Law and Ethics Assignment: The Union Carbide Bhopal Disaster Report

This report delves into the ethical standing of the Union Carbide Company in the aftermath of the 1984 Bhopal disaster, a devastating industrial accident at its subsidiary's pesticide plant in India. The report outlines the case scenario, detailing the gas leak of Methyl Isocyanate (MIC) and its catastrophic consequences, including thousands of deaths and injuries. It analyzes the ethical position of the company, highlighting issues such as faulty management, cost-cutting measures, and insufficient compensation to victims. The report discusses the measures adopted by the company, including legal proceedings and compensation settlements, and offers recommendations for future actions, emphasizing economic and environmental feasibility studies, prioritizing safety, and taking responsibility. The conclusion underscores the importance of ethical considerations in business operations, particularly when dealing with potentially hazardous materials and global operations.

Law and Ethics -
Assignment 2
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Table of Contents
Introduction......................................................................................................................................3
Assessment 2 – Ethical Issues at Union Carbide Company............................................................3
Case Scenario..............................................................................................................................3
Ethical standing of the Union Carbide Company.......................................................................4
Measures adopted by the Union Carbide Company....................................................................6
Recommendations to the company.............................................................................................7
Conclusion.......................................................................................................................................7
References........................................................................................................................................8
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Introduction
Morals and ethics are those values that forms the basis of one's reaction or management
of actions. It is a division of philosophy and ethics when practised in business takes the form of
professionalism and forms the basis of business response whenever the situation of contingency
arises or in other words, ethics are the underlying values that determines the business response to
the moral problems that originate in business environment (de los Reyes Jr, Scholz and Smith,
2017). Below mentioned report focusses on ethical position and the response of the Union
Carbide Company in the aftermath of the Bhopal disaster which took place in the plant of one of
its subsidiary company in India. Union Carbide Company is an American multinational
producing chemicals and polymers. This report presents the background of the case study
followed by the ethical standings of the company and its responses to those moral dilemmas.
Further, recommendations have been suggested in the way of approaches that company could
have followed to save the case.
Assessment 2 – Ethical Issues at Union Carbide Company
Case Scenario
Background of the case study provided is the Bhopal disaster which took place in the
year 1984. It is also known as Bhopal gas tragedy as it took place in the town of Bhopal and the
incident was caused by a gas leak. Recognised as one of the worst industrial disaster that took
place in the world had Union Carbide Company as one of the primary stakeholder. US company
entered into partnership with government of India through its subsidiary Union Carbide India
Limited for opening and operating a pesticides plant in Bhopal, capital of the Indian state
Madhya Pradesh. Company held 51% of partnership stake while minority stake was held by
government of India and other Indian corporations. Land for the chemical using pesticides
producing plant was given to the partnership by government of Madhya Pradesh at subsidised
rates in an area located near residential areas. In the night of December 2-3, 1984, Methyl
Isocyanate (MIC) and other chemicals got leaked from the plant and started spreading over
whole area in the form of white smoke (Scheberle, 2018). It was a dangerous smoke which
started mixing with air, water and soil in the farther areas soiling environment of the whole area
and got transported to near by areas as well mixed with water and air, resulting in a lethal smoke
over a large area of Bhopal in just few hours. Many thousands lost their lives due to that lethal
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smoke while other many thousands sustained injuries of various scales, some even causing
permanent damages to their respiratory system, skin and eyesight. Some after effects are still
seen in the people and the babies that take birth here even after decades.
An official investigation was launched to know the reasons behind the incidents and to
prosecute those guilty of the incident. Public investigation report held slack management and
lack of maintenance of safety systems at the plant as responsible for the tragedy. Therefore, civil
and criminal charges were filed against company and its officials in both Indian courts as well as
US courts (Bloch, 2016). Officials of both parent company and subsidiary company were made
accused. However, company officials pleaded non-guilty in the court and rather blamed a
disgruntled employee as cause of the incident. They claimed someone had intentionally failed
safety systems and allowed water to enter into the tank where MIC is stored. MIC is a highly
toxic gas and reacts even more strongly when mixed with other agents such as water. Company
claimed that it was this intentional sabotage that caused water to mix with MIC and form a
boiling effect that resulted in that lethal smoke and causing safety valves to burst and gets mixed
with other chemicals that made the situations more grave. This theory also found its way in the
internal investigation report of the company but it could not get proved in the court. Lacking
jurisdiction, company was acquitted in US Court but was convicted as guilty in Indian Court and
had to pay compensation to settle the case.
