Delhi forgets Bhopal and fights for Dow

By Sudha Ramachandran

BANGALORE - India is preparing to roll out the red carpet for Dow Chemicals to invest in India. The government is said to be considering removing all "legal hurdles" in the way of the US giant.

The cabinet is believed to have drafted a note calling to absolve Dow Chemicals of all legal liabilities relating to the Bhopal gas tragedy in which the main accused - Union Carbide - which Dow Chemicals acquired in 2001, was charged with culpable homicide.

On December 3, 1984, Union Carbide's plant in Bhopal in central India spewed over 40 tons of lethal methyl isocyanate gas. Its cost-cutting measures had effectively disabled safety procedures essential to prevent or alert employees of such disasters.

Some 4,000 people died in the immediate aftermath of gas leak. Over 15,000 have died in the years since of related diseases, while hundreds of thousands of survivors suffer from debilitating diseases caused by inhaling the toxic fumes or drinking water contaminated by the chemicals.

Following the disaster, Union Carbide and its officials, including chief executive officer Warren Anderson, were charged by a Bhopal district court with culpable homicide, grievous assault and other serious offenses. Union Carbide and its officials never showed up in court to face trial and repeatedly ignored the court's summons. They are fugitives from the law.

Under an out-of-court settlement reached in 1989, Union Carbide agreed to pay US$470 million in damages to people exposed to the deadly gas - about $400 per person. Union Carbide officials are reported to have said that "the amount was plenty good for an Indian".

This paltry pay-off got it off the hook in the civil suit brought by the Indian government. But its criminal liabilities survive. And Union Carbide never cleaned up the environment in Bhopal. It denied legal obligation to conduct or finance the clean up, arguing that with the 1989 settlement its obligations had ended.

According to the "polluter pays principle" which is valid both in the United States and India, Union Carbide/Dow must pay for the clean up in Bhopal. But Dow argues otherwise.

Since 2001 when it acquired Union Carbide as a 100% subsidiary, Dow Chemicals has insisted on distancing itself from Union Carbide's liabilities. It faces a lawsuit in Madhya Pradesh, the state of which Bhopal is the capital. India's Ministry of Chemicals and Fertilizers has demanded a token deposit of $250 million as initial payment for the costs of cleaning up.

Dow Chemicals has argued that Union Carbide had sold its shares in Union Carbide India in 1994, seven years before Dow Chemicals acquired it and that Dow cannot be held accountable for Union Carbide's liabilities.

Sections in the Indian government concur with this view.

Dow Chemicals has said that it will not invest in India unless the lawsuit against it is withdrawn and it is cleared of all its legal liabilities in India. It has been lobbying hard, directly and through the US government to have the "legal hurdles" on its way to investment in India removed.

The Indian government is reported to be working to help that happen.

Dow has said that it wants to invest US$100 million to set up a research and development center near Pune, in the Western state of Maharashtra. Dow has promised to make other major investments in India.

Backing the effort to absolve Dow Chemicals of all legal liabilities in connection with the Bhopal gas disaster is a formidable phalanx of ministers, officials and business leaders from India and the United States. India's Finance, Commerce and Law ministries are said to be in favor of absolving Dow of legal liabilities but the Chemical and Fertilizer Ministry is opposing the move.

An April Cabinet Secretary note was categorical about what the government's course of action should be and why. "Given the scope for future investments in the sector, it stands to reason that instead of continuing to agitate these issues [Dow's legal liability] in court for a protracted period, due consideration be given to the prospect of settling these issues appropriately. An important aim is to remove uncertainties and pave the way for promoting investments in the sector."

It now appears the government is considering withdrawing the affidavit against Dow Chemicals and opting for an out-of-court settlement. Indian industrialist and chairman of the Tata Group, Ratan Tata, has said he will head a corpus with the help of other Indian companies and Dow to clean up the Bhopal plant site. Dow has reportedly indicated its willingness to contribute to this corpus, but is insisting that this should not be seen as arising from an obligation.

The Indian government's effort to let Dow Chemicals off the hook stems from its interest in the large investment that the multinational company has promised to make in India. But more importantly fear that stern action against the multinational will scare away investors has stood in the way of India demanding justice on behalf of its citizens.

India signaled its soft approach towards Union Carbide within days of the Bhopal gas tragedy. In his first reaction to the disaster, India's then ambassador in Washington announced that the tragedy would not affect India-US relations or India's foreign investment policies. It allowed Anderson and other officials to slip out of the country and its efforts to have them extradited have been lukewarm. Its out-of-court settlement with Union Carbide, which was done without consulting the victims, was nothing short of a sell-out.

And now comes the move to absolve Dow Chemicals of its legal obligations.

However, alumni of the Indian Institutes of Technology (IIT), the country's premier engineering colleges, have decided to do their bit to get Dow Chemicals and others to clean up their act.

In May 2005, IIT alumni intervened and forced the organizers of the Global IIT 2005 Conference at Washington DC to cancel the key-note address by William Stavropoulos, then chief executive officer of Dow Chemical.

And now they are putting pressure on the IIT management to prevent campus interviews being conducted by the company. Recently, Dow Chemicals was forced to cancel its pre-placement talks in IIT Madras and IIT Bombay when students objected to any partnership between the IITs and this company.

The Indian government might be eager to put out the welcome mat for Dow's investment. But if the company wants to hire India's finest technical brains, it will need to clean up its act.

Sudha Ramachandran is an independent journalist/researcher based in Bangalore.

(Copyright 2007 Asia Times Online Ltd. All rights reserved.)