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5 Long-term recovery from the Bhopal crisis
The Bhopal toxic gas leak crisis
Antecedents and failures
A multiple-perspectives understanding of crises
Recovery of the victims and their community
Recovery of Union Carbide
Recovery of the government
Implications for long-term disaster recovery
On the night of 2/3 December 1984, a major accident occurred in Bhopal, India, at a pesticide plant owned by the Union Carbide Corporation (Bogard 1989). This accident triggered a long-term industrial crisis for the entire population of Bhopal, for government agencies in India, and for the Union Carbide Corporation. Industrial crises are processes of severe disruption and harm that originate in industrial activities and technological systems. They affect people, property, and the natural environment. Communities, corporations, and government agencies are sometimes restructured in the wake of these crises.1
This chapter begins with a brief description of the Bhopal crisis. The second section discusses causes of the crisis in terms of antecedent conditions and accident-related failures. The third section describes a multipleperspectives framework for understanding crisis recovery issues. In the subsequent three sections, crisis recovery is described from the perspectives of the primary stake-holders - the community and its victims, Union Carbide Corporation, and the Government of India. The final section includes speculations about long-term recovery from crisis and examines policy implications.
Fig. 5.1 Bhopal, showing the area affected by the leakage of toxic gas (not to scale)
The Bhopal toxic gas leak crisis
The Bhopal crisis was triggered by a technological accident: 45 tons (100,800 lb) of methyl isocyanate (MIC) gas escaped from two underground storage tanks at a Union Carbide pesticide plant. The accident occurred between 10 p.m. (2 December) and 1.30 a.m. (3 December) when the plant was on second shift and the surrounding population was asleep in slum "hutments" that are densely packed together in this part of Bhopal (fig. 5.1).
Leaked gases were trapped under a nocturnal temperature inversion in a shallow bubble that blanketed the city within five miles of the plant. Next morning, over 2,000 people were dead and 300,000 were injured. Another 1,500 people died in subsequent months owing to injuries caused by the accident. At least 7,000 animals perished but damage to the natural environment remains largely unassessed (Prasad and Pandey 1985).
Emergency services were completely overwhelmed and confusion was rampant in the affected neighbourhoods. Police instructed people to run away from the area, but many of those who did so inhaled large amounts of toxic MIC and succumbed to its effects. Residents were unaware that the simple act of covering their faces with wet cloths and lying indoors on the floor provided effective protection against the gas. That night, and in the days that followed, nearly 400,000 people fled the city in a haphazard and uncontrolled evacuation. Two weeks later, during government attempts to neutralize the plant's remaining MIC, another wave of mass flight involved 200,000 people (Shrivastava 1992; Diamond 1985; Morehouse and Subramaniam 1988).
To understand the causes of the larger crisis it is necessary to examine the antecedent conditions that set the stage for it, and the more proximate failures that directly caused the accident. Hazardous antecedent conditions and proximate failures occurred both inside Union Carbide and outside the company, in its social, economic, and political environments.
Antecedents and failures
Outside the plant
Inside the plant
In 1934, Union Carbide Corporation set up a subsidiary company in India, known as Union Carbide (India) Ltd. (UCIL) (table 5.1a). This company's Bhopal facility was originally designed to formulate pesticides. The procedure involved buying stable ingredients locally, mixing them, and packaging them for sale to the government for use in an anti-malaria campaign.
In 1974, UCIL received a government licence to manufacture 50,000 tons of MIC-based pesticides each year; however, the market for these products was declining at the time, both because malaria was under control and because over 300 small manufacturing firms were now competing vigorously with UCIL (Dhingra 1978). Therefore, in a measure aimed at cutting costs, UCIL decided to manufacture key ingredients in its own plant instead of buying them from suppliers. In 1981 it established a plant to make MIC - a highly toxic and unstable chemical. In the next few years the agricultural pesticides market declined further because of poor weather and meagre crops.
By 1984, UCIL was ranked twenty-first in size among companies operating in India. It had revenues of Rs 2 billion (then equivalent to US$170 million). Fifty-one per cent of UCIL was owned by the parent company; remaining shares were held by 24,000 stockholders. Ten thousand people were employed in five operating divisions that manufactured batteries, carbon products, welding equipment, plastics, industrial chemicals, pesticides, and marine products.
