Jul 4, 2010

Dow owns all liability for Union Carbide-related law suits in US, but refuses to do so in India

The Group of Ministers (GoM) headed by Home Minister P Chidambaram, known to be a sympathizer of Dow Chemicals, has done what it was expected to do: absolve Dow Chemical of all responsibilities of the Bhopal gas tragedy. For some strange reasons, the national outrage witnessed over the injustice being meted out to Bhopal gas victims was somehow missing when the GoM came out with an equally harmful decision.

P Chidambaram must be asked to explain as to how and why the government has refused to initiate any action against Dow Chemical for its refusal to own damages caused by Union Carbide in Bhopal. I agree that the legal route to make that possible had already been blocked by faulty judicial verdicts earlier, But there are several ways the government can step in. It can easily pressurise Dow Chemicals to behave.

Nevertheless, The Times of India (July 3, 2010) has published an excellent analysis that exposes the double standard's of Dow Chemicals. In the US, Dow is fighting 75,000 Union carbide-related suits and is expected to part with $ 839 million in coming years, while in India it has remained steadfast in denying any role for Bhopal clean up. This is only possible with support from the Government of India. I don't blame Dow Chemicals as much as I blame my own government. They have failed the people of India.

In case you missed it, here is the TOI analysis:

Dow's double standards exposed

Subodh Verma
Times Insight Group

Here is something for legal eagles of the government of India to chew on: while Dow Chemical Company denies any responsibility for damages caused by Union Carbide in Bhopal, it has taken over all liability of Carbide for fighting out over 75,000 asbestos related law suits in the US. Dow/Carbide expects to incur liability costs of $839 million in the coming years. They have already spent a whopping $687 million in litigation costs, besides paying out $1,480 million to an unspecified number of claimants till date. Carbide became a subsidiary of Dow through a merger in 2001.

These facts, gleaned from the mandatory annual filing (Form 10-k) for 2009 submitted by Dow to the Securities and Exchange Commission (SEC) of the US on February 19, 2010, clearly establish that Dow has taken over Union Carbide liabilities for bodily damages caused by the latter's commercial activities. In the case of Bhopal, Dow has consistently claimed that it had nothing to do with the massive gas leak disaster of December 3, 1984 in the pesticide plant run by Union Carbide.

In 1994, Union Carbide (USA) sold off its interest of 50.9% in Union Carbide (India) to Macleod Russel (India) which renamed it as Eveready Industries India. According to Dow, its connection with UCIL doesn't exist because it took over the parent company only in 2001. But, according to N D Jaiprakash, one of the petitioners in the lawsuits on Bhopal, Union Carbide (USA) had already been declared an absconder in 1992 and it is named in the chargesheet filed by the Union government. "All criminal liability, as also liability for clean up of contamination caused by Carbide prior to disaster naturally passes to Dow," he explains.

In the US asbestosis cases, Dow is defending or settling the suits on behalf of Union Carbide as well as Carbide's subsidiary Amchem Products Limited, which Carbide took over in 1977. In India, Dow is distancing itself from Union Carbide (USA), which in turn is washing its hands off its own subsidiary Union Carbide India Limited.

According to the latest Form 10-k filing by Dow, there were 75,030 unresolved asbestosis related claims at the end of 2009, including 24,146 claims against both Union Carbide and Amchem. There are over 50,000 individual claimants. Dow/Carbide settled 9,131 claims in 2009.

Of the $839 million estimated future liability reported in the 10-k filing, about 23% is for existing pending claims and 77% is for future claims. Asbestosis claims have arisen from thousands of people who were exposed to asbestos used by companies in the 1940s and 50s. Inhalation of asbestos fibres causes four categories of compensable diseases: mesothelioma; lung cancer; certain other cancers (colon-rectal, throat, intestines and stomach); and non-malignant conditions like lung damage. Claimants are seeking compensation for a variety of causes including negligent failure to warn, strict liability, breach of express and implied warranty, negligent infliction of emotional distress, enhanced risk of disease, medical monitoring, and civil conspiracy. A Supreme Court appointed committee said in 1991 that by 2015, about 265,000 people would have suffered damage from asbestos.

The 10-k filing of Dow also states that it is seeking recovery of $84 million from insurers for its asbestos liability, and $448 million as costs of defence and resolution of law suits in courts.

The similarities between the Bhopal disaster and asbestosis cases in US are striking in that both have led to long term and severe bodily harm to people because of actions of the companies. But the attitude of Dow is strikingly different between US and India. In the US, Dow is responsible for what its subsidiaries (and their subsidiaries) did years ago. Hence, it is in the thick of litigation and forced to pay affected persons because of immense pressure from public opinion and judiciary. So much so that Dow admits that asbestos related claims, including future defence costs could have a material adverse impact on its consolidated financial position.

In India, Dow is denying any responsibility for what its subsidiary Union Carbide (USA) and its then subsidiary Union Carbide India did in the Bhopal tragedy in 1984.



Anonymous said...

This is an appalling and shameless situation & frequently cited here, Devinder. Simply put:

People killed in accident on oil rig leased by British company BP, resulting in four presidential visits, a $1.6bn clean-up and the establishment of $20bn compensation fund in two months

15000 +
People killed in accident at Bhopal plant owned by American company Union Carbide, resulting in 0 presidential visits, no clean-up and $470m compensation in 25 years

This was in a box with a large red title: NUMBER CRUNCHING

See http://www.private-eye.co.uk/

Barbara Panvel

Pramod said...

Devinder Ji,
Our puppet ministers and prime ministers continue to do what they have doing ever since independence, its pretty much like a highway robbery. Britishers ruled India by "divide and rule" and new mantra is "distract and rule". Idiot box is doing a great job for them one front and they are keeping rest of the population hungry and the ones who protests have been declared naxalites and terrorists.
US government has banned any one from going close to the oil spill and booms, camera crew, media personnel and just about any body stays 65 feet away from beaches with oil spill, so no more pictures of oil soaked birds, punishment? yes there is $40,000 fine and felony charges, how is that for democracy? who is doing it? hmmmm Mr Barack Obama? so what does mean? simple, people forget all this really quickly, and another catastrophe goes less punished, its always happened and keeps happening. Yes 4 presidents visited the site, yes 1.6 bn dollars clean up, and 20 bn dollars compensation fund but the damage done is irrversible, oil leak will continue for several years, and no one is going to pay for that, in fact no one can as you can not repair the damage done to nature and then it will do more damage and the price paid will be peanuts, as usual, so Big corporations wins again. Just this time without media. How crazy? And who is responsible for all this, Greed.