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May 20, 2007

The Acid Wash Effect

SHUCHI SRIVASTAVA, OUTLOOK INDIA, MAY 28, 2007

A government/industry nexus is giving leeway to Dow in the Union Carbide wrangle. Why?

This is the story of an American MNC, accused of bribing Indian officials and influencing policymakers.
It's about The Dow Chemical Company (Dow), the second-largest chemicals maker in the world and an inheritor of our worst industrial accident, the Bhopal gas tragedy.

Apart from Dow chairman Andrew Liveris, the dramatis personae include Planning Commission deputy chairman Montek Singh Ahluwalia, Indian ambassador to the US Ronen Sen, and Tata Sons chairman Ratan Tata, one of the country's most powerful and credible businessmen.

In the recent past, they have all interacted several times with each other. Montek heads the Indo-US Economic Dialogue Committee, which aims to help India become a knowledge economy and usher in a second green revolution in agriculture through technological inputs. An important ingredient of the umbrella negotiations between the two nations is the Indo-US CEO Forum, which is chaired by Tata and includes Liveris, one of the 10 American CEOs handpicked and appointed to the forum by US President George Bush. Ronen Sen is obviously diplomatically involved in all these parleys.

Therefore, it was natural for Dow—and Liveris—to use the interactions to distance itself from the cases relating to the poisonous gas leak from the Union Carbide factory in 1984. After Dow took over Union Carbide's global operations in 2001, the former insisted that it should not be dragged into criminal, environmental and financial liabilities for the incident that led to the death of nearly 20,000 people. In official backgrounders, Dow has consistently maintained that it had "never owned nor operated the (Bhopal) plant" and, therefore, it "has no responsibility for Bhopal".

But in recent times, Dow has been asked by the Indian government to cough up money to clean up the toxic wastes—above and below ground—still present at the factory site. Satinath Sarangi, an International Campaign for Justice leader, explains, "The issue of who will pay for cleaning up of the site remains." In May 2005, while responding to a public interest litigation on the issue, the Union ministry of chemicals and fertilisers (MOCF) urged the Madhya Pradesh High Court to order Dow to deposit an initial amount of Rs 100 crore for the purpose. Adds Yashveer Singh, officer-in-charge, Bhopal cell, MOCF, "This is against a final figure that may be around Rs 400-500 crore."

It's now clear why Dow is not keen to get entangled in the Bhopal tragedy case. On November 8, 2006, Liveris shot off a letter to Ronen Sen saying "it was a pleasure to see you again at the US-India CEO Forum in New York on 25 October. I especially appreciated your support in discussing resolution of the Bhopal legacy issue as a tangible, deliverable outcome for the CEO Forum." The letter added that since the Indian government representatives admitted at the meeting that "Dow is not responsible for Bhopal and will not be pursued by the GoI, it will be important to follow through to ensure that concrete, sustained actions are taken that are consistent with these statements".

The Dow chairman suggested a two-pronged action plan for India. One, the central and state governments should use the opportunity that existed to join hands with local CEOs and foundations to 'remediate' (or clean up) the Bhopal site. Two, the Indian leaders needed "to work closely with all ministries of the central government to ensure that their stated position is reflected in any and all of GoI's statements, legal files, and dealings with the Indian court system". In short, Liveris wanted the MOCF to withdraw its court application asking for the Rs 100 crore deposit.

Despite several telephone calls, Outlook could not speak to Sen in Washington.)

Interestingly, while responding to an application filed by Bhopal's International Campaign for Justice under RTIA, Naseem Ahmad, APIO, Planning Commission, admitted that the Dow chairman had met Montek twice. In a letter (March 14, '07), Ahmad wrote that "Liveris had met Ahluwalia at the Indo-US CEO Forum in New York (25 October) and subsequently he had also paid Ahluwalia a courtesy call at the 2007 World Economic Forum meeting in Davos." But there are no indications whether the Bhopal gas tragedy cases came up during these discussions.

Less than three weeks after Liveris' letter to Sen, Ratan Tata took a seemingly pro-Dow stance. In a letter to Montek, the Tata Group chairman referred to the contents of the Liveris-Sen exchange. He added that the withdrawal of the MOCF court application "is obviously a key aspect and I wanted your assessment as to whether this is possible". Taking Liveris' arguments forward, Tata wrote that his offer "to lead and find funding for the remediation of the site...still stands. Perhaps it could break the deadlock?"

In fact, the Tata group has been serious about its cleaning-up initiatives. On July 10, '06, Tata wrote to finance minister P. Chidambaram that "remediation of the gas tragedy site be considered because of the likelihood of contamination of the soil and groundwater in the area, which would endanger the health and lives of the people of Bhopal". Talking about a local remediation fund, Tata added that "should the government and the courts endorse such a line of action, an effort could be made to bring (together) like-minded corporate houses to contribute to such a fund. These suggestions are totally independent of the issues being addressed in the courts."

This brings us to several crucial questions. Is the Tata group trying to bail out Dow? Are legal liabilities the only reason for Dow to lobby so aggressively? Why is the Tata group so intent in pursuing site remediation? Finally, is Dow's case being pushed by powerful Indian officials like Montek in any form whatsoever?