(a) Chronology of events leading to the accident
|Inside Union Carbide||Outside the company|
|1100: Bhopal established|
|Until 1860: undeveloped|
|1860-1945: community dependent on agriculture for tax revenue|
|1950: population 70,000|
|1950s: UCIL expands into chemicals|
|1956: Bhopal becomes state capital|
|1965: government pesticide market|
|1969: Agri Products Division||Booming pesticides market|
|Mid 1970s: heavy competition|
|1978: licensed to make MICb|
|1981: MIC plant|
|1980-1982: bad weather|
|1984: population 695,000; lack of infrastructure|
|1982: safety defects (OSS)c|
|1984: Oct. tank loses pressure; Nov. second tank loses pressure; 2 Dec. 11 p.m.: pipe washing; 3 Dec. 1 a.m.: accident|
|18 December: elections|
|Failures inside the plant||Failures outside the plant|
|Defective plant design||Haphazard urbanization|
|Faulty pipe washing||Inadequate housing|
|Lax safety procedures||Plant in densely populated area|
|MICb tanks poorly maintained||Lack of infrastructure|
|Contaminants in the tank||Failure of government to identify hazard|
|Storage of contaminated MIC||Unprepared community|
|Failure of four safety devices|
|Lack of on-site emergency plan|
|OSSc findings not implemented|
|Lack of investment in plant safety|
|Cut-back in personnel|
|Lack of safety computers|
|Cost-cutting erodes safety|
|Lack of crisis management plans|
|Top management ignorant of hazards|
a. Union Carbide (India) Ltd.
b. Methyl isocyanate.
c. Operational Safety Survey.
The accident that is discussed here began when a large volume of water entered the MIC storage tanks and triggered a violent exothermic chain reaction. Normally, water and MIC were kept separated, even when supply pipes were flushed with water during routine cleaning. However, on this occasion metal barriers known as slip blinds were not inserted and the cleaning water passed directly into the MIC tanks (table 5.1b). Additional water may have entered later during a mistaken effort to control the reaction by drenching it with water. The tanks' pressure systems had also been reported defective in October and November 1984. Within a few minutes of the introduction of water, temperatures and pressures in the tanks increased to the point of explosion (International Confederation of Free Trade Unions 1985).
Four safety devices that were meant to keep toxic gases from escaping into the atmosphere failed to function: lack of coolant in the MIC tank refrigerator prevented it from operating properly; the vent gas scrubber could not neutralize the gases because it lacked sodium hydroxide; a pipe leading to the flare tower had been dismantled for repairs, so the flare could not be used to burn escaping gases; finally, water sprays could not be used to douse the gases because they lacked sufficient pressure to reach the height from which the gases were spewing. As a result, 45 tons of MIC escaped from the tanks (Union Carbide Corporation 1982, 1985).
Outside the plant
Problems that occurred outside the plant were rooted in the historical underdevelopment of the surrounding region and its sudden industrialization after Indian independence. Bhopal was founded around 1100 A.D. near two large lakes that provided a reliable water supply for agriculture on a semi-arid plateau. Control over water in this area was a central issue that precipitated continuous battles among the Hindu kings and Moslem nawabs. Indeed, continuous feuding kept Bhopal politically unstable and economically underdeveloped for most of its history. Even during the more peaceful years of British colonial administration the region did not develop an industrial base.
After Indian independence (1947), Bhopal became the capital of Madhya Pradesh - a large, poor, unindustrialized, agricultural state in the centre of the country. As the seat of state government, Bhopal attracted new government offices, service jobs, commerce, and industry. In 1956, Asia's largest heavy electrical manufacturing plant was established in the city. Throughout the 1960s, Bhopal continued to attract new industries and government institutions. With this sudden development came surging population growth and haphazard urbanization. From a base of 50,000 people in the mid-1950s, the city grew to 102,000 in 1961, to 385,000 in 1971, to 670,000 in 1981, and surpassed 1 million by 1991 (Bhopal Municipal Corporation 1975; Minocha 1981).
