Ethical Analysis of Union Carbide's Actions in the Bhopal Disaster

This report provides a detailed analysis of the ethical position of Union Carbide, US, in the aftermath of the Bhopal Gas Tragedy. It begins with an introduction to ethics in business and sets the stage by outlining the scenario of the Bhopal disaster, which occurred in 1984 due to a gas leak at a Union Carbide India Limited plant. The report identifies the stakeholders involved, including Union Carbide Corporation, the Indian subsidiary, the government, the judiciary, employees, and the local population. It then delves into the ethical issues faced by Union Carbide, such as non-compliance with safety standards, poor leadership, loss of goodwill, and prioritizing financial interests over social responsibility. The approaches taken by the company are examined, including its legal defense, compensation payments, and post-tragedy safety audits. The report concludes with recommendations for future actions, emphasizing the importance of environmental and economic feasibility studies, moral responsibility, and humanitarian efforts. The report underscores the interconnectedness of corporate and societal well-being and the impact of mismanagement on both.

Business Law and Ethics –
Part 2
1

Table of Contents
Introduction......................................................................................................................................3
Part 2 Ethical position of Union Carbide, US in the aftermath of Bhopal Gas Tragedy.................3
Scenario.......................................................................................................................................3
Stakeholders of the case..............................................................................................................4
Ethical issues faced by Union Carbide, US................................................................................4
Approaches by company.............................................................................................................5
Recommendations.......................................................................................................................6
Conclusion.......................................................................................................................................6
References........................................................................................................................................8
2

Introduction
Ethics is that branch of knowledge that deals with moral principles. These moral
principles govern a person's behaviour and the perception of right and wrong. In businesses,
ethics includes those underlying values and principles that drives an organisation's approach and
decision-making (De and et.al., 2020). It influences business decision-making in contingencies
and conflicting situations. Below mentioned report is aimed at assessing ethical position of the
Union Carbide company, US in the wake of Bhopal Gas Tragedy which took place in one of its
subsidiaries in India. Company deals in chemicals and polymers. Ethical dilemmas faced by the
company and the position it adopted forms the centre point of discussion in this report.
Part 2 Ethical position of Union Carbide, US in the aftermath of Bhopal Gas
Tragedy
Scenario
Case study taken as reference in this scenario is known as Bhopal Gas Tragedy or Bhopal
disaster. It took place in the night of December 2-3, 1984 in Bhopal, a small town in the Indian
state of Madhya Pradesh and is acknowledged as one of the most disastrous industrial tragedies
in the world. Background of this case study involves US chemicals and polymers producing
company Union Carbide which entered into partnership with Government of India through its
subsidiary Union Carbide India Limited to produce pesticides from its plant opened in Bhopal.
On the unfortunate night of tragedy, Methyl Isocyanate (MIC) gas and other chemicals got
leaked from their plant and started spreading across the near by areas which includes residential
areas, risking the lives of people residing there. It polluted air, water and land that came in its
contact, increasing the exposure of harm to farther areas. There was white smoke all over the
area which caused fatal injuries to hundreds of people resulting in their death. Hundreds of others
suffered from blindness, burns, lesions in their respiratory system, etc. Many of the ill-effects of
the tragedy can be felt by local residents till date (Rajan, 2019).
Official investigation was launched in the case and it reported that incident happened due
to non-maintenance of the safety systems at the plant. Company was accused of slackness in
their management and received criminal and civil charges against it in Indian courts.
Government of India also included parent US company and its Chairman Warren M. Anderson
in its legal suit for negligence. Company argued that it was not their management failure but
3

rather an intentional sabotage. It claimed that safety systems were intentionally made to fail
which allowed water into MIC tank. MIC is a highly toxic gas and when it gets infused with
other agents like water, it reacts more strongly. Combining with water resulted into a boiling
effect that forced safety valves to explode and the result was that lethal white smoke.
Government of India paid compensation to victims. Company settled that case by paying $470
million in 1989 which had hurt their finances a lot (Senthilkumar, Sah and Ganesh, 2017).
Stakeholders of the case
Stakeholders are those parties in this case study which got directly or indirectly impacted
by this tragedy. Below mentioned are primary stakeholders:
 Union Carbide Corporation – parent US company
 Union Carbide India Limited – Indian subsidiary
 Government of India
 Judiciary
 Employees of the companies
 Local people
Ethical issues faced by Union Carbide, US
Ethical issues are those issues in a business setting where such situations arise that create
moral and ethical dilemma for the company. Bhopal gas tragedy resulted involved various ethical
issues for all the stakeholders. Below mentioned are the ethical issues faced by the Union
Carbide Company, US in the unfortunate incident:
 Non-compliance of safety standards – Plant was situated near residential area which
should have been avoided since company was manufacturing chemicals in it. Being in so
proximity with people around, company was responsible for developing and maintaining
safety standards at highest level. Company undertakes safety audit at global level but
failed to implement the recommendations made by them in their subsidiaries. It can be
owed to either negligence in maintaining high quality control standards or to
underinvestment in required safety precautions in a company which works with highly
dangerous chemicals (Odysseos, 2016).
 Bad leadership example – When the tragedy struck, it was primary responsibility of the
company to take lead in accepting the moral responsibility and lead the rehabilitation
process. But rather than taking that route, company official moved out of India fearing
4

