Dow Investors Request SEC Investigation on Lack of Disclosure of Bhopal Liabilities

Bhopal Gas Peedit Mahila Stationery Karmachari Sangh
Bhopal Gas Peedit Mahila Purush Sangarsh Morcha
Bhopal Group for Information and Action

For immediate release
NEW DELHI, 15 May, 2008 — Prompted by the release of an internal PMO note that cites a Law Ministry opinion that Dow Chemical will inherit Union Carbide’s potential liabilities in Bhopal, eight US-based shareholders have signed a complaint to the US Securities and Exchange Commission against Dow for non-disclosure of the risks it faces in India. Sanford Lewis, a Boston-based attorney for the investors who filed the complaint with the SEC today stated, “These documents highlight a concern that Dow has failed to disclose significant risks to its investments in India. Dow has stated repeatedly it has no liability for remediation of the Bhopal site, yet the document released by the Indian government tells a different story.” The letter from investors seeks and SEC investigation and any appropriate enforcement action.
Dow maintains that all Bhopal liabilities were settled under the 1989 settlement, and that Dow will not be affected by any of the Bhopal liabilities that could stick to Union Carbide. This, despite the fact that at the time of acquisition, Union Carbide was a proclaimed absconder from India for failing to appear in court to face trial on charges of “culpable homicide not amounting to murder.”
Despite economic compulsions and strategic decisions by the company that require Dow to have a major manufacturing and marketing presence in India, the company has proceeded to invest in India with caution. The company has made it clear to the Government that its investments in India can be made only if the legal-overhang of Bhopal liabilities is removed, and if its investments can be protected from legal action over the Bhopal controversy.
The documents released on May 12 include an internal briefing note from the Prime Minister’s office. Dated 7 February, 2008, the note states:
“Irrespective of the manner in which [Union Carbide Corporation] has merged or has been acquired by Dow Chemicals, if there is any legal liability, it would have to be borne by Dow Chemicals”.
In 2005, Dow began intense lobbying for legal immunity against Carbide’s liabilities prompted by a May 2005 application by the Ministry of Chemicals in a case relating to toxic waste clean-up in the Madhya Pradesh High Court. The application sought Rs.100 crores ($25 million) from Dow towards clean-up costs. Dow claims that its 100 percent subsidiary, Union Carbide, is a separate legal entity with its own system of liability management, and that Dow has inherited only assets and not Carbide’s liabilities.
Responding to requests from Dow and its allies, the Prime Minister instructed the Chemicals Ministry to prepare a note on Dow’s legal liabilities in consultation with the Law Ministry. While the actual note prepared by Chemical and Law Ministries is not available, the internal briefing note prepared by PMO director Shaleen Kabra dismisses any possibility for immunity: “[The Law Ministry] has categorically stated that in view of the pendency of Writ Petition in the Madhya Pradesh High Court and the legal position stated above, it cannot also be said that the investment proposed to be made by the Dow Chemicals will be immune from the orders of the Court,” the note observes.
A copy of the complaint concerning non-disclosure of risks faced in India by Dow filed with the SEC today by eight US shareholders (pdf).
For more information, contact: Rachna Dhingra: 9717516005.

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