PANNA: Union Carbide: Outlaw Corporation Acquired by Dow

Union Carbide: Outlaw Corporation Acquired by Dow

From Trespass Against Us, Dow Chemical and the Toxic Century by Jack Doyle

The following on Union Carbide/Dow Chemical’s responsibility to the survivors of Bhopal appears near the end of investigative reporter Jack Doyle’s new book. A closer look at the damage done by the chemicals from just one company, the book is a clear wake-up-call for anyone concerned about public and environmental health, and a tribute to the communities coming together to resist this chemical trespass.

Long before Dow acquired it in 2001, Union Carbide had fully entered the ranks of the world’s top chemical corporations. Formed in a merger of five companies that included National Carbon Co., maker of the first dry-cell battery (Eveready), and calcium chloride producer, Union Carbide Co., the new company in 1917 became known as the Union Carbide and Carbon Corporation. Initially engaged in metallurgical and carbon products, Union Carbide soon added gases and chemicals to its repertoire, and by World War II was even refining uranium and helping to build the atomic bomb. By 1963, Carbide, like Dow, had also become a major plastics producer, shipping more than one billion pounds annually. In the 1970s, as the third largest U.S. chemical company, Carbide became known for consumer products such as Prestone antifreeze and Glad plastic wrap. But Carbide’s largest customer was the steel industry, which it supplied industrial products such as oxygen, chromium, and manganese to stoke its furnaces and feed its mills.(1)

After the catastrophic gas leak killed thousands in Bhopal, Carbide became economically vulnerable, and was targeted by Wall Street agents looking to pick up cheap assets. To avoid being taken over entirely, Carbide retrenched. Consumer businesses were sold off, including Eveready batteries, Prestone antifreeze, Glad plastic bags, the agro-chemical business, and even the company’s headquarters in Danbury, Connecticut. By 1989, CEO Robert Kennedy had set up Carbide’s remaining parts as a holding company with three primary businesses—chemicals and plastics, industrial gases, and carbon.(2) Although its most notorious legacy became Bhopal, throughout its history—even after Bhopal—Carbide had its share of other environmental problems, workplace woes, and battles with community groups.

Back in Bhopal

In India, the federal government in 1986 had passed the Bhopal Gas Leak Disaster Act, which made the Indian government the representative for all individuals seeking compensation for damages from the incident. By this time, a slew of court actions had been filed. In fact, when the cases were combined in the U.S. court system, there were approximately 145 actions involving 200,000 plaintiffs. In 1986, the U.S. District Court of Southern New York found in favor of Union Carbide, and directed that the trial be moved to India. As the trial date approached, India contended that Union Carbide was actively involved in finalizing the Bhopal plant’s design, and that the company had intentionally reduced or eliminated safety items. Union Carbide was also charged with neglecting oversight and responsibility at the plant, including plant maintenance. Carbide appeared to have neglected recommendations of its own internal audits at the Bhopal plant. But the company, for its part, disputed these claims, and countered that the government of India had prohibited Carbide’s active participation in the final plant design. Carbide also asserted it had provided the appropriate training, and charged that the Indian subsidiary, UCIL, was responsible for safety and maintenance, with the government of India as its regulator. Finally, Carbide’s investigation had concluded that the MIC storage tank at the heart of the incident was sabotaged, a finding hotly disputed by many others. The case ended in 1989 when the Supreme Court of India authorized Union Carbide and UCIL to pay the agreed-upon sum of US$470 million in damages to the government of India.(3) The settlement was challenged in 1990 and 1991, with some advocating pursuit of the $3 billion in damages that had been originally proposed.(4) However, the Indian courts subsequently upheld the civil settlement, but allowed the criminal case to be reopened. The criminal case remains open today.

Back in the United States, through the late 1980s and early 1990s, Union Carbide and its CEO at the time, Robert Kennedy, became very visible players in the move to embrace Responsible Care, the chemical industry’s program of self-initiated environmental, health and safety improvement. But the same old Union Carbide seemed to rise from the ashes of the past. On March 12, 1991, for example, an explosion and fire at Union Carbide’s Seadrift, Texas plant killed one worker, injured 32 others, and came within minutes of killing hundreds. An OSHA (U.S. Occupational Safety and Health Administration) document revealed that Union Carbide’s environment, health and safety staff had conducted seven audits at Seadrift over a period of 20 years, at least three of which had warned explicitly of dangers which contributed to the disaster. Four of the audits were conducted after the Bhopal disaster and after Union Carbide’s push for Responsible Care. But Union Carbide failed to act on its own environment, health and safety staff recommendations or in accordance with its own Responsible Care rhetoric. Carbide agreed to pay OSHA a $1.5 million fine in November 1992 to settle alleged federal safety violations. OSHA had alleged that Carbide operated the Seadrift plant in a manner that created “the potential for catastrophic explosion involving ethylene oxide—a highly reactive chemical.”(5) In India, Carbide sold its interest in the Bhopal plant in 1994. Bhopal victims and activists, meanwhile, continued pursuing Carbide for damages and medical expenses through the 1990s, including filing legal actions in the United States.

