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Case 3-9 Bhopal, India: A Tragedy of Massive Proportions
We are citizens of the world. The tragedy of our times is that we do not know this.
Woodrow T. Wilson (1856–1924), 28th president of the United States
At five past midnight on December 3, 1984, 40 tons of the chemical methyl isocynate (MIC), a
toxic gas, started to leak out of a pesticide tank at the Union Carbide plant in Bhopal, India. The
leak was first detected by workers about 11:30 p.m. on December 2, 1984, when their eyes began
to tear and burn. According to AcuSafe, “in 1991 the official Indian government panel charged
with tabulating deaths and injuries counted more than 3,800 dead and approximately 11,000 with
disabilities.” However, estimates now range as high as 8,000 killed in the first three days and
over 120,000 injured. There were 4,000 deaths officially recorded by the government, although
13,000 death claims were filed with the government, according to a United Nations report, and
hundreds of thousands more claim injury as a result of the disaster. On June 7, 2010, an Indian
court convicted eight former senior employees of Union Carbide’s Indian subsidiary to two years
in jail each for causing “death by negligence” over their part in the Bhopal gas tragedy in which
an estimated 15,000 people died more than 25 years ago. While the actual numbers may be
debatable, there can be no doubt that the Bhopal incident raises a variety of interesting ethical
questions, including:
• Did the company knowingly sacrifice safety at the Bhopal plant?
• Did the Indian government properly oversee the functioning of the plant consistent with
its regulatory authority?
In the Beginning
On May 4, 1980, the first factory exported from the West to make pesticides using MIC began
production in Bhopal, India. The company planned to export the chemicals from the United
States to make the pesticide Sevin. The new CEO of Union Carbide came over from the United
States especially for the occasion.
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Safety Measures
The Union Carbide plant in Bhopal was equipped with an alarm system with a siren that was
supposed to be set off whenever the “duty supervisor in the control room” sensed even the
slightest indication that a possible fire might be developing “or the smallest emission of toxic
gas.” The “alarm system was intended to warn the crews working on the factory site.” Even
though thousands of people lived in the nearby bustees (shantytowns), “none of the loudspeakers
pointed outward” in their direction. Still, they could hear the sirens coming from the plant. The
siren went off so frequently that it seemed as though the population became used to it and
weren’t completely aware that one death and several accidental poisonings had occurred before
the night of December 2, and there was a “mysterious fire in the alpha–naphtol unit.”
The Accident
The accident occurred when a large volume of water entered the MIC storage tanks and triggered
a violent chain reaction. Normally, water and MIC were kept separate, but on the night of
December 2, “metal barriers known as slip blinds were not inserted and the cleaning water
passed directly into the MIC tanks.” It is possible that additional water entered the tanks later on
in the attempts to control the reaction. Shortly after the introduction of water, “temperatures and
pressures in the tanks increased to the point of explosion.”
The report of consultants that reviewed the facts surrounding the accident indicates that workers
made a variety of attempts to save the plant, including:
• They tried to turn on the plant refrigeration system to cool down the environment and
slow the reaction, but the system had been drained of coolant weeks before and never
refilled as a cost-saving measure.
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The Workers and Their Reaction
It was reported that the maintenance workers did not flush out the pipes after the factory’s
production of MIC stopped on December 2. This was important because the pipes carried the
liquid MIC produced by the plant’s reactors to the tanks. The highly corrosive MIC leaves
chemical deposits on the lining of the tanks that can eventually get into the storage tanks and
contaminate the MIC. Was it laziness, as suggested by one worker?
Another worker pointed out that the production supervisor of the plant left strict instructions to
flush the pipes, but it was late at night and neither worker really wanted to do it. Still, they
followed the instructions for the washing operation, but the supervisor had omitted the crucial
step to place solid metal discs at the end of each pipe to ensure hermetically sealed tanks.
