it that Dow owns the asbestos liabilities of Union Carbide and Government of India has far failed to make it liable for Bhopal’s legacy?

Unmindful of a confidential 13 page safety audit report (attached) of Union Carbide Corporation (now owned by Dow Chemicals), Indira Gandhi government was prevailed upon to grant industrial license for a plant that led to disaster in December 1984.

There is a need to review The Registration and Licensing of Industrial Undertakings Rules, 1952 under which the license was granted on 31st October 1975. An application for the registration of the plant was made Eduardo Munoz, headed the South and East Asia divisions, Agricultural Products Division (APD), Union Carbide Corporation on 1st January 1970 to the Ministry of Industry (formerly to Ministry of Industrial Development), Government of India. The Ministry of Industry’s Committee that recommended the issuance of industrial license to Union Carbide must be made public.

The very fact that application for industrial license was made by Munoz establishes the liability of Dow Chemicals owned Union Carbide Corporation (UCC).
Notably, foreign investors were limited to 40% ownership of equity in Indian companies, but Indira Gandhi government waived this requirement in the case of UCC.

In pursuance of an agreement between in 1966, to begin with Union Carbide’s India plant built in 1969 was to import 1,200 tons of Sevin from the parent company in the US for manufacturing pesticides and UCC was to build a factory in India to produce Sevin within five years. Although Eduardo Munoz, the Argentinean agronomic engineer objected to the location of the factory because it was residential area and sought to stop storage of huge quantity of Methyl Isocynate (MIC) but he was overruled by the UCC officials saying, "You have absolutely no need to worry, dear Eduardo Munoz. Your Bhopal plant will be as inoffensive as a chocolate factory." The agreement between Government of India and Union Carbide that led to the setting of the plant too must be made public.

Government of India must re-examine all the industrial licenses granted to hazardous chemical plants in particular and the granting of industrial licensing procedure in general. The safety audit report notes, “our safety performance has shown no improvement for more than ten years as measured by the most significant yardstick: disabling injury frequency. Furthermore, in the last ten years we have become the most hazardous employer in the Big Seven chemicals group, maiming people at more than twice the rate of the others.” In 2001 Union Carbide merged with Dow Chemical, Inc., but it continues to operate its huge plants in places like West Virginia, Louisiana and Texas. Government of India must inform the citizens its action taken report with regard to

The safety audit report was authored by R. T. Bradley and covers the period from 1959 to1968. The report observes, “We have been twice as bad as their combined average over the last ten years. We rank seventh in the Big Seven (DuPont, Monsanto, American Cyanamid, Allied, Celanese, Dow and Carbide, in that order).” Government of India must explain as to how it supervises hazardous industries without sufficient industrial intelligence and how it pre-empts possibility of production of war time chemicals? R. T. Bradley concludes saying, “All management and supervision must seriously want more safety--we will only get as much safety as we want, not what we might just say we want, unless we really mean it.” It further infers, “All of this will involve more cash outlay for loss prevention but it will be in the form of sound investment. Our 1968 property losses, between $5 and $10 million, indicate as much. The humanitarian aspect is, of course, the most important consideration and should not be dollar -oriented. However, a good measure of improvement in injury experience will almost certainly become a corollary to reduction in property losses and business interruption losses.” Clearly, non-compliance with such recommendations led to Bhopal’s disaster. Isn’t it sufficient to make Government of India to state categorically that Dow Chemicals is liable for Bhopal’s disaster?

Efforts of US corporations to create a duality by referring to parent company and subsidiary company as two entities is an exercise in sophistry to which Government of India has been fallen prey by introducing Liability for Nuclear Damage Bill in the parliament amidst massive opposition which puts the “liability” of the private “operator” at Rs. 500 crore per incident, with the further proviso to lower it down to Rs. 100 crore in a manifest attempt to favour private business enterprises at the cost of Indian citizens.

The Nuclear Liability Bill is an extension of what the Federation of Indian Chambers of Commerce and Industry (FICCI)'s 25 member working group on civil nuclear energy-2009 had articulated in its 57-page report too explicitly draws on the directions and observations of the Supreme Court in Charan Lal Sahu's case in the matter of Bhopal disaster. This propensity is illustrated by what Peter Mason, president and chief executive of nuclear supplier GE-Hitachi Nuclear Energy Canada said while explaining to the Parliamentary Standing Committee of the Canadian House of Commons on Natural Resources that is dealing with Bill C-20, their Nuclear Liability and Compensation Act, November 2009. He contended, "If there was not a cap and if there was no suitable legislation insurance in place, then we wouldn't be in the nuclear industry."

While British Petroleum (BP) is facing a bill of up to $34 billion from the Gulf of Mexico disaster after US senators demanded the oil company deposited $20 billion (about Rs 92000 crores) into a ring-fenced account to meet escalating compensation costs. The cost of the clean-up effort and payment of damages to affected communities, such as fishermen is about a total of $5 billion. In India, the recommendations of Group of Ministers (GoM) on Bhopal are following the path of Telengana in order to dilute the massive public outrage against cover-up in the matter of justice for Bhopal disaster.