Ethical standing of the Union Carbide Company
In the case of Bhopal gas tragedy, primary stakeholders involved in the case are Union
Carbide Company, Union Carbide India Limited, Government of India, government of Madhya
Pradesh, judicial system of India and US, employees of the company and the general public of
the Bhopal and its nearby areas. However, this report undertakes ethical standing of the company
only in the wake of this incident (Baumann-Pauly and Nolan, 2016). This was one such incident
which required company and its officials to decide what is priority for them and what they
believe is right and wrong.
 Faulty management – Company held more than 50% in the partnership and was primarily
responsible for the daily operations as well. Even though it claimed that it was not sole
controller of the operations and it was intentional sabotage, it could not prove the theory.
Moreover, there have been reports with the local journalists and activists who have
protesting since incident to bring justice to the real victims that the technology that Indian
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subsidiary has been using was sent to it by the parent US and was unproven one to utilise
MIC and should not have been used without taking care of the safety parameters.
Moreover, reports have been provided that it was reported to Head Office in US even
months before incident that there were numerous safety lapses and plant and equipment
was also poorly maintained but those reports were brushed aside which if acted otherwise
would might have been able to stop the incident.
 Cost cutting measures – Investigation reports reported that the plant was not giving much
profits to the company in comparison to the investment they have made in the company
and to improve the profitability, they had started cutting cost (Diochon, Mills and
Raufflet, 2017). Also, level of global profit reduced making the risk bearing capability of
company decreased. Company had a reported loss of $4m from Bhopal plant in the early
1984 and the group profit shrunk from $800m to only $79m in span of just three years.
However, the issue was that they were cutting costs on safety and maintenance as well
even after dealing in harmful chemicals and gases which are of highly toxic nature,
capable of killing people. Also, there is a global trend in the company operations to
undertake safety audits in all its operations. In the safety audit report performed before
disaster, it could have been concluded by the parent company that there were safety
concerns however, they still went ahead with cost cutting measures keeping safety
concerns aside. They downsized their maintenance team and reduced supervision on the
plant by eliminating the post of maintenance supervisor on November 26. In addition,
they amended safety manual and raised storage ceiling of MIC to a dangerous volume
level meanwhile reducing the time of training from earlier six months to a mere 15 days
period.
 Insufficient compensation – Since, the company was held responsible for the incident, it
had been asked to compensate victims. Activists claim that Plant Union had reported to
the management that MIC plant was causing pollution more than acceptable level but the
general manager of the plant did not care about their concern (Wettstein, 2020).
However, company refuted these claims and rather claims that it had gone to government
asking it to shut down the plant and offer it to sale to interested buyers in October 1984
only. It further claims that it had also appointed a local safety officer who was entrusted
to study the feasibility of the dismantling of the MIC plant but officer reported against
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dismantling the plant citing the reason that there exist high level of corrosion at several
points. Therefore, it had to continue operations for the time being the government does
not decide on its fate. Hence, it should not be blamed alone and should not be forced to
pay compensation alone. It felt like being treated as scapegoat of the tragedy. However,
activists further claimed that on the December 2, operators of the plant reported small
leaks from the plant to their senior but no action was taken and in the following night
only, it resulted into deadly explosion. This contradicts the arguments of the company
that it was intentional sabotage (Crane, 2020).
In short, above mentioned arguments presented that company had not performed well
ethically. Government of India sued the company and asked for $3bn as compensation but
company refused and presented counteroffer of paying only $7m as full and final settlement.
