Union Carbide and the Bhopal Disaster: An Ethical and Legal Analysis

This report delves into the ethical considerations surrounding the Bhopal gas tragedy, focusing on the actions and responsibilities of Union Carbide Corporation. The report examines the ethical issues, including the construction of the factory near a residential area, breaches of safety standards, loss of the company's image, and unethical leadership. It identifies ethical dilemmas faced by the company, such as balancing corporate interests with social responsibility and accepting responsibility for the tragedy. The report discusses the approaches adopted by Union Carbide, including compensation and safety audits, and suggests further actions such as accepting moral responsibility, developing rehabilitation centers, and working with the government. The analysis underscores the importance of ethical business practices, safety management, and the consequences of mismanagement in preventing such industrial disasters.

Business Law and Ethics –
Part 2
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Table of Contents
Introduction......................................................................................................................................3
Part 2 Ethical issues at Union Carbide.............................................................................................3
Case Study...................................................................................................................................3
Stakeholders of the case..............................................................................................................4
Ethical issues...............................................................................................................................4
Ethical dilemmas.........................................................................................................................5
Approaches adopted....................................................................................................................6
Approaches suggested.................................................................................................................6
Conclusion.......................................................................................................................................7
References........................................................................................................................................8
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Introduction
Ethics refers to the system of moral principles and and seeks to define behaviour that are
considered right or wrong. Ethics in business refers to those policies and practises which an
organisation is expected to practise in the face of situations which are controversial and give rise
to ethical dilemmas (Bowie, 2020). This report is aimed at assessing the ethical position of the
parent US Union Carbide company in the aftermath of the Bhopal Gas Tragedy in its subsidiary
in India. Union Carbide Corporation is an American multinational chemicals and polymers
producing company. Ethical issues which arose in the case and different approaches adopted by
the company are discussed in this report.
Part 2 Ethical issues at Union Carbide
Case Study
Presented case study is based on Bhopal gas tragedy also known as Bhopal disaster. It is
considered as one of the worst industrial disasters in the world. US Company Union Carbide
Corporation operates in India through its subsidiary Union Carbide India Limited in partnership
with Government of India. This unfortunate case happened at its pesticides plant at Bhopal, a
small town in Indian state of Madhya Pradesh. On the night of December 2-3 1984, Methyl
Isocyanate (MIC) gas and other chemicals leaked from the plant and risked the lives of hundreds
of thousands of people (Palazzi, Currò and Fabiano, 2015). It also harmed environment and
polluted air, water and soil of the nearby areas. MIC is highly toxic and reacts more strongly
when it is combined with other agents including water. Reported official cause of the tragedy is
slack management and non-maintenance of the safety systems at plant by the Company while
company argues that it was result of intentional sabotage which led to failure of safety systems
and water entered into the tank where MIC was stored and resulted into a boiling effect in the
tank which caused safety valves to explode and lethal white smoke to attack the city of Bhopal
(Ajith and et.al., 2017). Smoke caused fatal injuries as well as non-fatal injuries including
blindness, burns, lesions in respiratory system, etc. Government of India paid compensation to
the victims and filed legal charges against Union Carbide and its Chairman at that time, Warren
M. Anderson. Company settled the case with the payment of $470 million in 1989.
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Stakeholders of the case
Stakeholders are those groups or individuals which are directly or indirectly affected in
this case. Primary stakeholders of the case study are below mentioned:
 Union Carbide Corporation
 Union Carbide India Limited
 Government of India
 Government of Madhya Pradesh
 Judicial system of India
 Employees of the companies
 Local people of Bhopal and nearby areas
 Civil Society
 Other stakeholders of the company
Ethical issues
Ethical issues refers to those situations in a business setting where moral and ethical
dilemma exists and needs to be addressed. Bhopal gas tragedy also involved various ethical
issues concerning action and reaction of the company, role of government, failure of safety
measures, delay in justice environmental loss, etc. (Mukherjee, 2016) This report seeks to
explore ethical issues in front of the parent US company in the aftermath of the tragedy, which
are below mentioned:
 Construction of factory near residential area – Company was dealing in chemicals in their
pesticides plant and such factory plant must be developed far away from residential area
to avoid any negative impact on their land, water and air. However, not only was the
factory plant constructed in populated area but also that strict safety standards and quality
controls were not kept in place.
 Breach of safety standards – Company and its management were responsible to develop
and ensure that all safety standards were adopted and in place. Company conducts safety
audit and suggest all recommendations in it to all of its facilities but negligence in
application of safety standards in Bhopal plant show slack in management as well as
underinvestment in safety standard in a high-risk company which resulted in such
dangerous tragedy (Le Menestrel, 2020).
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 Loss of image of the company – Bhopal plant had so many flaws in its working
conditions such as bad maintenance of the machinery, lack of equipment and
environmental safety standards, etc., all of which were attributed to saving money and
the resulting tragedy because of it, diminished company's safe image all over the world.
Therefore, company disowned moral responsibility of the tragedy. Even when Dow
Chemicals acquired it later, it didn't accept responsibility for the fear that it might
adversely affect its share prices as well (Ram Mohan, 2019).