Dow acquires Carbide

Then, in August 1999, Dow Chemical announced it would spend $9.3 billion to acquire Union Carbide, making Dow the world’s No. 2 chemical company. The new Dow–Union Carbide company would have $24 billion in annual sales with operations in 168 countries. Dow called the deal a strategic business decision. In early February 2001, when Dow consummated the merger after review by the Federal Trade Commission, the New York Stock Exchange building was wrapped with a giant banner displaying the Dow diamond. The Carbide deal, after all, was a major event, putting Dow at the top of the world’s chemical giants—on the same level as DuPont. “The new Dow is on its way to a totally new level of performance,” crowed Michael Parker on page one of a special commemorative magazine Dow published on the merger, touting its upside possibilities.(6) Yet others had wondered why Dow would willingly take on a company with so much unresolved liability, including Bhopal and asbestos.

“When you make an acquisition, you get some pleasant surprises and you get some downside,” said Dow CEO William Stavropoulos when asked those questions by a Midland Daily News reporter in March 2003. “With Carbide, we got a tremendous upside on the Kuwait and Malaysia operations”—where cheap energy is the prize. “In this world where energy is very expensive,” Stavropoulos explained, “we have a source of low-cost energy in Kuwait and Malaysia which we can grow off of.”(7) As for Bhopal, Dow claimed all along that the matter was resolved by the Indian courts, and that Dow, at any rate, had insulated itself from Carbide’s Bhopal liabilities by virtue of how it structured the acquisition. As for asbestos, Dow has said it would be protected through insurance and/or Congressional action. Dow obviously knew about the potential downside at Carbide when it first calculated the acquisition, and no doubt believed it could minimize those through a combination of good lawyering, lobbying, and creative public relations. But Dow may have miscalculated.

India’s Central Bureau of Investigation is seeking to name Dow instead of Carbide in the pending criminal proceedings. Dow says it has received no formal indication that the Indian government is following through on this threat, and that it doesn’t expect any legal action. Some on Wall Street don’t like Dow’s gamble, and a few have tried to get a closer look at the company’s balance sheet. Says David Romero, a litigation manager at a U.S. securities law firm that brought an unsuccessful suit challenging the accuracy Dow’s liability disclosures: “Union Carbide had simply left India. But Dow is an active presence in the country.” Dow has joint ventures there that make adhesives and sealants, as well as agricultural chemicals.

Dow may have also underestimated the tenacity of the Bhopal victims and their allies. Hundreds of U.S. activists, concerned about the continuing plight of Bhopal’s victims, are now engaged in the global Bhopal campaign effort. And that campaign is expanding to college campuses, unions, social and religious investors, even involving some members of the U.S. Congress. Bhopal activists, from India and elsewhere, attended Dow’s annual shareholders’ meeting in Midland in 2003, as they have in other years since Dow announced the Carbide acquisition. They come to publicly ask Dow officials and its stockholders to take responsibility for the Bhopal liability. First and foremost, the activists want Dow to face up to longstanding criminal charges against Carbide in India. They also want the company to arrange for long-term medical rehabilitation and monitoring of Bhopal victims. And they want economic rehabilitation and social support for survivors’ children, and a cleanup of the toxic wastes and contaminated groundwater still festering at Carbide’s old factory site.

One major network of Bhopal activists, the International Coalition for Justice in Bhopal (ICJB), has continued to push Dow on multiple fronts since the first announcement of the Dow–Carbide merger. A delegation of Bhopal survivors and ICJB activists took their fight to a number of U.S. cities in the spring of 2003, including New York, Washington and Houston. Among the protestors were Rashida Bee, 46, and Champa Devi Shukla, 50—two survivors of the Bhopal disaster. Bee lost nine members of her family to the gases and suffers from semi-blindness, breathing difficulties, and other chemical-related illnesses. Shukla and her husband also suffer Bhopal-related health effects. Bee and Shukla also have grandchildren with birth defects common to babies born to gas-affected parents. “If Dow were a truly responsible company, it would have settled the Bhopal issue the day they acquired Union Carbide,” said Bee in May 2003 while protesting in New York City.(8) Bee and Shukla, along with longtime Bhopal activist Satinath Sarangi, came to the United States for a 40-day tour of communities affected by Dow, and to raise awareness about Dow and Bhopal.