The latter dismisses the last question out of hand. "Ratan (Tata) wrote to me about Dow in my capacity as the chair of the Indo-US Economic Dialogue Committee and I have forwarded his request to the MOCF. I can only play the role of a facilitator here as neither am I an expert nor am I authorised to make any such recommendations," Montek told Outlook in a telephonic conversation.

His take on the Tata-Dow connection is simple. "I cannot with all certainty say what is the exact motivation that could have prompted Ratan to take this course. But his role as the chair of the Indo-US CEO Forum could have something to do with it as Liveris is also one of the CEOs representing American business interests in the forum," explains Montek. A statement issued by the Tata group said that its suggestions to Montek or Chidambaram were no different from "any public-spirited initiative to clean a polluted river or a site damaged by some abnormal phenomenon".

"There is a risk that health issues may emerge, which impact not only the unfortunate victims of the Bhopal tragedy but also those citizens of Bhopal who were not affected by the tragedy but who may be impacted by possible contamination of underground water. It is surely imperative that some initiative be undertaken to clean the site, which has remained neglected for the last 22 years," adds the Tata Group statement. Agrees Montek, "I don't think that Ratan's offer to front-end the remediation exercise at the Union Carbide plant should be misconstrued and seen negatively."

But the fact is that if the Tata offer is accepted, it will benefit Dow.

Legally, it will be construed as a signal that the American firm has nothing to do with the Union Carbide cases. And it will force the MOCF to withdraw its application asking Dow for the Rs 100 crore deposit. As Liveris said in his letter to Sen, "Certainly a withdrawal of the (MOCF) application would be a positive, tangible demonstration that the GoI means what it says about Dow's lack of responsibility in the (Bhopal) matter. "

If Dow is absolved of the legal liabilities, it will be in a better position to pursue its strategy to invest $1 billion in India over the next few years. Recently, it received a positive indicator when the industry ministry, after a green signal from the law ministry, approved Dow's collaboration with Reliance Industries. It meant that India had not blacklisted Dow. Clarifies Montek, "Yes, Dow is viewed as a strategic investor. But that will not have any bearing on its legal liabilities and I have not responded to any such requests that have come my way. I believe justice must be meted out in this case given the gravity of the crime... ."

Finally, the Bhopal fallout may impact the investigations in the Dow bribery case too. On February 13, '07, the American firm reached a settlement with the US Securities Exchange Commission (SEC). It agreed to pay a penalty of $3,25,000 for allegedly bribing Indian central and state officials to secure faster registration and approval for three molecular products in the 1996-2001 period. Dow had deliberately falsified records to hide the $1,00,000 payments.

Union agriculture minister Sharad Pawar has stated that India has ordered a CBI probe and asked the authorities to re-examine the clearances of the three products. When asked whether Dow would be blacklisted, Pawar said that "after investigations, definitely action will be taken against the company".

However, the argument for blacklisting Dow in the bribery case may be diluted if it gets a reprieve in the Carbide case. Its supporters will point out that Bhopal is a much bigger issue and, therefore, India should be more lenient in the bribery case too. And if Dow is neither blacklisted nor asked to pay for the Bhopal remediation, it will enable it to quietly pursue its India-specific strategy.

Posted by bhola at 10:54 AM | Comments (0)

May 05, 2007

Indian government assures action against Dow Chemicals

The Statesman, New Delhi, May 4, 2007

NEW DELHI, May 4: The government today assured that it would take
action against Dow Chemicals, the multinational company which took
over the controversial Union Carbide in 2001, if the company is found
guilty with respect to reports that it bribed Indian officials to get
its products registered.

Ms Brinda Karat of the CPI-M alleged in the Rajya Sabha that these
products are banned in the US and other developed countries due to
adverse effect on children, and demanded blacklisting of the company.
The issue was raised by BJP MP S S Ahluwalia who cited reports of US
Securities Exchange Commission (SEC) about confessions by Dow
Chemicals regarding it having bribed Indian officials some years ago
for securing approval of its products.

The MP also queried the minister about the MNC allegedly pressuring
the government to get rid of its financial liability for clean up of
the Bhopal toxic waste.

Posted by bhola at 09:03 AM | Comments (0)

Action will be taken against Dow after probe

Monsters & Critics.com, May 4, 2007

New Delhi, May 4 (IANS) The government Friday promised to take action
against Dow Chemicals, which has taken over Union Carbide and produces
insecticides in India, after investigating reports that it secured
registration and approval of its products by bribing Indian officials.
Agriculture Minister Sharad Pawar gave the assurance in the Rajya
Sabha in reply to a question by Bharatiya Janata Party MP (BJP) S.S.
Ahluwalia regarding Dow Chemicals' reported confessions to the US
Securities Exchange Commission (SEC).

The minister said he was aware of the reports. 'This incident took
place in 1996-2001. Preliminary inquiries showed that one senior
officer of the Central Insecticides Board (CIB) and some officers of
the state were involved. We ordered a CBI (Central Bureau of
Investigation) inquiry into this.'