The GoM’s reported recommendation about enhanced compensation for Bhopal victims to the tune of Rs. 1500 crores and Rs. 720 crores for rehabilitation is pittance in comparison to what has just be set as a benchmark for Gulf of Mexico’s industrial disaster. If Government of India does not know how to act, it should at least learn from US President in order to make Dow Chemical liable and make Warren Anderson face charges trial for manslaughter. Sonia Gandhi and Manmohan Singh must learn to deal with long-term corporate terrorism that has been underway with connivance of government officials. An all party committee and a Joint Parliamentary Committee must examine the dubious circumstances of the birth and death of Bhopal’s plant and UCC’s research and development centre.

“Investigation has revealed that UCIL started importing Sevin from the UCC, USA in December, 1960. They were marketing this Sevin after adding dilutants etc. Subsequently, they decided to manufacture Sevin in their plant at Bhopal itself and accordingly created necessary facilities for production of Sevin MIC as the basic raw material. To start with, they were importing MIC in 200 litres capacity stainless steel drums from the UCC Plant in West Virginia, USA, Subsequently UCC and UCIL decided to manufac-ture MIC in their factory at Bhopal itself,” as per the Supreme Court order dated 13/09/1996.

The order observes, “At that stage on 13th November, 1973, UCC and UCIL entered into an agreement entitled Foreign Collaboration Agreement according to which the best manufacturing information then available from or to Union Carbide had to be provided for the factory in India. This necessitated UCC supplying the design, know how and safety measures for the production, storage and use of MIC which ought to have been an improvement on the factory of UCG at West Virginia based on the experience gained there. Investigation has however disclosed that: the factory at Bhopal was deficient in many safety aspects. The design, know-how and safety measures were provided by the Union Carbide Corporation, USA and the erection and commissioning of the plant was done under the strict control of the experts of UCC. The Indians in this plant were only working under their directions.” All this clearly reveals that UCC did not disclose its 10 year safety audit report to Government of India.

Supreme Court’s order notes, “After an initial period of profits, the UCIL factory was running in loss. The loss for the first 10 months of 1984 amounted to Rs. 5,03,39,000. Due to this, U.C.E, Hongkong directed UCIL vide their letter dated 26 October, 1984 that the factory at Bhopal should be closed down and sold to any available buyer. As no buyer became available in India, UCE,, Hongkong directed UCIL to prepare an estimate for dismantling the factory and shipping it to Indonesia or Brazil where they probably had some buyers. These estimates were completed towards the end of November, 1984.” The Joint Parliamentary Committee must examine as to how is that no institution of Government of India had intelligence about the goings on the plant and suggest ways to bring such companies under genuine legislative control.

U.S.-India Business CEOs Forum that commenced on 22nd June in Washington in the shadow of the industrial disaster of Bhopal or Gulf of Mexico which is not the last crisis that democracy in India and US face. The U.S.-India Business CEOs Forum is likely to work hard to ensure that they are insulated from civil and criminal liabilities for engineering catastrophe- be it in chemical industry or in the nuclear industry. The forum was constituted in 2005 by US President and the Indian Prime Minister. During the Forum’s meeting underway Finance Minister Pranab Mukherjee who is leading India’s delegation of CEOs like Tata Group Chairman Ratan Tata, all ears are on how the matter of Dow’s liability and Anderson’s extradition is dealt with.

In the light if the above there is a need to review the Registration & Licensing of Industrial Undertakings Rules, a parliamentary probe as to why Indian Council of Medical Research (ICMR) abandoned its medical research in 1994, how did a dubious trust like the Bhopal Memorial Hospital Trust came in to being, why there has been non-execution of the Letter Rogatory [Letter of Request] of the Chief Judicial Magistrate, Bhopal had issued on 6th July 1988 to the US to permit the CBI to carry out a comparative study of the safety systems of plants in West Virginia, USA and identify other concerned officials of UCC and to examine current registration and licensing of chemical pesticides taking cognizance of Union Carbide's 10 year Confidential Safety Report, US Securities Commission’s revelation regarding Dow’s bribery of Indian officials.

It is incumbent upon Prime Minister Manmohan Singh and President Barack Obama to be wary of extreme monetary pre-occupations of CEOs and attend to pressing non-monetary concerns of ecosystem services in order to provide healing touch to disasters in Bhopal and Gulf of Mexico by learning lessons from Chernobyl nuclear disaster and Three Mile Island Nuclear Accident. How they make corporations like and Dow Chemicals and British Petroleum (BP) accountable will determine whether or not shareholders property based democracy is superior to peoples’ democracy.
For Details: Gopal Krishna, ToxicsWatch Alliance, Mb: 9818089660, E-mail: krishna2777@gmail.com Web: toxicswatch.blogspot.com
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