One clear result of rapid growth was an acute shortage of infrastructural services at the time of the accident. Housing, water supply, electricity, transportation, communication, and medical services were all inadequate. Nearly 20 per cent of the city's population lived in 156 slum colonies, many of which were located alongside various hazardous facilities. Throughout the city, water was available for only a few hours a day. There was no sewage treatment system. Cuts and reductions in electrical power were a continuing problem. Bhopal's antiquated and highly unreliable telephone system included only 10,000 lines to serve more than 1 million people. The medical system was even more inadequate: there were 1800 hospital beds and 300 doctors. When the accident occurred, this poor infrastructure limited the city's ability to mitigate damage (Bidwai 1984; Morehouse and Subramaniam 1988; Shrivastava 1992).
A multiple-perspectives understanding of crises
This chapter employs a multiple-perspectives analysis of Bhopal (Shrivastava 1992). This approach seeks to understand the crisis from the perspectives of all key stakeholders. Stakeholders are individuals and organizations that influence, or are influenced by, the crisis. The key stakeholders in the Bhopal crisis included victims (i.e. the community in Bhopal), Union Carbide Corporation, and the Government of India.
A multiple-perspectives approach also acknowledges the complexity of causes and the importance of contextual factors. It interprets causes in systemic terms (Mitchell, Devine, and Jagger 1989). Technological, organizational, and societal systems are susceptible to multiple, simultaneous, and interacting failures. A main limitation of the traditional systems view of causation is that it does not indicate which causes are more or less important, and from whose point of view. The multiple-perspectives approach addresses this limitation and accepts the impossibility of unambiguously fixing blame for industrial crises. Attempts to affix blame are reductionist: they merely divert analysts from proper understanding of the events. Finally, the multipleperspectives approach regards controversies and conflicts as an integral part of crises. Such conflicts cannot be denied or brushed away: they are the central defining features of crises.
The most controversial elements of crises are their impacts or consequences. Consequences are difficult to ascertain because they are many, diverse, and difficult to measure. Some consequences are indirect, some are unknown, some are trans-generational, and some extend in space to unforeseeable areas. In the Bhopal case, victims saw the crisis largely in terms of personal losses: they lost their lives or faculties, their health, their sources of income, and their sense of community. An army of lawyers, government officials, activists, reporters, and researchers invaded Bhopal. The lives of residents have already been disrupted for months and years, and will continue to be disrupted for a long time to come. In these circumstances, recovery has involved efforts to rebound from multifaceted losses.
Officials at Union Carbide viewed this crisis as an unfortunate technological "incident." Because of its long history in the chemical industry, the company was familiar with the types of losses such incidents generate. These include legal liability for damages, financial losses, and bad reputation. Union Carbide's main concern was to protect its financial assets and reputation. It embarked on an elaborate strategy of legal defence, financial restructuring, and public relations (Union Carbide Corporation 1985).
For the Government of India, the crisis was a socio-economic and political disaster. As the institution responsible for safeguarding public safety, the government had failed abysmally. It needed to redeem itself in the eyes of the public, by deflecting responsibility for its role in the disaster. It was also saddled with the far more difficult task of managing recovery and rehabilitation of victims.
Recovery of the victims and their community
Struggle for compensation
Victims remain victims
As used here, the term "recovery" refers to the period after the gas had dissipated and the victims were attempting to come to terms with its consequences. This does not mean that there was a return to a preaccident state of normalcy or an overall improvement in the status of victims. In that sense, recovery may never have taken place for a majority of those who were affected by this crisis.
In the immediate aftermath of the accident, most attention was devoted to medical recovery. MIC caused damage to lung tissue and respiratory functions. Victims suffered from breathlessness, cough, nausea, vomiting, chest pains, dry eyes, poor sight, photophobia, and loss of appetite. They also manifested psychological trauma symptoms: these included anxiety, depression, phobias, and nightmares.
Women in the affected area appear to have suffered a variety of medical problems. Studies of limited population samples showed that up to 50 per cent of women experienced irregular menstruation, and there was a failure of lactation in nursing mothers. The number of spontaneous abortions rose sharply. Women also bore a disproportionately large burden of economic and social losses: they lost earning members of their family and had no alternative source of income; they were socially ostracized and victimized by loan sharks.
