Should Dow be allowed to do business in India?

Sreelatha Menon, Business Standard, May 07, 2008
DEBATE
The two issues that remain are whether Dow inherited Union Carbide’s liabilities and why the government never cleaned up Bhopal after settling with Carbide
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Scot Wheeler,
Director Communications, Dow Chemicals, Midland, US
‘Dow did not inherit Union Carbide’s liabilities. Furthermore, Carbide settled its liabilities with the Indian government way back in 1989′
Let me start by clarifying a significant point. The Dow Chemical Company does not have responsibility or legal liability for the Bhopal tragedy or its aftermath. We do have deep sympathy for the victims of the tragedy in Bhopal and we, along with many others, ask the question today, “Why isn’t this site cleaned up?”
For those unfamiliar with this situation, it is important — and also accurate reporting — to understand that The Dow Chemical Company never owned or operated the former Bhopal plant site and this situation is not Dow’s responsibility, accountability, or liability to bear. The solution to this problem is in the hands of the Indian central and state governments as the site today is under the control of the Madhya Pradesh state government.
As there have been a number of inaccuracies reported by media regarding liability, I want to be very clear on this point. First, you should be aware that Union Carbide Corporation (UCC) was no longer doing business in India long before Dow acquired its shares in 2001. Also, contrary to claims made by some people, Dow did not inherit UCC’s liabilities and does not have responsibility for them.
UCC remains a separate company. UCC has its own board of directors, its own financial reporting (you can read UCC’s 10-K financial report to the SEC online), and its own employees. And, more importantly, UCC manages its own liabilities. Furthermore, Union Carbide Corporation and the former Union Carbide India Limited (now Eveready Industries India Limited) settled their liabilities regarding the Bhopal tragedy with the Indian government back in 1989 and this settlement was upheld by the Indian Supreme Court in 1991.
As I mentioned earlier, the former Union Carbide India Limited plant site is now under the ownership of the state government of Madhya Pradesh. This has been the case since 1998 and for whatever reason most of us do not know or fully understand, the site remains unremediated. As owners of the site, the Madhya Pradesh government is the entity that has the ability and, more importantly, the authority to ensure that the plant site gets cleaned up.
Finally, Dow India recognises the importance of India’s economic development and sees the region as a high potential growth opportunity for the chemicals and plastics businesses. As a key component of our global business strategy, Dow India is focusing on bring new technologies to the region as well as making good use of local talent in the fields of chemicals sciences and technology. Dow’s association with India is not new and, in fact, celebrated its 50th anniversary last year. Most recently in April, Dow Europe GmbH, a wholly-owned subsidiary of The Dow Chemical Company, and Gujarat Alkalies and Chemicals Ltd. announced the signing of a Joint Venture Agreement for the construction, operation and ownership of a 200 kilotons per year chloromethanes manufacturing facility in Gujarat. These are exciting business developments.We are confident about Dow India’s future success and look forward to being a part of India’s continued economic development.
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Prashant Bhushan,
Advocate, Supreme Court
‘You can use any corporate strategy or veil, but liabilities and assets come together. Dow owns Carbide, so it needs to ensure it fulfils its obligations’
Dow Chemicals should not be allowed to conduct business in India for three reasons. Firstly they have purchased the Union Carbide Corporation (UCC) and when you have purchased a company, it does not matter what corporate subterfuge you seek to hide behind, you purchase its assets and liabilities. You can use any corporate strategy or veil but liabilities and assets come together.
Dow can continue to claim that UCC is a separate company, with its own board of directors, its own financial reporting and its own employees. Saying this and more are all part of Dow’s corporate strategy. But the fact is that UCC was liable for environmental and other damage caused by the chemical disaster, and was responsible for cleaning it up. It didn’t do so.
Since Dow has purchased it, it has inherited that responsibility. It just cannot turn its face away. When they purchased Union Carbide, it was with the knowledge of the Bhopal disaster legacy, and it cannot now pretend not to have anything to do with that tragedy.
