The 1984 disaster in Bhopal, India, is one of the major business ethics cases of the past generation. A hazardous chemical was spilled and, tragically, many people died. Awful. 
But I am weary of reading the standard journalistic accounts that run like this: In the name of profit, a large American multinational corporation neglected safety; as a result, many people, especially poor people, were killed and maimed, and the corporate executives involved have never been criminally prosecuted.[1]
Bhopal is an important case to learn from, but it is absolutely crucial to attend to all of the relevant facts, many of which the standard accounts omit[2]:
1. The most important is that Union Carbide’s (UCC) presence in India was governed heavily by the Indian government and its aggressive, top-down industrial policy.
2. The decision to use the hazardous chemical MIC was the Indian government’s, not UCC’s. 
UCC’s initial plan was to import already-combined chemicals and to process diluted and safer pesticides. But the Indian government was pursuing a policy of national self-sufficiency, requiring that everything be “Indianized.” MIC could have been imported much less expensively, as UCC initially planned, but UCC was required by the government to manufacture pesticides from scratch. This in turn required the storage and handling of large amounts of hazardous MIC.
3. The government directives also required the building of larger facilities. As the parent corporation, UCC was allowed to submit generalized guidelines for the design of the safety systems. But in the name of national self-sufficiency, the Indian government required that Indian consulting firms do the detailed design and installation of the safety systems.
4. The Indian government was also pursuing an affirmative action program. The effect of affirmative action was to replace UCC’s foreign experts in engineering and agricultural chemistry with locals. Not surprisingly, many of the locals were under-educated, and many happened to be friends and family members of Indian politicians in charge of regulating the facility. 
5. Finally, the decision to situate the chemical plant in the middle of a residential community was the Indian government’s, not UCC’s. The local Bhopal government was pursuing a re-zoning policy, which included giving thousands of Indians construction loans to encourage them to build their homes near the chemical plant.
So before jumping to conclusions about culpability, it’s important that we frame the investigative questions accurately:
To what extent was Bhopal a corporate failure and to what extent was it a government failure? Does the Bhopal disaster indict business executives or government bureaucrats — the pursuit of profit or racial quotas? Is capitalism or statist industrial policy at fault?
Almost 30 years later, I have yet to come across a professional and objective set of answers to those questions.[3] I look forward to it, especially as the stakes are so very high.
Sources:
[1] Jennifer Rosenberg, “1984 – Huge Poison Gas Leak in Bhopal, India.” About.com. Viewed July 14, 2013.
[2] I discuss these elements in my review in Teaching Philosophy of Kevin Gibson’s Ethics and Business (Cambridge, 2007).
[3] Update: Edward Fox, in the comments below, links to journalist Robert Bidinotto’s damning reports in The Intellectual Activist (1985) and The Wall Street Journal (1986). Bidinotto’s summary here.
Who could conceive a disaster like this being beneficial for a business?
This is such an important case, and it would be good to see a comprehensive and objective narrative and analysis of it.
Leaving the management of a potentially dangerous technology under the complete control of an incompetent manager and then absolving oneself of, or accepting the absolution for, any blame would be irresponsible.
Allowing your good name to be used for such a mismanaged venture without having any direct influence on its management would be, most certainly, foolhardy.
The implication of your post seems to suggest that UCC’s behavior in this tragedy was exemplary. I trust you are mistaken.
You write, Graham: “The implication of your post seems to suggest that UCC’s behavior in this tragedy was exemplary.”
Not at all. The post’s penultimate paragraph explicitly asks four questions about the degrees of responsibility of UCC and the Indian government. The final paragraph says I haven’t seen good answers to them. So the implication of the post is that they are open questions.
Stephen, I would wholeheartedly agree with you if you hadn’t opened the post rejecting (or growing weary of) the claim that “…a large American multinational corporation neglected safety…”. This, you go on to say is a standard response that leaves out many facts and the facts you have listed are, you must admit, one sided.
I won’t belabor the point but I maintain the implication of your article is quite clear even before the penultimate paragraph that claims objectivity.
Saying that you seem to suggest UCC’s behavior was “exemplary” was a facetious comment on my part and for that I am sorry but I am heartened to hear that you do think UCC may be culpable, although not entirely.
Do you suppose a trail would be in the best interest of the corporate executives? Would give them the opportunity to vindicate themselves and end much speculation? (Sorry I am being facetious again.) I suppose neither UCC nor the Indian Government would be anxious for its day in court and without that all we can do is speculate. Personally, I would be hard pressed to condone the behavior of either one of them.