Local doctors had no information on the toxicity and epidemiology of MIC poisoning. Even the publicly available scientific data on MIC did not reach doctors in Bhopal until several days after the accident. Hence, the only medical treatment provided was limited to symptomatic treatment of injuries. The medical system was simply overwhelmed by the large number of injured victims that rushed to hospitals. The coroner's office was unable to provide death certificates to victims' relatives. Many bodies were buried or cremated before official registration of death. Voluntary organizations set up makeshift clinics in the affected neighbourhoods to supplement the government's efforts: these included the Indian Red Cross, Voluntary Health Association of India, Medico Friends Circle, and several religious charitable organizations. In 1987 the state government converted one of its local clinics into a 150-bed hospital for gas victims.
The lack of medical documentation of injuries proved to be a major hindrance to the delivery of medical relief and the provision of compensation. But it was not the only problem: without baseline data on community health it was also difficult to identify specific medical consequences of MIC exposure and to develop focused treatment protocols. Poor health information is common in many disasters, especially those that affect developing countries. It has important implications for disaster-management strategies. Several epidemiological and medical surveillance studies were initiated by the Indian Council of Medical Research and the local medical college. They found that a large population (possibly 300,000 people) had been affected by the gas. Unfortunately, government-sponsored studies were not made fully public for several years, because they were to be used in the court case against Union Carbide.
Managing the health effects of MIC exposure was confounded by two other factors. First, most of the affected people were poor and malnourished; they suffered many of the post-exposure symptoms even before exposure to MIC. Second, it was not clear what gases besides MIC may have been implicated in the accident. Some doctors felt that cyanide may have been one of the by-products of the accident. They detected cyanide poisoning symptoms among the victims, though this was never proved or disproved.
Economic losses from the accident included loss of jobs, loss of earning capacity of victims, business disruptions, cost of compensation and rehabilitation, and legal costs. The UCIL plant, a $25 million investment, was shut down immediately after the accident, and 650 permanent jobs were lost. A few months later the Union Carbide Research and Development Center, located in another part of Bhopal, was also cut back to a skeleton staff. Local businesses and state government offices were shut down for three weeks, losing business and tax revenues. The two mass evacuations disrupted commercial activities for several weeks, with resulting business losses of $8-65 million. Loss of work in government offices was not included in these estimates (Morehouse and Subramaniam 1988; Shrivastava 1992).
In the year after the accident, the government took many well-intentioned steps to provide economic relief to victims. Compensation of about $800 per fatality was paid to relatives of dead persons. Smaller cash compensation awards (less than $100) were distributed to 20,000 victims and 3,000 more victims were provided with part-time employment. New schools were also opened in the affected neighbourhoods. Unfortunately, in proportion to the tremendous relief needs these early (1985-1987) efforts were miniscule. Government relief failed to alleviate the misery of victims; it was simply too small in scale and limited in scope. But, given the many competing demands for government support, this was all that the government could manage at the time.
Beginning in March 1991, new interim relief payments were made to victims. Sums of Rs 200 (about $8) per month were paid to all victims who lived in 37 of the city's 54 wards that were officially classified as "gas affected." A total of $260 million was disbursed, but the money was given to all people who lived in the affected wards, not just the victims. In fact, many of the people who lived in these 37 wards were not victims at all: they had moved in after the accident. As cash relief payments flowed into the city, the local inflation rate jumped to between 15 and 20 per cent per annum. Most people pinned their hopes of long-term recovery on anticipated compensation from Union Carbide.
Struggle for compensation
Union Carbide paid $470 million of a compensation settlement in January 1989. This money remained in a court-administered account until 1992, while claims were sorted out. By early 1993 there were 630,000 claims, of which only 350,000 had been substantiated on the basis of medical records. Hundreds of victims continued to die during the prolonged politico-legal and bureaucratic battles over compensation.