This negotiation finally concluded with company paying $470m laying the condition that all
cases against it and all its officials, be it criminal and civil would be considered settle for full and
final time in present and future (Bhopal gas disaster: Corporate negligence with deadly
consequences, 2010).
Measures adopted by the Union Carbide Company
Company knew the safety concerns present on the plant and must have faced ethical
dilemmas of choosing economical interest over environmental responsibilities and choosing its
future or brand image over its social responsibilities. It must have wanted to help the victims as
well as safeguard itself from legal hassles. Company faced legal proceedings in the case in both
US and India. It was acquitted in US court after it opined that it lacked jurisdiction over the case
but in Indian court, it was convicted and the case was settled on payment of $470 million on the
condition it would not be dragged further in this case in the further as compensation which
means that it had chosen its future and brand image over the social responsibilities (Amyotte and
et.al., 2016). Post the incident, government not only confiscated the land and plant but also
declared sale of its assets. Company received $17 million as its share which it donated
voluntarily to government to construct a hospital which shows that company here chose its social
responsibilities over economic interest as post incident, it had got huge blows to its finances
globally and this amount would have helped it gain some stability. Company further made
creation, implementation and sincere controlling of the risk management plans in all its
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operations across globe to fulfil its environmental responsibility without compromising its
economical interests.
Recommendations to the company
It is recommended to company that it must undertake economic and environmental
feasibility report before starting a plant. Government must have its own concerns to start and
keeping the plant operational like pesticides to local farmers at economical prices or employment
to the local people but company must give its own economic interest a priority as it is
responsible for all its employees as well. Had the company conducted a feasibility report and saw
that plant would not be beneficial for it, it would have undertaken two routes – either not
operating it or managing the expenses beforehand so that it need not resort to cost cutting
measures later. Moreover, there are other methods to cut cost but cutting safety must not have
been adopted anyhow. Further post the tragedy happened, it should have taken responsibility and
compensated people on its own and then deal with government and legislature. It would have
saved it much of legal cost as well as it might have been able to settle at lesser compensation
amount. Further, it should have involved international media to cover their humanitarian efforts
which would have saved blows to its reputation and the further downfall in the future (Harrison,
2016).
Conclusion
Above mentioned report is focussed on ethical standing of the parent US Union Carbide
Company in the wake of the disaster happened in one of its subsidiary. It has been clearly
elucidated above that disaster of these scale do not happen overnight, they are result of the
mismanagement and faults from a long time. These incidents are a lesson from the past that shall
never be repeated in the future. It can also be concluded above that company could have taken
better standing post the tragedy which would have not only helped it save its face rather would
have also helped it gain market value internationally.
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References
Books and Journals
Amyotte, P.R. and et.al., 2016. Why major accidents are still occurring. Current opinion in
chemical engineering. 14. pp.1-8.
Baumann-Pauly, D. and Nolan, J., 2016. Business and human rights: From principles to practice.
Routledge.
Bloch, K., 2016. Rethinking Bhopal: A Definitive Guide to Investigating, Preventing, and
Learning from Industrial Disasters. Elsevier.
Crane, G., 2020. Criticism Against Itself. American Literary History.
de los Reyes Jr, G., Scholz, M. and Smith, N.C., 2017. Beyond the “Win-Win” creating shared
value requires ethical frameworks. California Management Review. 59(2). pp.142-167.
Diochon, P.F., Mills, A.J. and Raufflet, E. eds., 2017. The Dark Side 2: Critical cases on the
downside of business. Routledge.
Harrison, S. ed., 2016. Disasters and the media: Managing crisis communications. Springer.
Scheberle, D.L., 2018. Industrial Disasters and Environmental Policy: Stories of Villains,
Heroes, and the Rest of Us. Routledge.
Wettstein, F., 2020. The history of business and human rights and its relationship with corporate
social responsibility. In Research Handbook on Human Rights and Business. Edward
Elgar Publishing.
Online
Bhopal gas disaster: Corporate negligence with deadly consequences, 2010. [Online]. Available
through:<https://www.reutersevents.com/sustainability/supply-chains/bhopal-gas-
disaster-corporate-negligence-deadly-consequences>
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