But the campaign to raise the “full costs” of Dow’s Union Carbide acquisition—and bring the company to account for these responsibilities—continues to grow beyond the Indian activists. In August 2003, the Paper, Allied-Industrial, Chemical & Energy Workers International Union (PACE) unanimously passed a resolution on Dow and Bhopal at the union’s constitutional convention. The resolution states that just as Dow accepted Carbide’s asbestos liabilities in Texas, Dow should also accept the liabilities in Bhopal. The PACE resolution also calls upon the government of India to include Dow in the ongoing criminal case in Bhopal.(9) In October 2003, U.S. Congressman Frank Pallone (D-NJ) and eight other members of Congress filed an amicus brief on behalf of about 20,000 victims of the 1984 Bhopal disaster. The brief, initiated by Pallone—who is co-founder of the Congressional Caucus on India and Indian Americans—came in response to a March 2003 decision by a U.S. District Judge in New York who dismissed all claims against Dow Chemical. Bhopal victims have appealed the judge’s ruling. Pallone and his colleagues sent a 23-page brief in the appeal case. It urges the court to hold Dow Chemical responsible. “There is strong support in Congress for holding those responsible for this horrific tragedy accountable for their actions,” said Pallone. “It is unacceptable to allow an American company not only the opportunity to exploit international borders and legal jurisdictions, but also the ability to evade civil and criminal liability for environmental pollution and abuses committed overseas.”(10)

In 2004, the 20th anniversary of the Bhopal tragedy, activists promise a year-long roster of actions and continuing protests pressing Dow Chemical on a range of toxic issues, not just Bhopal. At the World Social Forum meeting in Mumbai, India, in late January 2004, activists picketed Dow’s Mumbai headquarters building. “This is just the beginning of a globally-coordinated fight to expose the toxic skeletons in Dow Chemical’s closet, ” said the ICJB’s Satinath Sarangi, one of the leaders in the Dow campaign, promising to make the fight on a broader palate of issues and with a wider coalition of allies.(11) With Union Carbide, Dow just might have gotten more than it bargained for.

From Trespass Against Us, Dow Chemical and the Toxic Century, by Jack Doyle, 2004, Common Courage Press, Monroe, Maine.

Notes
1 Company Profile, Union Carbide Corporation, Hoover’s, December 2000; Milt Moskowitz, Michael Katz, and Robert Levering, Everybody’s Business, Harper & Row: San Francisco, 1990, pp. 526–27; David Dembo, Ward Morehouse, Lucinda Wykle, Abuse of Power: Social Performance of Multinational Corporations: The Case of Union Carbide, New York: New Horizons Press, 1990, pp. 12–19.
2 Milt Moskowitz, Michael Katz, and Robert Levering, Everybody’s Business, Harper & Row: San Francisco, 1990, pp. 526–27.
3 Sanjoy Hazarika, “Bhopal Payments Set At $470 Million For Union Carbide,” New York Times, February 15, 1989, p. A-1.
4 See for example, Associated Press, “India Seeks To Reopen Bhopal Case,” New York Times, January 22, 1990, p. D-1.
5 “Union Carbide to Pay A $1.5 Million Fine To Settle U.S. Charges,” Wall Street Journal, November 4, 1992, p. A-16.
6 Dow Chemical Co., “Dow and Union Carbide Have Merged,” Around Dow, Special Commemorative Issue, p. 1.
7 Kathie Marchlewski, “Stavropoulos Speaks: Dow CEO Answers Questions from Michigan Ops to Union Carbide and More,” Midland Daily News, March 23, 2003.
8 Jim Carlton and Thaddeus Herrick, “Bhopal Haunts Dow Chemical,” Wall Street Journal, May 8, 2003, p. B-3.
9 Paper, Allied-Industrial, Chemical & Energy Workers International Union (PACE), “Bhopal/Dow Chemical,” Resolution No. 49, Adopted August 18–23, 2003, Las Vegas, Nevada.
10 “Congressman Pallone Fights for Bhopal Gas Victims,” Times of India, October 18, 2003.
11 International Coalition for Justice in Bhopal (ICJB), Press Release, “Activists Mount Global Challenge To Dow,” January 16, 2004.