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Alabama A & M University Union Carbide Corporation and Bhopal Case Questions

Alabama A & M University Union Carbide Corporation and Bhopal Case Questions

Question Description

Read the Union Carbide Corporation and Bhopal case that begins on page 384 of your Business, Government, and Society textbook. In lieu of answering the questions that follow the case, you will respond to the prompt below;

Consider the concerns as described in this case and prepare a memorandum that addresses the concerns described below. Your memo should be completed in narrative form (you may use headings if you choose to do so for organizational purposes, but do not list your responses in bullet form). Minimum page length: 6 pages; Maximum page length: 10 pages (double spaced).

Identify all of the potential ethical issues you see (if any). Describe and analyze the implications of each issue, including who or what were affected by the company’s response. In identifying issues and addressing their implications, your discussion should be as comprehensive as possible—you should consider any economic, social, or ecological implications.

Additionally, your analysis should thoroughly identify and discuss at least two potential courses of action that the company could have taken with respect to each issue you have discussed. Clearly demonstrate your reasoning process—identify and explain any ethical principles or arguments you are relying on; do not simply state unsupported conclusions.

If you choose to apply any approaches to ethical reasoning that you learned about in this course, clearly state what they are and how you are applying them to this case. Of the possible solutions you identified, which would you recommend that the company should have adopted as a resolution? Again, fully explain and justify your recommendations. Finally, explain how you would implement each solution you have recommended.

Union Carbide Corporation and Bhopal case

n December 3, 1984, tragedy unfolded at the Union Carbide pesticide plant in Bhopal, India. Water entered a large tank where a volatile chemical was stored, starting a violent reaction. Rapidly, a sequence of safety procedures and devices failed. Fugitive vapors sailed over plant boundaries, forming a lethal cloud that moved with the south wind, enveloping slum dwellings, searing lungs and eyes, asphyxiating fated souls, scarring the unlucky. Bhopal is the worst sudden industrial accident ever in terms of human life lost. Death and injury estimates vary widely. The official death toll set forth by the Indian government for that night is 5,295, with an additional 527,894 serious injuries. Greenpeace has put the death toll at 16,000. 1 The incredible event galvanized industry critics. “Like Auschwitz and Hiroshima,” wrote one, “the catastrophe at Bhopal is a manifestation of something fundamentally wrong in our stewardship of the earth.” 2 Union Carbide was debilitated and slowly declined as a company after the incident. The government of India earned mixed reviews for its response. The chemical industry changed, but according to some, not enough. And the gas victims endure a continuing struggle to get compensation and medical care. 3


U nion Carbide established an Indian subsidiary named Union Carbide India Ltd. (UCIL) in 1934. At first the company owned a 60 percent majority interest, but over the years this was reduced to 50.9 percent. Shares in the ownership of the other 49.1 percent traded on the Bombay Stock Exchange. This ownership scheme was significant because although UCIL operated with a great deal of autonomy, it gave the appearance that Union Carbide was in control of its operations. By itself, UCIL was one of India’s largest firms. In 1984, the year of the incident, it

had 14 plants and 9,000 employees, including 500 at Bhopal. Most of its revenues came from selling Eveready batteries. U nion Carbide decided to build a pesticide plant at Bhopal in 1969. The plant formulated pesticides from chemical ingredients imported to the site. At that time, there was a growing demand in India and throughout Asia for pesticides because of the “green revolution,” a type of planned agriculture that requires intensive use of pesticides and fertilizers on special strains of food crops such as wheat, rice, and corn. Although pesticides may be misused and pose some risk, they also have great social value. Without pesticides, damage to crops, losses in food storage, and toxic mold growth in food supplies would cause much loss of life from starvation and food poisoning, especially in countries such as India. Exhibit 1 shows a Union Carbide advertisement from the 1960s that describes the company’s activities in India. The Bhopal plant would supply these pesticides and serve a market anticipated to expand rapidly. The plant’s location in Bhopal was encouraged by tax incentives from the city and the surrounding state of Madhya Pradesh. After a few years, however, the Indian government pressured UCIL to stop importing chemical ingredients. The company then proposed to manufacture methyl isocyanate (MIC) at the plant rather than ship it in from Carbide facilities outside the country. This was a fateful decision. Methyl isocyanate, CH3NCO, is a colorless, odorless liquid. Its presence can be detected by tearing and the burning sensation it causes in the eyes and noses of exposed individuals. At the Bhopal plant it was used as an intermediate chemical in pesticide manufacture. It was not the final product; rather, MIC molecules were created, then pumped into a vessel where they reacted with other chemicals. The reaction created unique molecules with qualities that disrupted insect nervous systems, causing convulsions and death. The plant turned out two similar pesticides marketed under the names Sevin and Temik. I n 1975 UCIL received a permit from the Ministry of Industry in New Delhi to build an MIC production unit at the Bhopal plant. Two months before the issuance of this permit, the city of Bhopal had enacted a development plan requiring dangerous industries to relocate in an industrial zone 15 miles away. Pursuant to the plan, M. N. Buch, the Bhopal city administrator, tried to move the UCIL pesticide plant and convert the site to housing and light com