As owner of Union Carbide, Dow Chemicals is responsible for making UCC take care of its responsibility. Since Dow says that UCC has its own mechanism to deal with its liabilities, then Dow should make UCC do its duty in this case.
So long as it doesn’t do so, Dow is shielding an offender. In that respect, Dow Chemicals should not be allowed to do business here because it is unwilling to pay for the environmental clean-up of the dirt left behind by UCC.
And the second reason for not doing business with Dow is that it is a proven offender, having bribed officials in the Indian Government to get its pesticides registered. It did pay a heavy penalty to a district court in the US which, in essence, is an admission of its guilt. A company that is guilty of such conduct should be blacklisted. Why should such a company be allowed to do business in India?
A third reason why Dow Chemicals should not be allowed in India is because it is in the business of toxic chemicals. It is true that many chemical manufacturers are in business. But they should be allowed only if they sign a liability agreement for total responsibility for anything that may happen in future. They must accept strict liabilities for anything that may happen in relation to their business practices. This is especially true of Dow because it has been covering up the crime of another chemical company it bought.
It is true that taking responsibility for UCC’s mistakes would lead to an unending list of liabilities for Dow. A way can be found to deal with that. But the simplest way is for Dow to just make Carbide do its job. It, after all, owns it.
For the last word on Dow’s inheritance of ‘successor liability’ from Union Carbide, see Rajan Sharma’s excellent recent article in Frontline – ed.
Story Comments
Posted By : Rupesh on 12 May,2008
Mr. Scot,if your claim about DOW not being liable for Bhopal is true, then why did DOW’s CEO Andrew livres meet with the Finance Minister to discuss the bhopal liability? Also Newspaper reports have quoted the letters livres wrote to the ministers of various ministries and Ratan tata pleading for an out of court settlement and an unconditional burial of the liability issue for investing in India. What was the need for all this if DOW is not responsible and liable for Bhopal.Great piece Mr.Bushan
Posted By : nogjenkins on 11 May,2008
I can’t believe Dow’s raw nerve in saying that they wanted Union Carbide’s assets but choose to leave behind their liabilities. If the tragedy had happened in the US, there would be no debate. It would have been considered a world-wide tragedy and the government would not have rested until the site was cleaned. But instead, Dow can hire a mouthpiece to glibly state that everything is fine in Bhopal. This second tragedy by Dow is even worse because it should how little a corporation cares
Posted By : PRAKASH on 10 May,2008
Mr.Wheeler, Don’t you see the double standard here? If Dow does not inherit liabilities of UCC, what about UCC’s asbestos liabilities here in the US, for which Dow has set aside money. Oh! that is right, I forgot that life of a US citizen has more worth than a Indian citizen, per your fellow Dow employee Kathy Hunt. Like Mr.Bhushan says, if a company purchases a company you purchase the assets and liabilities, not just liabilities in the US. I do not know where your brain is. Please no BS on BS
Posted By : nity68 on 10 May,2008
Dear Mr. Wheeler: Your response contains claims that are not borne out by facts. You mention that Union Carbide ceased doing business in India long before 2001. Indeed betwen 1994 and 2002, more than $20 million was earned by Union Carbide in India through a series of front companies. In 2005, you got caught for trying to pass off Carbide’s technology as your own. Unethical companies cheat. Stupid companies like yours get caught too. In India, you will meet your match. Bhopal will finish you.
Posted By : bhopalmemory on 10 May,2008
The reason UCC wasn’t doing business in India when Dow acquired it is that it was absconding from the country on charges of manslaughter for Bhopal. Dow acquired UCC knowing that it was under criminal charges. The notion that UCC is fully owned and yet ‘independent’ is preposterous, as is the notion that the state of MP’s custodianship over the Bhopal site frees Dow from responsibility. The 2 pending court cases on water contamination at the site and calling Dow & UCC speak otherwise.