 Unethical leadership – Insufficient safety standards caused this incident and rather than
taking responsibility of it and taking primary role in controlling and correcting situation,
company leadership claimed it as intentional sabotage suggesting that it had sufficient
safety systems in place in operational condition. Company leaders rather than going out
to support and console their victim employees and common public, settled monetary
compensation with government and left India.
Ethical dilemmas
Ethical dilemma refers to the situation in which choices are to be made out of two or
more courses of action, which involves at least one course of action which is lucrative but
involves transgressing ethical principles. In this case study, parent company must be facing
ethical dilemmas over the courses of action available in front of them out of the ethical issues
that arose in the aftermath of the Bhopal tragedy. Few ethical dilemmas are below mentioned:
 Saving face of the company over taking responsibility of the tragedy – Tragedy happened
at factory site under one of the subsidiary of the company rather than at some site directly
under the parent company. It must be in a dilemma to accept responsibility of the mishap
as a group company or deferring the responsibility to the subsidiary and partner
government of India for the negligence, to save its global operations (Sharma, 2016).
 Choosing future of the company over present – Tragedy was of huge scale and parent
company could not get away without dealing with its shadow. Its shares prices and
market valuation was continually decreasing making it a takeover target. It must be in
dilemma over choosing future of the group of companies over the present tragedy
happened in just one factory of one subsidiary company.
 Compensating victims over clearing the lawsuit – Company was in constant pressure of
understanding the scale of the tragedy and must have wanted to compensate victims
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themselves as that would be consolation for their public image but they were facing
lawsuits and their Chairman and other senior executives were facing culpable homicide
cases and to settle those cases, it would need to pay Indian government and courts
millions of dollars. Company was not in stable financial position after tragedy and
therefore, might had faced dilemma of clearing lawsuit and their name over
compensating victims (Matilal and Adhikari, 2020).
 Economic interest over social responsibility – Bhopal facility was not so profitable for
company but Government of India wanted it to continue as it provided economic benefits
to it and provided employment to local population. Company must be in dilemma and in
the process of keeping the business going and saving money, must have disregarded their
environmental and social responsibility of keeping strict safety standards.
Approaches adopted
Once the ethical issues and ethical dilemmas have been identified, company must had
proceeded towards choosing approaches to face the ethical issues and dilemmas, not only to save
their face and future but also, to fulfil their social responsibility towards the society which has
faced never seen before tragedy before of its negligence. Company faced lawsuit in both US and
India and paid $470 million to government to compensate to the victims. In 1992, government
seized the plant and announced sale of its assets. Union Carbide received its share at $17 million
which it donated to government to construct a hospital near Bhopal (Sharma and Umekar, 2019).
Company conducted safety audits in its other factories and made creation, implementation and
strict monitoring of safety plan and risk management plan mandatory.
Approaches suggested
To avoid any unfortunate incident, company should have undertaken an economic and
environmental feasibility report beforehand starting company. It would have provided them an
estimation of profitability to decide whether they should have started the project or not and post
initiation, how to manage without compromising on safety standards considering the danger
level of its products and by-products. Post tragedy, company and its Chairman should have
accepted moral responsibility and develop rehabilitation centres for victims and economic
compensation for its employees and others whose economic activities were shut down because of
the tragedy (Faheem, 2017). Rather than fighting against government, it should have worked in
partnership with government to improve the situation. They should have taken help from
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international media to highlight their good efforts that would have restore their goodwill and
saved them from global financial crisis.
Conclusion
This report is based on ethical considerations of a business in the wake of unfortunate
tragedy. It could be deduced that such tragedies are not result of some fluke or errors, they are
result of serious mismanagement and safety lapses. This gives rise to various related ethical
issues and dilemmas which require attention of management to prevent their repetition and
control their repercussions.
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References
Books and Journal
Ajith, S. and et.al., 2017, April. Automated gas pollution detection system. In 2017 2nd
International Conference for Convergence in Technology (I2CT) (pp. 483-486). IEEE.
Bowie, N.E., 2020. Business ethics (pp. 158-172). Routledge.
Faheem, H., 2017. The Bhopal Gas tragedy: Revisited after twenty-five years 1. In The Dark
Side 2 (pp. 97-126). Routledge.
Le Menestrel, M., 2020. Corporate Social Responsibility: The Bhopal Gas Tragedy (Video, Case
Study & Discussion) Monday 15th of April, 2013–Marc Le Menestrel.
Matilal, S. and Adhikari, P., 2020. Accounting in Bhopal: Making catastrophe. Critical
Perspectives on Accounting. 72. p.102123.
Mukherjee, S., 2016. Surviving Bhopal: Dancing bodies, written texts, and oral testimonials of
women in the wake of an industrial disaster. Springer.
Palazzi, E., Currò, F. and Fabiano, B., 2015. A critical approach to safety equipment and
emergency time evaluation based on actual information from the Bhopal gas
tragedy. Process Safety and Environmental Protection. 97. pp.37-48.
Ram Mohan, M.P., 2019. Criminal negligence and director's liability under Indian Penal Code:
the case of Bhopal gas tragedy.
Sharma, D., 2016. A tale of two tragedies: Bhopal gas leak in India and BP oil spill in
US. Indian Institute of Management Ahmedabad.
Sharma, M. and Umekar, S., 2019. Socio-Economic assessment of Bhopal gas victims. ZENITH
International Journal of Multidisciplinary Research. 9(3) pp.1-12.
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