2001: Dow Chemical Enters the Fray

“If you define ‘liability’ simply as the ability to lie, then Dow’s in liability up to its ears.”
- Ryan Bodanyi, Former Organizer of Students for Bhopal

In 2001 the Dow Chemical Company, based in Midland, Michigan, USA, purchased the Union Carbide Corporation and all its assets and liabilities. To this day, Dow-Carbide has refused to:

  • Clean up the factory site, which continues to contaminate the soil and water of surrounding communities and has caused a second major health crisis in the city
  • Provide just compensation to victims made ill by the contamination
  • Fund necessary medical care, health monitoring regimens and research studies
  • Reveal decades of research on the effects of MIC and related toxins, which were conducted by Union Carbide
  • Offer alternate livelihoods to victims who cannot pursue their work because of exposure-related illness
  • Stand trial before the Chief Judicial Magistrate’s court in Bhopal, where Union Carbide faces criminal charge of culpable homicide (manslaughter) and has fled these charges for many years

Smashing Dow’s Lies

In order to avoid taking responsibility for Bhopal, Dow has spun a web of elaborate lies. Using many contradictory reasons, it claims it has no liability in Bhopal. ICJB has compiled Dow’s most blatant lies and the facts that prove Dow wrong:

Lie #1: “There’s no liability because of the 1989 settlement.”

Dow Chemical has been consistent in its refusal to admit liability for the Bhopal disaster, arguing that the 1989 settlement  between Union Carbide and the Government of India of $470 million resolved all liabilities.

Before acquiring Carbide, Dow asserts it did an “exhaustive” study to determine any liability for Bhopal. They obviously did not “study” very hard, as there is ample evidence Carbide’s criminal and civil liabilities are still very much in existence. Yet they continue to claim, “there is no legal foundation for application of liability.”

THE FACTS:

  • The original 1989 settlement pertained to both criminal and civil (monetary) charges against Union Carbide, absolving it of all criminal charges as long as they paid the monetary settlement.
  • The settlement case reopened the following year, in 1990, because of complaints from the survivors.
  • In 1991 the court made a new ruling, which reinforced the monetary civil settlement but reinstated the criminal charges for manslaughter, causing grievous harm, and poisoning animals. Carbide still faces these charges today.
  • The 1989 settlement dealt solely with disaster-related damages sustained only by the gas-affected survivors. It did not include the environmental liabilities and pollution associated with the routine operation of the factory – it did not include financial restitution for those poisoned by the water contamination from Carbide’s abandoned chemicals.
  • On March 17, 2004 the US Second Circuit Court of Appeals resoundingly refuted Dow’s dishonesty by sanctioning further property damage, environmental remediation, and personal injury claims against Union Carbide.
  • In a June 28, 2004 official letter, the Indian Government asked the US court to hold Carbide liable for environmental remediation at the site.
  • On March 13, 2003 Forbes Magazine called Dow’s purchase of Carbide “a mistake” because of lingering liabilities regarding Bhopal. The article outlines both sides, but clearly indicates Dow’s liability.

Lie #2: “The liability belongs to Union Carbide, not to Dow.”

Dow claims that Union Carbide’s liabilities do not roll over to Dow Chemical, even though it purchased all of Union Carbide. It continues to maintain, contrary to laws in India and the USA, as well as International Corporate Law, that it acquired the assets of Union Carbide without its liabilities. Dow also claims that it is not liable for the contamination in Bhopal because it stems from a Union Carbide factory, not a Dow Chemical one.

THE FACTS:

  • Dow took responsibility for some of Union Carbide’s liabilities – specifically the ones under USA jurisdiction. Dow accepted Carbide’s asbestos liabilities in the US, paying survivors $2.2 billion to resolve all claims.
  • “Union Carbide remains as a subsidiary of Dow, with its own board of directors, and its own assets and liabilities,” said a Dow spokesperson. The argument is that just because they own stock in a company does not make them liable for the company’s liabilities. However, Union Carbide:
    • Now supplies only to Dow’s businesses
    • Has a board comprised of Dow managers and executives
    • Sold its headquarters in Danbury, Connecticut,
    • Its business activities, according to Dow’s official regulatory filings, are part of “Dow’s global businesses rather than stand-alone operations.”
    • Essentially, Carbide is Dow is Carbide.
  • Dow’s callousness towards the Bhopalis was evident immediately after it bought Union Carbide, with the Dow Public Affairs spokesperson saying “$500 is plenty good for an Indian” (Kathy Hunt, 2002), referencing the compensation amount each survivor received through the 1989 settlement.
  • More than nine separate studies have demonstrated the existence of serious contamination in and around the Carbide factory. Union Carbide, as the polluter, is bound under US law, International law and Indian law, to undertake the clean up. Dow, as the 100% owner of Union Carbide (As of 2005, Dow’s John Dearborn was Carbide’s CEO, Dow’s European CEO Luciano Respini was a director of UCC, and Dow’s vice president Frank Brod was Carbide’s registrant), is legally bound, under US merger law, to take control of each of Carbide’s assets AND liabilities. It is irrelevant, in the eyes of the law, for Dow to claim that they didn’t cause the contamination themselves: as of February 2001, Dow IS Carbide. It’s as simple as that. Each new illness and death resulting from the mutagenic and carcinogenic chemicals 20,000 Bhopalis are drinking daily is therefore entirely Dow’s responsibility and Dow’s alone. And if that wasn’t enough, one of Dow’s “Responsible Care” commitments is a promise “to work with others to resolve problems associated with past handling and disposal practices.” Or doesn’t Dow believe in “Responsible Care” after all?

