BUS 4474 CH11 Concerns Raised in the Union Carbide Corporation & Bhopal Case HW Read the Union Carbide Corporation and Bhopal case. Consider the concerns a

BUS 4474 CH11 Concerns Raised in the Union Carbide Corporation & Bhopal Case HW Read the Union Carbide Corporation and Bhopal case. 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. Chapter 11 Multinational Corporations 385
EXHIBIT 1
Union Carbide
Advertisement
This ad
appeared
in Fortune
magazine in
April 1962
Source: Courtesy
of Union Carbide
Corporation .
Bag
Bola
Science helps build a new India
Onen working the fields… the eternal river Ganges…jeweled elephants on parade. Today
these symbols of ancient India exist side by side with a new sight-modern industry. India
has developed bold new plans to build its economy and bring the promise of a bright future
to its more than 400,000,000 people. But India needs the technical knowledge of the
western world. For example, working with Indian engineers and technicians, Union Carbide
recently made available its vast scientific resources to help build a major chemicals and
plastica plant near Bombay. Throughout the free world, Union Carbide has been actively
engaged in building plants for the manufacture of chemicals, plastics, carbons, gases, and
metals. The people of Union Carbide welcome the opportunity to use their knowledge and
skills in partnership with the citizens of so many great countries
UNION
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issuance of this permit, the city of Bhopal had en- mercial use. For reasons that are unclear, his effort
acted a development plan requiring dangerous in- failed, and Buch was soon transferred to forestry du-
dustries to relocate in an industrial zone 15 miles ties elsewhere.
away. Pursuant to the plan, M. N. Buch, the Bhopal The MIC unit was based on a process design
city administrator, tried to move the UCIL pesticide provided by Union Carbide’s engineers in the
plant and convert the site to housing and light com- United States and elaborated by engineers in India.
386 Chapter 11 Multinational Corporations
The design required storage of MIC in big tanks. MIC unit operated with six workers per shift, half the
An alternative used at most other pesticide plants number anticipated by its designers.
would have been to produce small amounts of MIC
only as they were consumed in pesticide produc- UNION CARBIDE’S
based on an optimistic projection that pesticide RELATIONSHIP WITH THE
sales would grow dramatically. Since an Indian law, BHOPAL PLANT
the Foreign Exchange Regulation Act of 1973, re-
quires foreign multinationals to share technology What was the organizational relationship of Union
and use Indian resources, detailed design work was Carbide Corporation in the United States to its sub-
done by an Indian subsidiary of a British firm. sidiary, Union Carbide India Ltd., and ultimately to
Local labor using Indian equipment and materials the Bhopal plant? How much direction and control
built the unit.
did the corporate parent half a world away in
In 1980 the MIC unit began operation under Danbury, Connecticut, exercise over the facility?
UCIL’s management. During the five years of design The Bhopal plant fit into the Union Carbide man-
and construction, densely populated shantytowns agement hierarchy as shown in the chart in Exhibit 2.
sprang up nearby, inhabited mainly by impover. Although Carbide employees from the United States
ished, unemployed people who had left rural areas managed the plant in its early years, in 1982, under
seeking their fortunes in the city. A childlike faith that pressure from the government, it was turned over to
the facility was a benevolent presence turning out indian managers. The experience of colonial rule in
miraculous substances to make plants grow was India created a strong political need for leaders to
widespread among them.
put on shows of strength with foreign investors.
In fact, when the MIC unit came on line the plant Indians felt a burning desire to avoid any appear
began to pose higher risk to its neighbors; it now ance of subjugation and demanded self-sufficiency
made the basic chemicals used in pesticides rather This is what had led to passage of the law requiring
than using shipped-in ingredients. One step in the foreign investors to use Indian firms and workers
manufacture of MIC, for example, creates phosgene, in certain ways and to put pressure on Union Car-
the lethal “mustard gas” used in World War I. The bide to turn the plant completely over to its Indian
benighted crowd by the plant abided unaware. subsidiary
In 1981 a phosgene leak killed one worker, and a The Bhopal plant was but one of 500 facilities in
crusading Indian journalist wrote articles about dan- 34 countries in the Union Carbide Corporation
gers to the population. No one acted. A year later, a universe. There was no regular or direct reporting
second phosgene leak forced temporary evacuation relationship between it and Union Carbide’s head
of some surrounding neighborhoods. Worker safety quarters in Connecticut. At the request of UCIL,
and environmental inspections of the plant were employees of Union Carbide had gone to India
done by the state Department of Labour, an agency twice to perform safety inspections on the plant
with only 15 factory inspectors to cover 8,000 plants Other than those occasions, managers in the United
and a record of lax enforcement.” Oversight was not States had received information or reporting about
vigorous.