The compensation that victims sought in mid-1985 was modest and reasonable. They asked that compensation for dead victims be paid according to the standards of death compensation then prevailing in India: seriously injured victims were to be paid $100-150 per month, to meet their food and medical needs; victims with minor injuries were to be paid a one-time compensation for medical costs and economic hardship (Morehouse and Subramaniam 1988). It was estimated that the total cost of all compensation would be between $600 million and $1.2 billion. The victims' quest for compensation took formal shape in a lawsuit filed by the Government of India against Union Carbide Corporation in New York, in March 1985. Table 5.2 summarizes the main legal events since the accident.
US-based cases were consolidated under Judge Keenan (Federal District Court of New York), and Union Carbide then asked that the case be moved to India, on the grounds that the United States was not a convenient venue for trial (Adler 1985). It was argued that the accident occurred in India and most of the evidence lay in India. Keenan sent the case to India under condition that "due process" of law would be followed there. The case went to the Bhopal District Court - the lowest-level court that could hear such a case. For the next four years it wound its way through the maze of legal bureaucracy, via the State High Court, up to the Supreme Court of India. The Government of India did not want to expedite the case by appointing a special court. That might constitute lack of due process and thereby provide grounds for appeal by Union Carbide.
Table 5.2 Chronology of legal events
|December 1984 to March 1985||Multiple lawsuits filed against Union Carbide Corporation (WCC) in India and the USA|
|March 1985||Bhopal Gas Leak Disaster Ordinance enacted in India. Government of India sues Union Carbide in New York|
|July 1985||UCC asks court to dismiss the case on grounds of forum non conveniens|
|November 1985||Court orders UCC to pay $5 million for interim relief|
|May 1986||Judge Keenan sends case to be tried in India|
|1987 1988||Out-of-court negotiations continue between UCC and Government of India. The case moves from Bhopal District Court to the State High Court, to the Supreme Court|
|January 1989||Supreme Court mediates a settlement for $470 million. Victims' lawyers challenge the settlement|
|October 1991||Supreme Court upholds settlement amount, but cancels immunity for UCC, opening up old suits|
|January 1992||Criminal cases reopened against UCC. Top UCC executives subpoenaed|
|January 1993||Compensation distribution initiated|
The two main legal disputes were over the amount of compensation and the exoneration of Union Carbide from future liabilities. But these disputes were complicated by lack of reliable information about causes and consequences. More importantly, the Government of India's Bhopal Gas Leak Disaster Ordinance - a law that appointed the government as sole representative of the victims - was challenged by victim activists. Victims were usually not consulted about legal matters or settlement possibilities. In the bureaucratic and political maze that constituted "the government," victims had no meaningful representation. This, in effect, dissolved the victims' identity as a constituency separate and differing from the government. This unintentional disempowerment of victims seems to occur in other disasters, too, especially where victims are poor and cannot afford independent legal help (Reich 1991).
The solution to costly and time-consuming litigation lay in reaching an out-of-court settlement. However, any settlement was fraught with many political dangers. A settlement with Union Carbide could backfire on the government. It could be seen as capitulation to pressures from a multinational corporation and the United States. This meant that a viable settlement could be made only after the case reached the Supreme Court, beyond which level it could not be appealed, at least in India. It also required correct political timing, when the settlement could go through parliamentary approval with minimal political opposition. The national parliamentary elections of 1989 presented a good political opportunity to settle the case and win support from voters. Five years had passed since the accident; the legal case had reached the Supreme Court; victims were fed up with waiting. In any event, hundreds of victims had died and thousands had moved out of the gas-affected neighbourhoods. The level of organization among victims was at the lowest point and their ability to protest was minimal. In January 1989, the Supreme Court brokered a settlement of $470 million in compensation that gave Union Carbide immunity from future prosecution.
Victims and activists challenged the settlement in the Supreme Court. They argued that the settlement amount was inadequate and claimed that granting Union Carbide immunity from criminal prosecution was unconstitutional. In October 1991, the Supreme Court ruled on this challenge: it upheld the compensation amount and ordered the government to distribute the compensation funds immediately. However, it also cancelled Union Carbide's immunity from further prosecution.
Victims remain victims
By 1991, seven years after the accident and two years after the settlement, victims were poised to receive compensation payments. But bureaucratic procedures delayed the initiation of payments until 1993. What had happened in the interim? The population of Bhopal had nearly doubled since the accident. Conflicts had politicized the definition of victims. The government was in the process of setting up 17 administrative courts for validating claims and distributing funds. It lacked good medico-legal documentation of damages to sort out valid claims: there were 13,000 death claims, whereas government figures showed 4,000 deaths. Of the 630,000 claimants, 280,000 failed to appear before officials to validate their claims.