Dow Chemicals, according to the Bhopal Group for Information and
Action, currently manufactures and sells Dursban (cholrpyrifas) for
home applications in India. But it has withdrawn the product from
household use in the US after it was demonstrated that the chemical
damages children's brain development.

Dow Agro sciences website describes Dursban as a 'specialty
insecticide which offers superior control of more than 280 insect
pests'.

Pawar said the Bhopal gas issue - poisonous gas from the Union Carbide
factory in Bhopal leaked out on the night of Dec 2-3 1984 killing
thousands - was not related to his ministry.

'They developed three molecular products and submitted (for approval).
After the US information, we asked them the truth. They told us `We
bribed one officer of CIB who retired in 2001 and some pesticides
control inspectors of the state'.'

He added that the government had asked 'the concerned authorities' to
look into the application for three molecular clearances and to
re-examine the product and to withdraw the clearance if proper
standards are not met.

At this stage, an incensed Brinda Karat of the Communist Party of
India-Marxist (CPI-M) got up to say: 'They are trying to register a
product here that is banned in other countries because of the adverse
influence on children.'

She asked pointedly whether the company would be blacklisted or not.
To which Pawar replied: 'After investigations, definitely action will
be taken against the company.'

Posted by bhola at 09:01 AM | Comments (0)

"CBI probing Dow's disclosure on bribes"

The Hindu, New Delhi, May 4, 2007

The Government has ordered a CBI probe into US firm Dow Chemicals' disclosure about paying bribes to officials in India for securing approval for their pesticides.

Replying to queries, Agriculture Minister, Sharad Pawar, said after
Dow Chemicals in February made the disclosure of paying two lakh
dollars in bribes, a preliminary inquiry was conducted which found
that a senior official of Central Insecticide Board and State-level
inspectors were paid money.

"Based on the findings of the preliminary enquiry, the Ministry has
decided to refer the case to the Central Bureau of Investigation for
further action," he said during the Question Hour in the Rajya Sabha.
As money could have been paid to several thousand inspectors across
many states, the case has been handed over to the CBI.

Pawar said the three formulations approved by the officer were also
being looked into to ascertain if they meet Indian standards.

"If the enquiry establishes malpractices, action will be taken against
the company also," he said.

Dow Chemicals had on February 13 make a disclosure to the US
Securities Exchange Commission (SEC) of having bribed government
officials in India some years ago for securing registration/approval
of their products.

Posted by bhola at 08:59 AM | Comments (0)

CBI probing Dow`s disclosure on paying bribes to officials

Press Trust Of India, New Delhi. May 5, 2007

Government has ordered a CBI probe into the US firm Dow Chemicals
disclosure about paying bribes to officials in India for securing
approval for their pesticides.

Replying to queries, Agriculture Minister Sharad Pawar said after Dow
Chemicals in February made the disclosure of paying two lakh dollars
in bribes, a preliminary inquiry was conducted which found that a
senior official of the central insecticide board and state-level
inspectors were paid money.

"Based on the findings of the preliminary enquiry, the ministry has
decided to refer the case to the Central Bureau of Investigation (CBI)
for further action," he said during the Question hour in the Rajya
Sabha.

As money could have been paid to several thousand inspectors across
many states, the case has been handed over to the CBI.

Pawar said the three formulations approved by the officer were also
being looked into to ascertain if they meet Indian standards.

Posted by bhola at 08:57 AM | Comments (0)

Pawar promises action against Dow Chemicals

Economic Times< may 4, 2007

NEW DELHI: Agriculture Minister Sharad Pawar on Friday promised action
against Dow Chemicals, which has taken over Union Carbide and produces
insecticides in India, after probing reports that it had secured
registration and approval of their products after bribing Indian
officials.
Pawar was replying to a question by Bharatiya Janata Party MP (BJP)
S.S. Ahluwalia in the Rajya Sabha regarding Dow Chemicals' reported
confessions to the US Securities Exchange Commission (SEC).

The minister said he was aware of the reports. "This incident took
place in 1996-2001. Preliminary inquiries showed that one senior
officer of the Central Insecticides Board (CIB) and some officers of
the state were involved. We ordered a CBI (Central Bureau of
Investigation) inquiry into this."

He said that the Bhopal gas issue - poisonous gas from the Union
Carbide factory in Bhopal leaked out on the night of Dec 2-3 1984
killing thousands - was not related to his ministry.

"They developed three molecular products and submitted (for approval).
After the US information, we asked them the truth. They told us `We
bribed one officer of CIB who retired in 2001 and some pesticides
control inspectors of the state."

He added that the government had asked "the concerned authorities" to
look into the application for three molecular clearances and to
re-examine the product and to withdraw the clearance if proper
standards are not met.

At this stage, an incensed Brinda Karat of the Communist Party of
India-Marxist (CPI-M) got up to say: "They are trying to register a
product here that is banned in other countries because of the adverse
influence on children."

She asked pointedly whether the company would be blacklisted or not,
to which Pawar replied, "After investigations, definitely action will
be taken against the company."

Posted by bhola at 08:56 AM | Comments (0)