the plant only infrequently and irregularly when
Meanwhile, the Indian economy had turned major changes or capital expenditures were re-
down, and stiff competition from other pesticide quested. Thus, the Bhopal plant was run with near
firms marketing new, less expensive products re- total independence from the American corporation
duced demand for Sevin and Temik. As revenues fell, In litigation to determine where victims’ lawsuits
so did the plant’s budget, and it was necessary to de should be tried, a U.S.court described its autonomy
fer some maintenance, lessen the rigor of training in these words:
and lay off workers. By the time of the incident, the
Union Carbide Corporation’s) participation in the
design and construction of the plant was limited
and its involvement in plant operations terminated
Shella Jasanoff, “Managing India’s Erwironment,”
long before the accident… [It was constructed and
Environment, October 1986, p. 33.
managed by Indians in India. No Americans were
384 Chapter 11 Multinational Corporations
Union Carbide Corporation and Bhopal
On December 3, 1984, tragedy unfolded at the Union had 14 plants and 9,000 employees, including 500 at
Carbide pesticide plant in Bhopal, India. Water en- Bhopal. Most of its revenues came from selling
tered a large tank where a volatile chemical was Eveready batteries.
stored, starting a violent reaction. Rapidly, a se- Union Carbide decided to build a pesticide plant
quence of safety procedures and devices failed. Fugi- at Bhopal in 1969. The plant formulated pesticides
tive vapors sailed over plant boundaries, forming a from chemical ingredients imported to the site. At
lethal cloud that moved with the south wind, envel- that time, there was a growing demand in India and
oping slum dwellings, searing lungs and eyes, as throughout Asia for pesticides because of the green
phyxiating fated souls, scarring the unlucky. revolution,” a type of planned agriculture that re-
Bhopal is the worst sudden industrial accident quires intensive use of pesticides and fertilizers on
ever in terms of human life lost. Death and injury es- special strains of food crops such as wheat, rice, and
timates vary widely. The official death toll set forthcom. Although pesticides may be misused and pose
by the Indian government for that night is 5,295, with some risk, they also have great social value. Without
an additional 527,894 serious injuries. Greenpeace pesticides, damage to crops, losses in food storage,
has put the death toll at 16,000.1
and toxic mold growth in food supplies would
The incredible event galvanized industry critics. cause much loss of life from starvation and food
“Like Auschwitz and Hiroshima,” wrote one, “the poisoning, especially in countries such as India.
catastrophe at Bhopal is a manifestation of something Exhibit 1 shows a Union Carbide advertisement
fundamentally wrong in our stewardship of the from the 1960s that describes the company’s activi-
earth.”2 Union Carbide was debilitated and slowly ties
in India.
declined as a company after the incident. The gov- The Bhopal plant would supply these pesticides
ernment of India earned mixed reviews for its and serve a market anticipated to expand rapidly.
response. The chemical industry changed, but ac- The plant’s location in Bhopal was encouraged by
cording to some, not enough. And the gas victims tax incentives from the city and the surrounding
endure a continuing struggle to get compensation state of Madhya Pradesh. After a few years, how-
and medical care.3
ever, the Indian government pressured UCIL to
stop importing chemical ingredients. The company
UNION CARBIDE IN INDIA then proposed to manufacture methyl isocyanate
(MIC) at the plant rather than ship it in from
Union Carbide established an Indian subsidiary Carbide facilities outside the country. This was a
named Union Carbide India Ltd. (UCIL) in 1934. fateful decision.
At first the company owned a 60 percent majority Methyl isocyanate, CH,NCO, is a colorless, odor-
interest, but over the years this was reduced to 50.9 per less liquid. Its presence can be detected by tearing
cent. Shares in the ownership of the other 49.1 per- and the burning sensation it causes in the eyes and
cent traded on the Bombay Stock Exchange. This noses of exposed individuals. At the Bhopal plant it
ownership scheme was significant because although was used as an intermediate chemical in pesticide
UCIL operated with a great deal of autonomy, it manufacture. It was not the final product; rather,
gave the appearance that Union Carbide was in con- MIC molecules were created, then pumped into a
trol of its operations. By itself, UCIL was one of In- vessel where they reacted with other chemicals. The
dia’s largest firms. In 1984, the year of the incident, it reaction created unique molecules with qualities that
disrupted insect nervous systems, causing convul-
1 “Has the World Forgotten Bhopal?” The Lancet, December 2, sions and death. The plant turned out two similar
2000, p. 1863
pesticides marketed under the names Sevin and
David Weir, The Bhopal Syndrome (San Francisco: Sierra Temik
Club Books, 1987), p. Xll
In 1975 UCIL received a permit from the Ministry
3 Rama Lakshmi, “Mustke for Bhopal Victims, ” The Economic of Industry in New Delhi to build an MIC produc
Times, February 18, 2011
tion unit at the Bhopal plant. Two months before the

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