Ethical Issues in The Union Carbide Corporation and Bhopal Case Memo Read the Union Carbide Corporation and Bhopal case that begins on page 384 of your Bus

Ethical Issues in The Union Carbide Corporation and Bhopal Case Memo 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; 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.
Here is case:
Union Carbide Corporation and Bhopal
On 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 ac- cording to some, not enough. And the gas victims endure a
continuing struggle to get compensation and medical care. 3
UNION CARBIDE IN INDIA
Union 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 per- cent. Shares in the
ownership of the other 49.1 per- cent 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.
Union 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 re- quires 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, how- ever, 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, odor- less 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.
In 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
commercial use. For reasons that are unclear, his effort failed, and Buch was soon transferred to forestry du- ties
elsewhere.
The 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, re- quires 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.
In 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.
In 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.
UNION CARBIDE’S RELATIONSHIP WITH THE BHOPAL PLANT
What 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?
The 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 Car- bide 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 head- quarters 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 re- quested. 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:
employed at the plant at the time of the accident. In the five years from 1980 to 1984, although more than 1,000 Indians were
employed at the plant, only one American was employed there and he left in 1982. No Americans visited the plant for more than
one year prior to the accident, and during the 5-year period before the accident the communications be- tween the plant and the
United States were almost nonexistent.5
Thus, the Bhopal plant was run by UCIL with near total independence from the American corporation. Despite this,
shortly after the gas leak Chairman Warren M. Anderson said that Carbide accepted “moral responsibility” for the
tragedy.
THE GAS LEAK
On the eve of the disaster, tank 610, one of three storage tanks in the MIC unit, sat filled with 11,290 gallons of MIC.
The tank, having a capacity of 15,000 gallons, was a partly buried, stainless-steel, pressurized vessel. Its purpose was
to take in MIC made elsewhere in the plant and hold it for some time until it was sent to the pesticide production
area through a transfer pipe, there to be converted into Sevin or Temik.
At about 9:30 p.m. a supervisor ordered an opera- tor, R. Khan, to unclog four filter valves near the MIC production
area by washing them out with water. Khan connected a water hose to the piping above the clogged valves but
neglected to insert a slip blind, a device that seals lines to prevent water leaks into adjacent pipes. Khan’s omission, if
it occurred, would have violated established procedure.
Because of either this careless washing method or the introduction of water elsewhere, 120 to 240 gallons of water
entered tank 610, starting a powerful exothermic (heat building) reaction. At first, opera- tors were unaware of the
danger, and for two hours pressure in the tank rose unnoticed. At 10:20 p.m. they logged tank pressure at 2 pounds
per square inch (ppsi). At 11:30 p.m. a new operator in the MIC control room noticed that the pressure was 10 ppsi,
but he was unconcerned because this was within tolerable limits, gauges were often wrong, and he had not read the
log to learn that the pressure was now five times what it had been an hour earlier.
Unfortunately, refrigeration units that cooled the tanks had been shut down for five months to save electricity costs.
Had they been running, as the MIC processing manual required, the heat rise from reaction with the water might
have taken place over days instead of hours.
As pressure built, leaks developed. Soon workers sensed the presence of MIC. Their eyes watered. At 11:45 p.m.
someone spotted a small, yellowish drip from overhead piping. The supervisor suggested fixing the leak after the
regular 12:15 a.m. tea break. At 12:40 the tea break ended. By now the control room gauge showed the pressure in
tank 610 was 40 ppsi. In a short time it rose to 55 ppsi, the top of the scale. A glance at the tank temperature gauge
brought more bad news. The MIC was 77 degrees Fahrenheit, 36 degrees higher than the specified safety limit and
hot enough to vaporize. Startled by readings on the gauges, the control room operator ran out to tank 610. He felt
radiating heat and heard its concrete cover cracking. Within seconds, a pressure-release valve opened and a white
cloud of deadly MIC vapor shot into the atmosphere with a high-decibel screech.
Back in the control room, operators turned a switch to activate the vent gas scrubber, a safety de- vice designed to
neutralize escaping toxic gases by circulating them through caustic soda. It was down for maintenance and
inoperable. Even if it had been on line, it was too small to handle the explosive volume of MIC shooting from the
tank. A flare tower built to burn off toxic gases before they reached the atmosphere was also off line; it had been
dismantled for maintenance and an elbow joint was missing. An- other emergency measure, transferring MIC from
tank 610 to one of the other storage tanks, was fore- closed because both were too full. This situation also violated the
processing manual, which called for leaving one tank empty as a safeguard.