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The Political Response
Union Carbide sent a team to investigate the catastrophe, but the Indian government had seized
all records and denied the investigators access to the plant and the eyewitnesses. The government
of the state of Madhya Pradesh (where the plant was located) tried to place the blame squarely on
the shoulders of Union Carbide. It sued the company for damages on behalf of the victims. The
ruling Congress Party was facing national parliamentary elections three weeks after the accident,
Economic Effects
The economic impact of a disaster like the one that happened in Bhopal is staggering. The $25
million Union Carbide plant in Bhopal was shut down immediately after the accident, and 650
permanent jobs were lost. The loss of human life means a loss of future earning power and
economic production. The thousands of accident victims had to be treated and in many cases
rehabilitated. The closure of the plant had peripheral effects on local businesses and the
population of Bhopal. It is estimated that “two mass evacuations disrupted commercial activities
for several weeks, with resulting business losses of $8 to $65 million.”
Union Carbide’s Response
Shortly after the gas release, Union Carbide launched what it called “an aggressive effort to
identify the cause.” According to the company, the results of an independent investigation
conducted by the engineering consulting firm Arthur D. Little were that “the gas leak could only
have been caused by deliberate sabotage. Someone purposely put water in the gas storage tank,
causing a massive chemical reaction. Process safety systems had been put in place that would
have kept the water from entering the tank by accident.”
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Anderson traveled to India and offered aid of $1 million and the Indian subsidiary of Union
Carbide pledged the Indian equivalent of $840,000. Within a few months, the company offered
an additional $5 million in aid that was rejected by the Indian government. The money was then
turned over to the Indian Red Cross and used for relief efforts.
The company continued to offer relief aid with “no strings attached.” However, the Indian
government rejected the overtures, and it didn’t help the company to go through third parties.
Union Carbide believed that the volatile political situation in India—Prime Minister Indira
Gandhi had just been assassinated in October—hindered its relief efforts, especially after the
Analysis of Union Carbide’s Bhopal Problems
Documents uncovered in litigation and obtained by the Environmental Working Group of the
Chemical Industry Archives, an organization that investigates chemical company claims of
product safety, indicate that Union Carbide “cut corners and employed untested technologies
when building the Bhopal Plant.” The company went ahead with the unproven design even
Technology Risks
“The comparative risk of poor performance and of consequent need for further investment to
correct it is considerably higher in the [Union Carbide–India] operation than it would be had
proven technology been followed throughout . . . the MIC-to-Sevin process, as developed by
Union Carbide, has had only a limited trial run. Furthermore, while similar waste streams have
been handled elsewhere, this particular combination of materials to be disposed of is new and,
accordingly, affords further chance for difficulty. In short, it can be expected that there will be
interruptions in operations and delays in reaching capacity or product quality that might have
been avoided by adoption of proven technology.
It is worth noting that the workers had protested unsafe conditions after the January 9, 1982,
leak, but their warning went unheeded. In March 1982, a leak from one of the solar evaporation
ponds took place, and the Indian plant expressed its concern to Union Carbide headquarters. In
May 1982, the company sent its U.S. experts to the Bhopal plant to conduct the audit previously
mentioned.
Union Carbide’s reaction to newspaper allegations that Union Carbide–India was running an
unsafe operation was for the plant’s works manager to write a denial of the charges as baseless.
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India’s Position
The Indian government has acknowledged that 521,262 persons, well over half the population of
Bhopal at the time of the toxic leak, were “exposed” to the lethal gas. In the immediate aftermath
of the accident, most attention was devoted to medical recovery. The victims of the MIC leak
suffered damage to lung tissue and respiratory functions. The lack of medical documentation
affected relief efforts. The absence of baseline data made it difficult to identify specific medical
consequences of MIC exposure and to develop appropriate medical treatment. Another problem
was that malnourishment of the poor Indians affected by the tragedy added to the difficulty
because they already suffered from many of the postexposure symptoms such as coughing,
breathlessness, nausea, vomiting, chest pains, and poor sight.
