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Should Dow be allowed to do business in India?
Sreelatha Menon | May 07, 2008
The two issues that remain are whether Dow inherited Union Carbide's liabilities and why the government never cleaned up Bhopal after settling with Carbide.
Scot Wheeler, Director Communications, Dow Chemicals, Midland, US
'Dow did not inherit Union Carbide's liabilities. Furthermore, Carbide settled its liabilities with the Indian government way back in 1989'
Let me start by clarifying a significant point. The Dow Chemical Company does not have responsibility or legal liability for the Bhopal tragedy or its aftermath. We do have deep sympathy for the victims of the tragedy in Bhopal and we, along with many others, ask the question today, "Why isn't this site cleaned up?"
For those unfamiliar with this situation, it is important - and also accurate reporting - to understand that The Dow Chemical Company never owned or operated the former Bhopal plant site and this situation is not Dow's responsibility, accountability, or liability to bear. The solution to this problem is in the hands of the Indian central and state governments as the site today is under the control of the Madhya Pradesh state government.
As there have been a number of inaccuracies reported by media regarding liability, I want to be very clear on this point. First, you should be aware that Union Carbide Corporation was no longer doing business in India long before Dow acquired its shares in 2001. Also, contrary to claims made by some people, Dow did not inherit UCC's liabilities and does not have responsibility for them.
UCC remains a separate company. UCC has its own board of directors, its own financial reporting (you can read UCC's 10-K financial report to the SEC online), and its own employees. And, more importantly, UCC manages its own liabilities.
Furthermore, Union Carbide Corporation and the former Union Carbide India Limited (now Eveready Industries India [Get Quote] Limited) settled their liabilities regarding the Bhopal tragedy with the Indian government back in 1989 and this settlement was upheld by the Indian Supreme Court in 1991.
As I mentioned earlier, the former Union Carbide India Limited plant site is now under the ownership of the state government of Madhya Pradesh. This has been the case since 1998 and for whatever reason most of us do not know or fully understand, the site remains unremediated. As owners of the site, the Madhya Pradesh government is the entity that has the ability and, more importantly, the authority to ensure that the plant site gets cleaned up.
Finally, Dow India recognises the importance of India's economic development and sees the region as a high potential growth opportunity for the chemicals and plastics businesses. As a key component of our global business strategy, Dow India is focusing on bring new technologies to the region as well as making good use of local talent in the fields of chemicals sciences and technology. Dow's association with India is not new and, in fact, celebrated its 50th anniversary last year.
Most recently in April, Dow Europe GmbH, a wholly-owned subsidiary of The Dow Chemical Company, and Gujarat Alkalies and Chemicals Ltd. announced the signing of a Joint Venture Agreement for the construction, operation and ownership of a 200 kilotons per year chloromethanes manufacturing facility in Gujarat. These are exciting business developments.We are confident about Dow India's future success and look forward to being a part of India's continued economic development.
Prashant Bhushan, Advocate, Supreme Court
'You can use any corporate strategy or veil, but liabilities and assets come together. Dow owns Carbide, so it needs to ensure it fulfils its obligations'
Dow Chemicals should not be allowed to conduct business in India for three reasons. Firstly they have purchased the Union Carbide Corporation and when you have purchased a company, it does not matter what corporate subterfuge you seek to hide behind, you purchase its assets and liabilities. You can use any corporate strategy or veil but liabilities and assets come together.
Dow can continue to claim that UCC is a separate company, with its own board of directors, its own financial reporting and its own employees. Saying this and more are all part of Dow's corporate strategy. But the fact is that UCC was liable for environmental and other damage caused by the chemical disaster, and was responsible for cleaning it up. It didn't do so.
Since Dow has purchased it, it has inherited that responsibility. It just cannot turn its face away. When they purchased Union Carbide, it was with the knowledge of the Bhopal disaster legacy, and it cannot now pretend not to have anything to do with that tragedy.
As owner of Union Carbide, Dow Chemicals is responsible for making UCC take care of its responsibility. Since Dow says that UCC has its own mechanism to deal with its liabilities, then Dow should make UCC do its duty in this case.
So long as it doesn't do so, Dow is shielding an offender. In that respect, Dow Chemicals should not be allowed to do business here because it is unwilling to pay for the environmental clean-up of the dirt left behind by UCC.
And the second reason for not doing business with Dow is that it is a proven offender, having bribed officials in the Indian Government to get its pesticides registered. It did pay a heavy penalty to a district court in the US which, in essence, is an admission of its guilt. A company that is guilty of such conduct should be blacklisted. Why should such a company be allowed to do business in India?
A third reason why Dow Chemicals should not be allowed in India is because it is in the business of toxic chemicals. It is true that many chemical manufacturers are in business. But they should be allowed only if they sign a liability agreement for total responsibility for anything that may happen in future. They must accept strict liabilities for anything that may happen in relation to their business practices. This is especially true of Dow because it has been covering up the crime of another chemical company it bought.
It is true that taking responsibility for UCC's mistakes would lead to an unending list of liabilities for Dow. A way can be found to deal with that. But the simplest way is for Dow to just make Carbide do its job. It, after all, owns it.