Prof. Hicks, do you have a couple of sources at hand for your account of the relationship between UCC and the Indian government, or did you have to put that chain together from a variety of clues?
Having worked with the folks from India in their capacity of offshore support, I would run if I had to endeavor anything remotely similar to Bhopal project. Their horrible work ethics, diabolical skill at passing and denying the blame, pathological inability to admit fault make them a no-no choice of partner. But Western business loves outsourcing to India so I have to put up with their inept style on a daily basis. Sorry UCC had to go thru that, but they called it by getting involved.
Hi Lidryn: I don’t know of good scholarly sources yet, which is part of my complaint. I have only pulled together points gleaned from a variety of commentary and journalistic sources.
Graham, I didn’t get the impression at all the Professor Hicks was saying UCCs behavior was exemplary. I don’t think it was by a long shot. What he was saying is: don’t ignore the government half the equation – which most who have written about this terrible disaster tend to do.
India’s government is rife with nepotism and corruption, as are most in the region. This is confirmed by friends from that part of the world e.g. a friend who wanted exit visas for his family to leave Pakistan (which, granted, is worse) was held court by a police chief, family and aides while they openly discussed the amount of the bribe required.
If the heads of UCC saw the whole mess slipping out of their grasp they ought to have cried hell and high water. I see it as a much worse echo of the Challenger shuttle explosion i.e. the moral failure of the Morton Thoikol engineers who crossed their fingers and sweated during lift-off praying their fears wouldn’t materialize, knowing full well there was a critical flaw going up under those astronauts.
In the aftermath of the that tragedy I remember reading a piece that blamed layers of bureaucracy. In contrast it said the previous head of the NASA manned spaceflight program – Mercury, Gemini and Apollo – General Abramson, was eminently approachable. A person interviewed said a janitor could walk up and speak to him in person if he saw a problem or had an idea of how to do something better. That kind of approachability left with him.
This tragedy evokes a quote by Mises…
“The corruption of the regulatory bodies does not shake his blind confidence in the infallibility and perfection of the state; it merely fills him with moral aversion to entrepreneurs and capitalists.”
– Ludwig von Mises, A Critique of Interventionism, p. 30
Ed,
Exemplary was a bad choice of words. Read my previous response. (Although there are some who are quite ready to absolve UCC of any blame in the absence of an objective set of answers. Mr. Hicks has indicated he is not.)
By a long shot do you mean not at all? We have already established that UCC was culpable we are only disputing how much. As Churchill allegedly said to Lady Astor “Madam, would you sleep with me for five million pounds?…” You know the rest.
Not sure if you are excusing UCC for an oversight or if you think they simply lost the notes when they did a risk assessment on the Bhopal project. When did they see the whole mess slipping out of their hands?
The Space shuttle analogy leaves me feeling slightly patriotic and very uneasy. It is a feeble attempt to put the disaster in a more noble light.
Mises? Really? How is that quotation helpful?
I would rather trust a man who recognizes when he has erred than one who perpetually justifies his misdeeds using worn out aphorisms and platitudes.
Taking responsibility for one’s mistakes is an heroic and sometimes costly thing to do for an individual. For a corporation like Union Carbide it is suicidal. There is little that is noble or uplifting in this sad tale and that, I think, is why it has become one of the major business ethics cases of the past generation.
Mises’ quote is helpful in my opinion in underscoring that in a free market system government officials won’t have the kind of power to dole out favors they do now: the separation of economy from state for the same reason the church was: so the state can’t play favorites (both subject to the rule of law). Today, much as they might like to, church officials can’t burn Richard Dawkins at the state.
Far from bridling the savage market as allegedly intended, the state’s interventionary and regulatory apparatus – not to be confused with the rule of law – is precisely the tool of graft. It is the very mechanism engaged by lobbyists to slip their corporate clients under the government’s bed sheets, often acting as a cartelization device against competitors. Key players of industries regulated often instigate preferential regulation – the technical term is “regulatory capture” – and former heads of those industries often head regulatory departments. Regulation and government-corporate graft go hand in hand e.g. the Washington old boys network.
Professor Hicks has every right to be “weary” of the standard narrative of the Bhopal disaster that completely ignores the Indian government’s enormous complicity in it. It was all over UCC like a dirty shirt, usurping one critical decision after another in the name of politicking, nepotism and cronyism. The UCC leadership’s great culpability lies in the degree they went along with it and not raising cries of protest and warning.