At the beginning of 1993, distribution of compensation money was started. Union Carbide's original $470 million had accumulated considerable interest and now totalled $700 million. By March of that year, 700 victims had received $2 million. This included relatives of the dead, who received $3,200 per fatality (more for multiple bereavements in the same family). Those who suffered serious injuries received $3,000 each; people with minor injuries were to receive much less (Hazarika 1993).
Bhopal has been in a chronic crisis since the accident. Only the parameters of the crisis have changed with time. At the time of the accident, medical and ecological damages were most salient; today, the economic and social damages are more important. The city has also experienced a steady transformation of social and cultural attitudes towards the disaster. For people not affected by it, the disaster became a nuisance. It was a source of political conflicts and economic decline of the city. This segment of Bhopal viewed gas victims as a burden on the city's limited resources. They preferred to forget about the accident and get on with their lives.
The precarious and explosive situation in Bhopal was apparent during the Hindu-Muslim riots of December 1992 and early 1993. Bhopal was among the three worst-affected cities in India and incurred 150 deaths; 1,300 gas victims had their homes and compensation documents destroyed in fires.
Recovery of Union Carbide
Legal battles and the "sabotage" defence
The accident threatened Union Carbide's financial survival (Union Carbide Corporation 1985-1990). It faced multibillion-dollar liability suits and bad publicity at a time when its stock price had fallen dramatically. Before the disaster, UCC stock traded at between $50 and $58; in the months immediately following the accident it traded at $32-$40. Speculators bought a large number of stocks from financial institutions seeking to unload them. Then, in the latter half of 1985, the GAF Corporation of New York made a hostile bid to take over Union Carbide. This battle and speculative stock trading ran up the UCC stock price to $96 and forced it into financial restructuring.
To respond to the GAF attack, Union Carbide sold the consumer products division, which was its most profitable business. Commodity chemicals were retained, although this was a business the company had originally wanted to divest itself of. In 1986, Union Carbide sold assets worth over $3.3 billion and repurchased 38.8 million of the shares to protect the company from further threats of take-over. Stockholders were given $1.1 billion in cash and a three-for-one stock split. The company also took on nearly $3 billion in debt. The 1987 Annual Report called this restructuring a "true come back story." Throughout 1987 the company consolidated its new structure. The new Union Carbide now has three divisions - Chemicals and Plastics, Industrial Gases, and Carbon Products.
In addition to company restructuring, there were many changes in personnel and business activities. Key top managers at the time of the accident were transferred, or retired, or left the company. At the parent company, Warren Anderson (the Chief Executive Officer), Ronald Wishart (Executive Vice President for Public and Government Relations), and Jackson Browning (Vice President for Environment, Safety, and Health), have retired. At the Indian subsidiary, the Chairman, Keshub Mahindra, and the Bhopal Factory Manager, J. Mukund, moved on to new positions. Most of the Bhopal plant managers left the company after the plant closed.
The departure of employees directly involved with the accident was convenient for Union Carbide. It allowed the company to distance itself psychologically from the disaster. Under the new Chief Executive, Robert Kennedy, a campaign was begun to rebuild a business decimated by the 1985 hostile take-over attempt. OAF's takeover bid forced UCC to reverse its corporate strategy and move counter to industry trends. Other large chemical companies, such as Du Pont and Monsanto, were diversifying away from commodity chemicals into new glamorous areas of biotechnology and pharmaceuticals. Union Carbide, too, wanted to balance its business portfolio by reducing dependence on cyclical commodity chemicals and expanding consumer products. In 1984, UCC tried unsuccessfully to sell its commodity chemicals business. However, to fend off the GAF attack, UCC sold its most profitable consumer products business units. It took on additional debt to buy back stock. There were few resources left with which to diversify. UCC cut back operations and emerged a much smaller, yet profitable, firm. According to company spokespeople, 1988 was "the best year in the 71 year history of Union Carbide." Earnings per share were $4.88, including a charge of $0.43 per share for resolution of the Bhopal litigation. By now, the Bhopal accident was exclusively in the hands of the company's legal department and outside attorneys.