At about 1:00 a.m. an operator triggered an alarm to warn workers of danger. The plant superintendent, entering the
control room, ordered a water spraying device be directed on the venting gas, but this last-resort measure had little
effect. Now most workers ran in panic, ignoring four emergency buses they were supposed to drive through the
surrounding area to evacuate residents. Two intrepid opera- tors stayed at the control panel, sharing the only
available oxygen mask when the room filled with MIC vapor. Finally, at 2:30, the pressure in tank 610 dropped, the
leaking safety valve resealed, and the venting ceased. Roughly 10,000 gallons of MIC, about 90 percent of the tank’s
contents, was now settling over the city.
That night the wind was calm, the temperature about 60°, and the dense chemical mist lingered just above the
ground. Animals died. The gas attacked people in the streets and seeped into their bedrooms. Those who panicked
and ran into the night air suffered higher exposures.
As the poisonous cloud enveloped victims, MIC reacted with water in their eyes. This reaction, like the reaction in
tank 610, created heat that burned corneal cells, rendering them opaque. Residents with cloudy, burning eyes
staggered about. Many suffered shortness of breath, coughing fits, inflammation of the respiratory tract, and
chemical pneumonia. In the lungs, MIC molecules reacted with moisture, causing chemical burns. Fluid oozed from
seared tissue and pooled, a condition called pulmonary edema, and its victims literally drowned in their own
secretions. Burned lung tissue eventually healed, creating scarred areas that diminished breathing capacity. Because
MIC is so reactive with water, simply breathing through a wet cloth would have saved many lives. However, people
lacked this simple knowledge.
UNION CARBIDE REACTS
Awakened early in the morning, CEO Warren M. Anderson rushed to Carbide’s Danbury, Connecticut, headquarters
and learned of the rising death toll. When the extent of the disaster was evident, a senior management committee
held an urgent meeting.
It decided to send emergency medical supplies, respirators, oxygen (all Carbide products), and an American doctor
with knowledge of MIC to Bhopal.
The next day, Tuesday, December 5, Carbide dis- patched a team of technical experts to examine the plant. On
Thursday, Anderson himself left for India. However, after arriving in Bhopal, he was charged with criminal
negligence, placed under house arrest, and then asked to leave the country.
With worldwide attention focused on Bhopal, Carbide held daily press conferences. Christmas parties were canceled.
Flags at Carbide facilities flew at half-staff. All of its nearly 100,000 employees observed a moment of silence for the
victims. It gave $1 million to an emergency relief fund and offered to turn its guesthouse in Bhopal into an
orphanage.
Months later, the company offered another $5 mil- lion, but the money was refused because Indian politicians
trembled in fear that they would be seen cooperating with the company. The Indian public reviled anything
associated with Carbide. Later, when the state government learned that Carbide had set up a training school for the
unemployed in Bhopal, it flattened the facility with bulldozers.
CARBIDE FIGHTS LAWSUITS
AND A TAKEOVER BID
No sooner had the mists cleared than American attorneys arrived in Bhopal seeking litigants for dam- age claims.
They walked the streets signing up plaintiffs. Just four days after the gas leak, the first suit was filed in a U.S. court;
soon cases seeking $40 billion in damages for 200,000 Indians were filed against Carbide.
However, the Indian Parliament passed a law giving the Indian government an exclusive right to rep- resent victims.
Then India sued in the United States. Union Carbide offered $350 million to settle existing claims (an offer rejected by
the Indian government) and brought a motion to have the cases heard in India. Both Indian and American lawyers
claiming to represent victims opposed the motion, knowing that wrongful death awards in India were small compared with those in the United States. However, in 1986 a federal court ruled that the cases should be heard in India,
noting that “to retain the litigation in [the United States] . . . would be yet another example
of imperialism, another situation in which an established sovereign inflicted its rules, its standards and values on a
developing nation.”6 This was a victory for Carbide and a defeat for American lawyers, who could not carry their
cases to India in defiance of the government.
In late 1986 the Indian government filed a $3.3 billion civil suit against Carbide in an Indian court. 7 The suit alleged
that Union Carbide Corporation, in addition to being majority shareholder in Union Carbide India Ltd., had
exercised policy control over the establishment and design of the Bhopal plant. The Bhopal plant was defective in
design be- cause its safety standards were lower than similar Carbide plants in the United States. Carbide had
consciously permitted inadequate safety standards to exist. The suit also alleged that Carbide was con- ducting an
“ultrahazardous activity” at the Bhopal plant and had strict and absolute liability for com- pensating victims
regardless of whether the plant was operating carefully o…
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