It was this type of distortion and failure to contextualize that delivered a quarter of mankind into the hands of tyrants like Stalin, Mao and Pol Pot.
The key error of socialist’ theorists lay in their failure to identify the role of the state in the evils they criticized – that is, a state distended beyond the boundaries of its proper functions. The horrors of the early industrial revolution had been a result of conditions inherited from the past caused by state-created privilege i.e. the monarchy, the aristocracy, the class system, the guild system, oligarchical land ownership, and mercantilism – with it’s protectionism, dispensations, subsidies, regulation, royal chartered monopolies, etc., – that disenfranchised the majority of the population and relegated them to abject poverty.
Failing to understand the state’s role in corporatism – as opposed to capitalism – socialists held out as the proposed solution moving from liberty – which they painted as anarchy – to statism.
The result was the ultimate corporate nightmare: the totalitarian state. In it society, economy and state were melded into a monolithic entity ruled by a CEO who possessed not only economic power – but now owned the military, police, judiciary, bureaucracy and media untrammeled by bourgeois anachronisms like individual rights and habeas corpus. It was Pol Pot as the cure for Kenneth Lay. Enlightenment liberals hold that the cure lies in the other direction, the same direction that broke the choke-hold of the church over European society: Liberalism (which I mean in its original sense, not the newspeak socialist inversion that appropriated and gutted it).
Ed, You assert that: “It (the Indian Government) was all over UCC like a dirty shirt, usurping one critical decision after another in the name of politicking, nepotism and cronyism.” Sounds like you have reached a verdict and you believe UCC tried to do the right thing but was usurped. (Its moral backbone too weak to stand the pressure. lol)
I am not as sure as you seem to be and will take from this blog probably its most pertinent point:
“Almost 30 years later, I have yet to come across a professional and objective set of answers to those questions. I look forward to it, especially as the stakes are so very high.”
Indeed. I won’t hold my breath. I expect there will be more damage control and, eventually the horror will be so diluted in our brains it will wash away. Awful.
Thanks for invoking the names of some of the world’s greatest despots. In some circles that is an automatic win in any debate even if it is one hell of a deviation from the topic. Well done.
One should never be weary of reading whatever parts of the standard journalistic accounts are truthful. Some of the issues you raise are indeed open to discussion but some are most certainly not.
I particularly refer to the fact that the (American) corporate executives have not been criminally prosecuted.
The execs have not been prosecuted despite the fact that ex-CEO Warren Anderson, and the Union Carbide Corporation, have been wanted, on the criminal charge of ‘culpable homicide not amounting to murder’, since 1987 but refuse to answer the charges. They have been ‘proclaimed absconders’ since 1992.
Dow Chemical (UCC’s current owner) for its part has, since 2005, refused to accept a summons addressed to its Michigan HQ, requesting an explanation as to why it will not produce UCC to the criminal courts.
The US Govt will not extradite despite the facts that: UCC itself elected India as the correct forum to hear the Bhopal case; and that India and the US maintain an extradition treaty.
Compare this with the US stance on whistleblower Edward Norton.
You also state that: “…Union Carbide’s (UCC) presence in India was governed heavily by the Indian government and its aggressive, top-down industrial policy.”
It may be true that Union Carbides ‘presence’ was governed by India’s industrial policy but it was also true that operational decisions, at the Bhopal factory were governed by Unikon Carbide’s famously ‘aggressive, top-down management style’.
Whilst the Indian government was pursuing its affirmative action program most of the other multinationals left India but UCC remained. UCC also contrived a situation whereby it never relinquished the controlling interest in UCIL (it never owned less than 50.9%).
The effect of affirmative action may have been to replace some UCC’s foreign experts in engineering and agricultural chemistry with locals but let’s not forget design decisions taken much earlier that clearly contributed to the disaster- the Bhopal plant was not built to the same standard as the US ‘sister’ plant and it is a matter of record that ‘untried technologies’ were used.
Graham: I should probably have mentioned that I read an article in the Objectivist ‘Intellectual Activist’ years ago on the Bhopal disaster but didn’t as I was short on time to look for it (between shifts). Made time yesterday, and, while I don’t have the original article yet I found a subsequent one by the author that references and quotes extensively from it.
Why credit this narrative over mainstream? Let’s say that ever since seeing mainstream media’s denial of the Cambodian holocaust in the late ’70s I’ve learned to take them with a grain of salt.
If any one of the facts put forth by Professor Hicks above is true, and I trust they are, it is a damning indictment.