mercial use. For reasons that are unclear, his effort failed, and Buch was soon transferred to forestry duties elsewhere. T he MIC unit was based on a process design provided by Union Carbide’s engineers in the United States and elaborated by engineers in India. The design required storage of MIC in big tanks. An alternative used at most other pesticide plants would have been to produce small amounts of MIC only as they were consumed in pesticide production. The decision to use large storage tanks was based on an optimistic projection that pesticide sales would grow dramatically. Since an Indian law, the Foreign Exchange Regulation Act of 1973, requires foreign multinationals to share technology and use Indian resources, detailed design work was done by an Indian subsidiary of a British firm. Local labor using Indian equipment and materials built the unit. In 1980 the MIC unit began operation under UCIL’s management. During the five years of design and construction, densely populated shantytowns sprang up nearby, inhabited mainly by impoverished, unemployed people who had left rural areas seeking their fortunes in the city. A childlike faith that the facility was a benevolent presence turning out miraculous substances to make plants grow was widespread among them. I n fact, when the MIC unit came on line the plant began to pose higher risk to its neighbors; it now made the basic chemicals used in pesticides rather than using shipped-in ingredients. One step in the manufacture of MIC, for example, creates phosgene, the lethal “mustard gas” used in World War I. The benighted crowd by the plant abided unaware. I n 1981 a phosgene leak killed one worker, and a crusading Indian journalist wrote articles about dangers to the population. No one acted. A year later, a second phosgene leak forced temporary evacuation of some surrounding neighborhoods. Worker safety and environmental inspections of the plant were done by the state Department of Labour, an agency with only 15 factory inspectors to cover 8,000 plants and a record of lax enforcement. 4 Oversight was not vigorous. Meanwhile, the Indian economy had turned down, and stiff competition from other pesticide firms marketing new, less expensive products reduced demand for Sevin and Temik. As revenues fell, so did the plant’s budget, and it was necessary to defer some maintenance, lessen the rigor of training, and lay off workers. By the time of the incident, the

MIC unit operated with six workers per shift, half the number anticipated by its designers.


W hat was the organizational relationship of Union Carbide Corporation in the United States to its subsidiary, Union Carbide India Ltd., and ultimately to the Bhopal plant? How much direction and control did the corporate parent half a world away in Danbury, Connecticut, exercise over the facility? T he Bhopal plant fit into the Union Carbide management hierarchy as shown in the chart in Exhibit 2. Although Carbide employees from the United States managed the plant in its early years, in 1982, under pressure from the government, it was turned over to Indian managers. The experience of colonial rule in India created a strong political need for leaders to put on shows of strength with foreign investors. Indians felt a burning desire to avoid any appearance of subjugation and demanded self-sufficiency. This is what had led to passage of the law requiring foreign investors to use Indian firms and workers in certain ways—and to put pressure on Union Carbide to turn the plant completely over to its Indian subsidiary. The Bhopal plant was but one of 500 facilities in 34 countries in the Union Carbide Corporation universe. There was no regular or direct reporting relationship between it and Union Carbide’s headquarters in Connecticut. At the request of UCIL, employees of Union Carbide had gone to India twice to perform safety inspections on the plant. Other than those occasions, managers in the United States had received information or reporting about the plant only infrequently and irregularly when major changes or capital expenditures were requested. Thus, the Bhopal plant was run with near total independence from the American corporation. In litigation to determine where victims’ lawsuits should be tried, a U.S. court described its autonomy in these words:

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