Posted By : percyf on 10 May,2008
To be fair to Scot, he is right about Carbide being a separate company with its own directors. Carbide has its own CEO, John Dearborn: it’s pure happenstance that he moonlights as Dow’s Geographic President for India. As for Carbide’s Business Vice President, why shouldn’t he make on the side as Dow’s president for Asia Pacific? And before you mock, Carbide’s board chooses to make all its products for just one customer simply because Dow pays such good prices. Totally separate companies. Hic.
Posted By : nalin on 10 May,2008
I am a supporter of business and industry but in my opinion the Bhopal case and all the dubious cover-up maneuvers are a massive international corporate crime and a national political disgrace. The citizens of India must reopen this case and bring all the unindicted to justice, especially those hiding overseas. After all, far more people died that night in Bhopal than on 911.
Posted By : nalin on 10 May,2008
I am a supporter of business and industry, but in my opinion,the callous post-Bhopal cover-up is a corporate crime and political disgrace. The citizens of India must re-open these cases and bring all the unidicted foreigners to justice? Many of them have been hiding behind a series of legal maneuvers and dubious back door political deals. After all, several times more people died in Bhopal than 911. Every MBA program should highlight this case under business ethics and corporate crime.
Posted By : Emily on 10 May,2008
Mr. Wheeler has failed to explain the motivation behind Dow’s refusal to accept legal liability for what happened in Bhopal; if Dow were to do so, it would be a precident-setting case, worldwide. Other corporations would then be subject to laws that hold them financially responsible for the devastation they wreak on humanity and the environment. Sadly, profit takes precidence over life, even in the courts. Thank you to Mr. Bhushan for his detailed response. Someone must stand for justice!
Posted By : shanao on 09 May,2008
Dow cannot legally purchase a company, enjoy it’s assets, and disregard it’s liabilities. It is disturbing and offensive that you call your corporate spin “accurate reporting.” Dow chose to purchase UCC, for better AND worse, knowing that the issue was anything but resolved. If a company’s product gave your son or daughter cancer, would you allow Dow to purchase that company and continue to profit from that product? That is what Dow is doing to thousands of sons and daughters in Bhopal.
Posted By : s_kavula@yahoo.com on 09 May,2008
Scott, As a company that has bribed Indian Officials to sell pesticides “banned elsewhere in the world”, you have no bloody right to be in this country. Period. You may have gotten away bribing officials, but in the eyes of the people in India, you are a shameless, unethical company. I wish to request everyone not to invest in DOW Chemicals and withdraw your money if you do hold any shares in DOW. BOYCOTT all DOW Products. skavula
Posted By : aquene on 08 May,2008
Mr. Wheeler, your arguments hold water like a seive. If Dow were to poison my family today, and be bought by another corporation tomorrow – would the liability disappear? Would my mother rise from the dead? or our family’s terrible loss cease to exist? Would the guardian angel of government step in to pay for your corporate mistakes on the taxpayer dole, so you could continue to poison still more with your toxic products?
Posted By : SomuKumar on 08 May,2008
Dear Scot, Excellent remarks. You have proven to be great DOW employee and equally “good” collegue of Kathy Hunt who claimed “$500 is good for an Indian?”. Even cold-blood murderer can’t spit such venom in their words, like you guys do! Just makes me curious, how much life of kids and family members of DOW executive board costs? Is it same $500 or few extra bucks? We don’t inherit liabilities but ofcourse inherit profits – lamest reasoning I have ever heard! Good job Mr. Bushan.
Posted By : dsethi on 07 May,2008
Thanks a lot Mr. Prashant for your detailed reply to these guys. Scot, I am really impressed with ur audacity to present this view point(pure BS)in a national dailiy here. Do you know there are about a 100 victims protesting against Dow at the in front of PMO. They do not have drinking water and communities are still counting the effected people- I would assume you know all this well thast why you are here. Every one knows that Dow is culprit here..You guys are still holding the red weapon..

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