Through friends and reading I’m aware that after the British were ousted Nehru and his heirs attempted to implement the socialism Gandhi strongly advocated with predictably dismal results. The horrific squalor of India, even more so then, was not the result of liberty.
Socialism as you may know proposes to replace the uncoerced economic decisions of individuals with the long range vision of government officials blessed with a superior and disinterested insight into what is best for them. This means top heavy – for the common good.
Mentioning Stalin, Mao and Pol Pot is not a deviation from the topic but a tocsin of the actual realized dead end the attack on economic liberalism led to.
The author of the above mentioned analysis is Robert Bidinotto and the article I found is ‘The Politics of Mutual Plunder’:
http://www.atlassociety.org/tni/politics-mutual-plunder
The original article it quotes from is ‘Bhopal: The Fruit of Industrial Policy,’ which appeared in ‘The Intellectual Activist’, July 19, 1985 and was excerpted by the ‘Wall Street Journal’ on Dec. 3, 1986.
Bidinotto in his own words:
http://www.samharris.org/forum/viewthread/10444/P15
“Clarification on the Bhopal disaster—The facts constitute a far greater indictment of the Indian government than my 23-year-old recollection of my original article, above, suggests. Here’s from my July 19, 1985 article, “Bhopal: The Fruit of Industrial Policy,” in The Intellectual Activist, as excerpted by the Wall Street Journal on Dec. 3, 1986:
‘The Indian government had its heavy hand on every aspect of the Bhopal plant, from its design and construction to its eventual operation. Initially, the facility merely imported raw pesticides, such as one called Sevin, and then diluted, packaged and shipped them. This was a relatively safe and simple operation. But, in accordance with industrial policy, Union Carbide was under constant pressure from the government to cut imports and reduce the loss of foreign exchange. To do this, Carbide was required by its state-issued operating license to transfer to the Bhopal facility the capability to manufacture the basic pesticides and, subsequently, even their ingredients. Everything was to be “Indianized.” Even the chemical production processes used in Bhopal were developed by Indian researchers . . .
‘To produce Sevin, carbon tetrachloride is mixed with alpha-naphthol and a chemical known as methyl isocyanate, or MIC (the chemical that leaked in the accident). Liquid MIC is a highly unstable and volatile chemical, and a deadly toxin. . . .
‘MIC was not required in Bhopal while the factory simply packaged Sevin, its final product. But the logic of “industrial self-sufficiency” and “technology transfer” required the manufacture of Sevin from scratch—and that meant dealing with its hazardous ingredients, including MIC.
‘So in 1971, the Union Carbide factory opened a small plant to manufacture alpha-naphthol, and began to import and store MIC—a chemical which never had to be in India in the first place, except to satisfy the Indian government. . . .
‘In 1977, based upon projections of growing demand, the Bhopal factory began to increase its alpha-naphthol facilities dramatically. A new $2.5 million plant—designed, of course, by an Indian consulting firm—was built. Ten times larger than most similar plants, it at once displayed design problems of scale: equipment would not work or would turn out to be the wrong size. . . .
‘Ultimately, faced with an inoperable alpha-naphthol facility, the factory’s management decided to [open an MIC production facility in 1980]. . . . The parent corporation sent guidelines for the design of the safety systems; but under Indian law, the details had to be determined by an autonomous Indian-staffed consulting firm. . . .
‘What had begun as a Carbide subsidiary for packaging pesticides was now a government-directed business manufacturing and storing a deadly chemical in a technologically backward culture.
‘Those were not business decisions. Those were political decisions. . . .
‘One last element of government policy helped lay the groundwork for the pending disaster. The area around the plant had been deserted at the time Carbide moved in. But in 1975 the local government, in a re-zoning scheme, encouraged thousands of Indians to settle near the plant by giving them construction loans and other inducements. In effect, government first helped to make the plant unsafe, and then drew the people into the path of the coming gas cloud.’
He added the following as an italicized addendum:
‘Add to all this the fact that after the plant was opened, the Americans were sent packing and were replaced by under-educated locals—most of them friends and relatives of local officials—and the culpability is clear.
‘Union Carbide was thus the victim of a “bait and switch.” They came into India under one set of business circumstances; but as time passed and they acquired a huge investment in sunk costs, Indian officials changed the deal in numerous ways, removing from Carbide the power to govern the operation of their own facility. Anyone who wishes to blame Carbide and capitalism for the outcome, rather than the Indian government’s fascistic “industrial policy,” is simply ignoring the bald facts of the case.’