Lie #3: “The Indian Government has no jurisdiction over Dow-Carbide.”

Dow Chemical has stated publicly that it has no intention of surrendering its subsidiary for trial. In December 2003, Dow spokesperson John Musser claimed that  “[Dow’s] position on the matter is that the Indian government has no jurisdiction over Union Carbide or Warren Anderson; therefore, they are not appearing in court.” This fabrication has been used by others, including Dow’s Indian lawyer and spokesperson, and the Indian Law Ministry.

THE FACTS:

  • When the disaster first occurred, the Indian government filed a $3 billion compensation suit on behalf of the victims in US federal court.
  • The case was quickly sent back to the Indian courts in May 1986 on the grounds of forum non-convenience – meaning that the American court believed the case was not under United States jurisdiction and that the more appropriate forum would be a court in India. The USA sent the case back to India under the condition that Union Carbide would submit to the jurisdiction of Indian courts for both civil and criminal charges.
  • Union Carbide agreed and submitted itself to Indian jurisdiction for the 1989 settlement. There is NO reason why NOW Union Carbide should not submit itself to Indian jurisdiction. In doing so, it is going against the direct orders of the US court.
  • By refusing to surrender its subsidiary for trial, Dow has placed itself in the legal position of harboring a fugitive.
  • While Union Carbide no longer has assets in India (which could be seized to compel its appearance for trial), Dow has at least four major subsidiaries in the country.
  • In January 2005, the Chief Judicial Magistrate’s court in Bhopal sent a summons to Dow’s US headquarters, asking it to show cause to the court why Dow’s Indian assets shouldn’t be seized to compel Carbide’s appearance for trial.

Lie #4: “It’s the Indian Government’s problem.”

Dow’s propaganda website, bhopal.com, claims that, “In 1998, the state government of Madhya Pradesh revoked Eveready Industries’ lease on and took possession of the facility and publicly assumed all accountability for the site, including the completion of any further remediation.” Therefore, Dow argues, the Madhya Pradesh (MP) government, the “current” owner of the site,
 is responsible for the cleanup. Dow also claims that the $300 million in interest that have accrued on Union 
Carbide’s original 1989 settlement should be used to pay for the 
cleanup.

THE FACTS:

  • In claiming that the $300 million should be used towards a clean up, Dow ignores a 2004 ruling by the Indian Supreme Court that
 this money exists solely to compensate the Bhopal victims for the loss
 of their health, livelihoods, and loved ones.
  • The MP government owns, and has always owned, the land that the factory was built on. Carbide leased this land to build its pesticides factory. In 1998 Carbide returned this lease to the State government, but 
did not fulfill one key provision of the lease agreement: that the site be returned in a 
pristine state. Carbide itself acknowledges this was a condition for the lease.
  • India has as law the “Polluter Pays” principle, which states that whoever pollutes the land must clean it up regardless of ownership. The “polluter pays” principle is enshrined in the Environmental Protection Act, passed in India in 1986. Ruling in Vellore Citizens’ Welfare Forum v. Union of India (1996) 5 SCC.647, the Indian Supreme Court declared that, “. . .Once the activity carried on is hazardous or inherently dangerous, the person carrying on such activity is liable to make good the loss caused to any other person by his activity irrespective of the fact whether he took reasonable care while carrying on his activity. The rule is premised upon the very nature of the activity carried on.” Elaborating on the “polluter pays” principle in MC Mehta v. Union of India (1997) 2 SCC 353, the Supreme Court ruled that “polluter pays” principle as interpreted by the Court means that “the absolute liability for harm to the environment extends not only to compensate the victims of pollution but also of restoring the environment degradation.”
  • In 1994 UCC sold off its UCIL shares, and UCIL was renamed as Eveready Industries India Limited (EIIL). In 1998, UCIL aka EIIL was in the middle of a remediation program of the factory site, supervised by the Madhya Pradesh Pollution Control Board (MPPCB). In error, a notice was sent to EIIL from another district office, telling EIIL to return the lease of the land. EIIL left, and when MPPCB demanded they come back and clean up the site, EIIL refused.
  • When Dow bought UCC in 2001, UCC no longer owned a majority of its subsidiary UCIL, but UCC is  still legally responsible for the actions that UCIL undertook when UCC owned 50.9% or more of the subsidiary.
  • On July 28, 1998 the MP Government issued a statement saying that they (MP Government), in consultation with NEERI-Nagpur and IICT-Hyderabad (professional environmental remediation groups), will ensure “. . . safe disposal of the residual Sevin Tar and Napthol Tar from the factory.” Dow perpetually alludes to this statement as if the MP government meant that it would take on the responsibility for the entire clean up. But Dow never actually produces the statement as evidence, because upon reading the statement it is clear the MP government was not saying it would undertake the work itself, just that it will ensure it is done, and with proper professional scrutiny. The work mentioned also only entails surface wastes and does not encompass a comprehensive remediation program. EIIL itself had paid for the consultation of NEERI and the IICT at the request of the MPPCB.
  • In February 1999 the MPPCB, which had been consistent in requiring EIIL/UCIL to remediate the site, wrote to the site manager demanding that the work be done, citing, in so many words, the polluter pays principle.
  • On Oct 19, 2002 the MP Government announced it would approach the Supreme Court and the Government of India in order to hold Dow accountable for remediation.
  • On February 5, 2003 the MP Government advised the Central Pollution Control Board to recover costs of clean up from Dow and EIIL. They argued that EIIL was still the occupier of the factory site and owner of its contents because of the absence of any formal handover.
  • On June 7, 2004 the MP Government submitted a formal letter to the Indian Government in response to the environmental liability case, Bano v Union Carbide, submitted to court in New York. The letter states that the government’s policy regarding remediation is that, “The State Government shall not bear any financial burden for this purpose. The disposal of the chemical waste shall be at the cost of Union Carbide.”
  • On June 28, 2004 the Government of India submitted a formal notice before the US federal court in New York (Bano v Union Carbide). It states its official policy: “Pursuant to the ‘polluter pays’ principle recognized by both the United States and India, Union Carbide should bear all of the financial burden and cost for the purpose of environmental clean up and remediation.”
  • On July 15, 2005 legal counsel for the government of India entered a court directive to UCC, Dow and EIIL asking that they deposit Rs. 100 crores (about $22 million) for site remediation costs.
  • Nevertheless, Dow continues to argue that the Madhya Pradesh government is responsible for the cleanup (see the Daily Environment Report, No. 144, Monday, July 28, 2003) – despite the fact that Dow owns UCC, UCC caused the pollution, and so UCC is liable under Indian law to clean it up.

Lie #5: “There are no liabilities. Period.”

During the administration of the merger of Dow Chemical and Union Carbide, officials from both companies stated: “there are no…criminal…actions, suits, claims, hearings, investigations or proceedings pending…No investigation or review by any Government Entity with respect to it or any of the subsidiaries is pending.”

THE FACTS:

  • This incredible statement outraged many of the company’s shareholders; several filed suit in 2001 to stop the merger.
  • In 2004, other shareholders, led by Boston Common Asset Management and including several church-based trusts, filed a shareholder’s resolution with Dow. It sought Dow’s full disclosure of the impacts the Bhopal matter might pose to the company, its reputation, its finances, and its expansion in Asia.
  • Earlier in 2004, a report by Innovest Strategic Value Advisors, “Dow Chemical: Risks for Investors,” stated that Dow faces “significant unreported, or underreported environmental risks.” The report details Dow’s failure to disclose liabilities relating to Bhopal, Agent Orange, Dursban, and dioxin in its SEC filings and statements to shareholders.
  • The Innovest report and Dow’s continued misrepresentations on its website and at its 2004 Shareholders’ Meeting led to a shareholder coalition that filed a letter with the SEC, alleging material misstatements and asking that the SEC investigate.
  • On May 12, 2005, a shareholder resolution was presented to Dow Chemical at its annual general meeting (AGM), “calling on the Board of Directors to disclose the risks to the company posed by changing scientific knowledge and public policies regarding Dow’s toxic chemicals.”
  • Dow’s response was to reiterate that the company’s disclosures are appropriate. Shareholders disagreed, saying that the company’s response was inadequate, and expressing shock that “the Board of Directors approved a response that does not address our company’s responsibility to remediate the impacts of that accident on the people and their communities” (written by a consultant to the Sisters of Mercy Trust, a Dow Shareholder).
  • On November 30 2005 the New York-Concerned Dow Chemical (NYSE:DOW) shareholders announced that they filed a resolution with the company requesting that it address its outstanding responsibilities for the 1984 Bhopal Chemical facility explosion.
  • In May 2006 shareholders filed a resolution requesting the company produce a report on new initiatives instituted by management to address health, environmental and social concerns of the Bhopal, India survivors.
  • On December 1, 2006 Dow shareholders announced that they filed a resolution with Dow asking that it address outstanding issues resulting from the Carbide chemical facility explosion in Bhopal.
  • On May 11, 2007 three shareholder resolutions were filed; they raised concerns about Dow’s ability to manage risks, damage to the reputation of the company, and its failures to disclose material liabilities to investors. One of the resolutions related to Dow’s failure to enact remediation of the abandoned waste in Bhopal.
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