Browning’s main strategy to restore Union Carbide’s image was to distance the company from
the site of the disaster. He points out early in the document that Union Carbide had owned only
50.9 percent of the affiliate, Union Carbide India Ltd. He notes that all the employees in the
company were Indians and that the last American employee had left two years before the leak.
The report contended that the company “did not have any hold over its Indian affiliate.” This
seems to be a contentious issue because while “many of the day–to-day details, such as staffing
and maintenance, were left to Indian officials, the major decisions, such as the annual budget,
had to be cleared with the American headquarters.” In addition, according to both Indian and
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Lawsuits
The inevitable lawsuits began in December 1984 and March 1985, when the government of India
filed against Union Carbide–India and the United States, respectively. Union Carbide asked for
the case filed in the Federal District Court of New York to be moved to India because that was
where the accident had occurred and most of the evidence existed. The case went to the Bhopal
District Court—the lowest-level court that could hear such a case. During the next four years, the
case made “its way through the maze of legal bureaucracy” from the state high court up to the
Supreme Court of India.
The legal disputes were over the amount of compensation and the exoneration of Union Carbide
from future liabilities. The disputes were complicated by a lack of reliable information about the
causes of the event and its consequences. The government of India had adopted the “Bhopal Gas
Leak Disaster Ordinance—a law that appointed the government as sole representative of the
What Happened to Union Carbide?
Not surprisingly, the lawsuits and bad publicity affected Union Carbide’s stock price. Before the
disaster, the company’s stock traded between $50 and $58 a share. In the months immediately
following the accident, it traded at $32 to $40. In the latter half of 1985, the GAF Corporation of
New York made a hostile bid to take over Union Carbide. The ensuing battle and speculative
stock trading ran up the stock price to $96, and it forced the company into financial restructuring.
The company’s response was to fight back. It sold off its consumer products division and
received more than $3.3 billion for the assets. It took on additional debt and used the funds from
the sale and borrowing to repurchase 38.8 million of its shares to protect the company from
further threats of a takeover.
The debt burden had accounted for 80 percent of the company’s capitalization by 1986. At the
end of 1991, the debt levels were still high—50 percent of capitalization. The company sold its
Linde Gas Division for $2.4 billion, “leaving the company at less than half its pre–Bhopal size.”
Questions
1. Characterize the values illustrated by management at Union Carbide in the way
they handled the Bhopal disaster.
Union Carbide management displayed heartlessness toward those affected by the Bhopal
disaster. They located a plant in Bhopal, India to possibly evade safety requirements in
the U.S. or at least to avoid the plant in their backyard. The lack of transparency may
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2. Identify the ethical issues that arise from the facts of the case. How do you assess
stakeholder responsibilities?
Some of the ethical issues that arise from the facts of the case include: Union Carbide cut
corners, employed untested technologies in building the plant, showed no concerns or
responsibility for the soil, water, and human environment of the plant; Indian government
3. Compare the decision-making process used by Union Carbide to deal with its
disaster with that of Ford Motor Co. in the Pinto case and Johnson & Johnson in
the Tylenol incident as described in this chapter. Evaluate management decision
making in these cases from an ethical reasoning perspective.
Union Carbide had begun the process to withdraw from operations in India. The plant
had been struggling to operate at a profit and the Indian requirement that most of the jobs
and positions be filled with Indian citizens caused training, safety, and other concerns.
From a corporate governance perspective, Union Carbide should have maintained safety
4. The document uncovered by the Environmental Working Group Report refers to
the acceptable “business risk” in the Bhopal operation due to questions about the
technology. Is it ethical for a company to use business risk as a measure of whether
to go ahead with an operation that may have safety problems? How would you
characterize such a thought process from the perspective of ethical reasoning?
This is a hard question as there is always going to be business risk in most company
undertakings. However, the riskier the situation, the higher moral intensity, and the need
for greater ethical vigilance. Also, the high potential dollar losses meant that the company
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