After the compensation settlement of 1989, Union Carbide believed that the crisis was over. Its leaders embarked on the task of aggressively rebuilding their various businesses. The company returned to the strategy it was considering in pre-Bhopal days, i.e. reducing dependence on heavy chemicals while diversifying into pharmaceuticals and consumer products. Therefore, in 1990, Union Carbide bought Vitaphore Corporation, a maker of medical devices. Joint ventures in dermatological products and plant genetics were also begun with other companies (Lepkowski 1993).
The crushing debt burden, acquired in the process of fending off OAF's threatened take-over, hampered the company's financial recovery. At the end of 1986, debt accounted for a staggering 80 per cent of capitalization. At the end of 1991, debt still remained at 50 per cent of capitalization and sales were $7.35 billion. In 1992, UCC sold its Linde Gas Division for $2.4 billion, leaving the company at less than half its pre-Bhopal size.
It is clear that the Bhopal disaster slowly but steadily sapped the financial strength of Union Carbide and adversely affected its morale and productivity. Pre-tax profits per employee were just $16,700. In comparison, its competitor and industry leader Dow Chemicals had pre-tax profits per employee of $41,200. Some financial analysts point to Union Carbide's reduced size, low profitability, lack of diversification, lack of competitive edge, and low employee morale as major liabilities (McMurray 1992).
The Indian subsidiary, Union Carbide India Ltd., maintained a low profile in the post-Bhopal period. It steered clear of lawsuits between the parent company and the Government of India, and concentrated on managing other businesses in India. UCIL closed the pesticide plant and reduced the Research and Development Center in Bhopal to a skeleton staff. Top management personnel from the Bhopal plant moved to other parts of the company. Apart from the fact that UCIL was denied permits that would have permitted expansion, it remained largely unaffected by the Bhopal accident.
Legal battles and the "sabotage" defence
For Union Carbide, the legal battle with the Government of India was a major long-term effect of the Bhopal disaster. The company's legal defence was built around the claim that it was not liable for damages from the accident, because they were the result of "sabotage" by a disgruntled worker. UCC claimed it knew the saboteur's identity, and the firm of Arthur D. Little, Inc. was hired to verify and publicize this viewpoint (Kalelkar 1988). The company also circulated videos about the sabotage claim to the media and other interested observers.
How was sabotage supposed to have occurred? It was alleged that water could not have entered the MIC tanks during pipe-washing operations: pipes leading to the tanks were simply too long; passages were too complex and blocked with closed valves. These factors would have presented an insuperable physical barrier to water. The only way that so much water could get into the MIC storage tanks was through deliberate action by an individual. According to UCC, a disgruntled worker wanted to spoil the MIC in tank 610. The main evidence was a hose connected to a water main beside an open inlet pipe leading to the tank.
The UCC sabotage theory did not explain how several other simultaneous failures contributed to the accident. In addition to water entry, there were failures in four safety devices - the vent gas scrubber, the flare tower, the refrigeration system, and the water spray. There were failures in design, operating procedures, and staffing, as described earlier. The positive-pressure systems in the MIC tanks had failed, four to eight weeks before the accident.
Union Carbide's information about the sabotage came from interviews with unnamed witnesses conducted several years after the accident, in unreliable conditions. The interviews were held neither under oath nor in the presence of legal authorities or any independent (not paid by Union Carbide) observers. UCC did not reveal the name of the saboteur so that legal action could be initiated.
The sabotage claim did not explain why a disgruntled worker would want to destroy a batch of MIC. Far greater financial damage could have been inflicted on the company by smashing expensive equipment or pouring water on finished goods. Without convincing evidence, the sabotage claim remains just that - a claim.
The deliberate introduction of water into MIC storage tanks might have taken place without any intention to commit sabotage. A small quantity of water from pipe washing could have initiated the accident. Operators on duty might have been alarmed by the sight of a rumbling hot tank and could have introduced water to cool it. Such a scenario was hinted at by some witnesses and it accommodates most of the claims raised in the sabotage defence.
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