The $195 million discrepancy – where’s the money gone?

In a highly important development, the Indian Supreme Court has asked the Reserve Bank of India to account for the colossal sum of Rs.8.85 billion ‘missing’ from the corpus of gas compensation money deposited by Union Carbide and its subsidiary Union Carbide India in 1989. The explanation, which should prove utterly fascinating, cannot come soon enough.

The Supreme Court notice, issued by judges Shivaraj V. Patil and D.M. Dharmadhikari yesterday, originates from a petition filed last year by 36 survivors representing each of the gas-affected wards of Bhopal. The petition seeks to have money remaining in the corpus – according to the Bhopal Welfare Commissioner’s records some $300 million – promptly distributed among genuine gas survivors. Following the survivors’ petition, however, the Government of India submitted an affidavit to the Supreme Court asserting that only $105 million remained with the Reserve Bank of India.

$105 million bears no resemblance to $300 million. How on earth can that be?

To date only around $254 million of the original $470 million settlement has been disbursed to over 566,000 claimants, leaving $216 million behind. The Welfare Commissioner’s figure of $300 millon for the remaining money can be explained by the addition of roughly $84 million in interest since 1989. Even without the interest, $111 million has simply vanished!


These are substantial quantities of money by anybody’s reckoning, which, naturally, has not escaped the dead-eye of Dow-Carbide. The existence of significant amounts of money still waiting to be disbursed to the gas affected appears to give the fugitive a perfect defence against claims that the settlement was inadequate, or that more compensation is needed from the company. If all that money is left over, then how can $470 million be far too little?

In an interview shown in the excellent ABC Dateline film on Warren Anderson last year (which can be viewed via Real Player here – be cautioned that the film contains graphic footage from 1984) Carbide’s ex-CEO Robert Kennedy attempts to amplify Carbide’s ‘generosity’ with the assertion that the $470 million settlement was the “largest civil settlement of its kind in India”. Given that there is no single incident of its kind remotely on the scale of Bhopal in world – never mind Indian – history, Kennedy’s remark actually makes a virtue of the scale of the crime. Yet of course it is the scale of the crime that shows the $470 million to be wholly inadequate.

And herein lies the rub, because the settlement was calculated according to grossly under-estimated figures for the dead and disabled: about 3,000 and 30,000 respectively. The MP and Central govts.’ culpability in this is inarguable. Just weeks after the disaster independent observers had reached similar estimates, with the proviso that more deaths and disabilities would follow and that surveys would eventually reveal the true magnitude of the disaster. By the time of the settlement in 1989, thousands more deaths had been recorded and nearly 600,000 compensation claims filed; numerous official medical studies revealed MIC to have affected almost every system in the body, illnesses were chronic and worsening and second generational effects were already being observed. The State and Central govts., then, conspired to ignore the mass of evidence thus allowing the settlement to remain low enough for the satisfaction of the company. When Carbide’s shares jumped $2 at the announcement, the market had made its own valuation of the settlement: “what an exceedingly good bit of business”.

But the startling fact is that, even if the estimates of dead and injured used by the Government had been correct, the settlement would still have been desperately low. On 22nd Feb 1985 the Indian Parliament enacted the Bhopal Gas Disaster (Processing of Claims) Act, 1985, arrogating to itself sole power of representation of the survivors in the pursuit of claims for damages. The Act made no provision for the payment of interest on claims (most of which took over 15 years to be settled) but it did set out factors to be quantified in determining compensation awards that go way beyond the simple fact of having been poisoned by Carbide’s gases, including the probable life span of the gas-affected, projected earning capacity, medical expenses, physical and mental injuries and their severity.

One writer, Alfred De Grazia, applied most of these factors to hypothetical figures for the dead and injured remarkably similar to those used by the Government of India in 1989 – given that he was writing in early 1985. The figures are actually less than those arrived at by the Government, but the compensation he calculated outstrips the eventual settlement by almost three times. You can judge for yourself how appropriate his methods were as the entire book, “A Cloud Over Bhopal”, is available online.

Once the contemporary figures for the dead and injured are factored in – the dead perhaps seven times the 1989 estimate, the severely injured five times more – we can begin to grasp just how pitiful the 1989 settlement was, and how scandalous it is that fifteen years on what little money there was has not only evaded its rightful beneficiaries, it seems, in substantial part, to have disappeared altogether. If all were as it should be, these events would provoke a public re-examination of each of the facts surrounding the paltry out of court settlement struck up between the Government of India and Union Carbide.

As ever, it is the survivors who suffer the grossest injustice, and Dow-Carbide who prosper. For any hope of substantive redress, the criminal case against Dow-Carbide has to be pursued ferociously and seen to its conclusion. A positive judgement in the case would lead to punitive and restitutionary fines that could, at the very least, compensate survivors for the health care needs and loss of livelihood so manifestly absent from the civil settlement.

The Reserve Bank of India has a lot of explaining to do

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