the legal provisions applied on them and claimed that it was intentional sabotage and
therefore, they are not responsible. They could have handled things in humanitarian
manner but they preferred settling the case by paying compensation to the court (Boda
and Zsolnai, 2016). They did not shoulder responsibility for even their employees who
were left jobless due to tragedy and others whose physical and mental capability to work
was destroyed in this incident.
 Goodwill loss – Bhopal gas Tragedy was a huge blow to the claims of safety standards
maintained by the Union Carbide Company in all its plants all over the world. It showed
to the world how company was willing to operate with lack of equipments, compromised
safety standards, bad maintenance, etc. just to save money. It tarnished global image of
the company and to save its face, company refused to shoulder the responsibilities of the
tragedy.
 Social responsibilities over financial interest – In one of the reports, it was identified that
the plant was not providing much economic benefits to the company and company
wanted to shut it down but the government which was partner in the agreement refused as
it was source of employment for local population. Therefore, for the sake of keeping the
business going and not suffering much loss, company might have discarded the
responsibility to maintain high quality safety standards to save money spent on it. This
makes it responsible for the social tragedy that happened in Bhopal for keeping it
financial interest over innocent lives and environmental responsibility (Gupta and Varma,
2020).
Approaches by company
Management of company must have to decide on approaches that it needs to adopt to
tackle this situation with an aim to minimise the impact on its present and future. Company was
facing lawsuits in both US and India and was having hard time dealing with its repercussions on
its other global operations. Lawsuit in US got quashed in absence of jurisdiction and settled case
in India by paying $470 million to compensate the victims. Post tragedy government shut down
the plant and in 1992, announced sale of its assets. Company received $17 million as its share
from the sale proceeds and rather than receiving the amount to help its ailing finances, donated to
government to construct a hospital as a goodwill gesture. Company made it compulsory for its
other plants and factories in other countries to conduct safety audit. It also made it mandatory to
5

develop risk management plan and seeks that it is properly implemented and reviewed
periodically.
Recommendations
Bhopal gas tragedy was such an unfortunate incident that must not have happened in the
first place and not be repeated under any circumstances. Therefore, it is recommended that
company should get prepared required feasibility reports such as environmental feasibility report
and economic feasibility report beforehand (Sourav, 2019). Had the company undertook
environment feasibility report, it would have known that it that it is not suitable for a chemical
company to be established near a residential area and the economic feasibility report would have
foretold the company that it is possible that this would not be a profitable investment for it.
Knowing possibilities, it would have taken better informed decision. It would also have been in
better position to manage its finances and operations in case it decided to take on the risk and
would not needed to be compromising on safety standards.
Once the tragedy had happened, it is recommended that company and its senior officials
should have taken moral responsibility of the incident and rather than going legal way only to
defend itself, it should have taken social way to save itself. It should have helped victims to avail
medical facilities and develop rehabilitation centres for them. It should have tried to develop
alternative ways to provide compensation to general victims and its victim employees such as
developing alternative means of providing employment for them. It had to pay large sum as
compensation to court which was no help in saving its reputation but taking humanitarian way
would have been able to earn some positive remarks for it. It could have taken help of
international media to highlight its efforts and save itself from global financial crisis that
followed it post tragedy (Parker, 2019).
Conclusion
Above report includes determining ethical concerns related to a industrial tragedy. It
could be concluded from above report that these tragedies are result of slack in management and
operational practices. It is a perfect example of how company and society are inter-related and
mismanagement on part of organisation can result in serious damages to the company as well as
society. Ethical issues and approaches that have been adopted and could have been taken are also
discussed above.
6

References
Books and Journal
Boda, Z. and Zsolnai, L., 2016. The failure of business ethics. Society and Business Review.
De, S. and et.al., 2020. Chronic respiratory morbidity in the Bhopal gas disaster cohorts: a time-
trend analysis of cross-sectional data (1986–2016). Public health, 186, pp.20-27.
Gupta, R.C. and Varma, D.R., 2020. Methyl isocyanate: the Bhopal gas. In Handbook of
Toxicology of Chemical Warfare Agents (pp. 389-402). Academic Press.
Odysseos, L., 2016. Human Rights, Self-Formation and Resistance in Struggles against
Disposability: Grounding Foucault's “Theorizing Practice” of Counter-Conduct in
Bhopal. Global Society, 30(2), pp.179-200.
Parker, K., 2019. Surviving Bhopal.
Rajan, S.R., 2019. Postscript: The Bhopal Gas Disaster Three Decades On. The Angry Earth:
Disaster in Anthropological Perspective, p.151.
Senthilkumar, C.S., Sah, N.K. and Ganesh, N., 2017. On the long-term effects of methyl
isocyanate on cell-mediated immunity in Bhopal gas-exposed long-term survivors and
their offspring. Toxicology and industrial health, 33(4), pp.318-331.
Sourav, S., 2019. Children and Disaster. Indian Anthropologist, 49(1), pp.51-65.
7