PS: Of course the horrific squalor of India existed long before Gandhi and Nehru.
If the facts portrayed by Hicks and Bidinotto hold, to speak of “the government half of the equation” would be ludicrous. The culpability of UCC would rest in failing to take a staggering loss/robbery and sound warnings.
Edward, I can’t agree with all of that I’m afraid. You are being as one-sided as the original article accuses the ‘standard journalistic’ accounts of being.
I’ll skip past the diatribe on socialism and move on to the facts about the disaster about which I’m better qualified to comment upon.
Yes history does record that the Indian government had its ‘heavy’ hand on many aspects of the operation of the Bhopal plant and, yes, it does seem there was an intention to acquire the production processes.
But, do you not think that, at the point the factory, and later, the formulation plant, were built that Union Carbide Corporation, as controlling shareholder of Union Carbide India Ltd, did not have its own ‘heavy’ hands on the design? History records that it did indeed make key decisions, regarding the plant’s design, from its Danbury HQ.
History records that UCC was well aware that the Bhopal plant was ‘less highly specified’ than the West Virgina ‘sister’ plant. UCC was also well aware that there was no river to pump treated effluent into, unlike at West Virginia, and assumed that India’s ‘less well advanced’ environmental legislation would see it through any trouble. And, yes, this is all a matter of record.
In fact, the way UCC solved the waste issue would have ensured that the ongoing environmental contamination disaster, still affecting (i.e. poisoning) tens of thousands of people in Bhopal today, would have happened with, or without, the gas disaster.
For the record, untreated waste was, initially, dumped in UNLINED pits on the factory site. Later, huge solar evaporation ponds were built away from the factory premises. Liquid effluent was treated, for Ph balance only, and then pumped in to these ponds. Yes, they leaked and, yes, Union Carbide was aware of the problem.
I’d also take issue with the idea that building an MIC production facility is somehow better than transporting MIC through hundreds of miles across the Indian countryside to Bhopal from whichever port the MIC was delivered (Mumbai was the port used whilst MIC was being delivered to Bhopal and one can only speculate the casualties had their been a spill there).
One last thing to which I will take major exception is the idea that the plant was built in a deserted area. I know Bhopal very well and I can tell you this is simply not true.
The area directly around the factory has become much more densely populated, that is true, but there were most certainly people living in the immediate vicinity. In fact (history records, again!) that there were ancient settlements in precisely this area.
But, this is missing the point as the area a just few metres away from the factory is what is being discussed. The fact is that the factory was built less than two kilometres from Bhopal’s main railway station. As you might imagine, that station was there a long time before the doomed pesticide plant. You’d also have to imagine that the station is surrounded by densely populated parts of the city and, in fact, there were many, many casualties in exactly that area.
Finally, just to say that most people with a knowledge of this story completely accept that the Indian Government have a degree of culpability in this terrible story but it is a total red-herring to discuss these issues whilst removing Union Carbide (and indeed current owner Dow Chemical) from the equation.
No time right now so just a couple thoughts and rhetorical questions.
My limited reading on the disaster outside the Objectivist take has turned up virtually nothing on the Indian government’s role. Everyone seems satisfied to leap on the narrative of greed crazed corporatists tossing every concern about safety and decency to the wind in their mad lust for profits.
How did the Bhopal catastrophe serve UCCs interests?
Are not MIC and other dangerous chemicals transported in the industrialized West including America?
UCC was incorporated in 1917. They’ve been doing what they do for almost a century, staffed by droves of First World scientists and engineers. Why did such a massive constellation of poor judgments and systemic failures occur just in India? Cutting corners is one thing but a Bhopal-scale disaster is another.
Re: the population around the plant. There may well be exaggeration, but in a country like India it might also be a relative assessment. (Met a friend just back from Japan during the Boxing Day madness downtown: he said the crowds would be a just normal day for downtown Tokyo).
Having worked with the opinionated folks like Gonzalo in their capacity as “specialists” in Petroleum Processing Facilities in the Arab Countries, I would run if I had to endeavor anything remotely similar to Bhopal project. They are hare brained, stemming from low levels of education and are mainly employed by contractors supplying labour, based on the colour of their skin. With the superiority complex and a chip on their shoulder, horrible work ethics, diabolical skill at passing and denying the blame, pathological inability to admit fault make them a no-no choice of partner. But Arab countries love having them in the work force, so I had to put up with their inept style on a daily basis. UCC had to go thru the tragedy because of these so called specialists who compromised safety due to their profit oriented work ethics.