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On 28th August the Motley Fool posted an article entitled 3 Reasons the Dow Chemical Company’s Stock Could Fall. It wouldn’t be hard to imagine that Dow’s refusal to address the Legacy of Bhopal would be one of those reasons and, in fact, this article lists it as the number one!
The Motley Fool says: ‘Unfortunately, Dow Chemical hasn’t taken responsibility for its subsidiary’s actions 30 years later — and it takes a rather arrogant stance against the Indian legal system.
‘The company doesn’t once mention the word “Bhopal” in its most recent 10-K (annual report to the Securities & Exchanges Commission). Instead, it lists UCC’s potential to have more asbestos-related suits (pending and future claims totaled $501 million at the end of 2013) filed against it in the United States (from the past 30 years) as its most likely source of legal action in the near term. There may not be much the company can do three decades after Bhopal, but there are still thousands living with permanent disabilities related to the disaster. Should international courts get involved with increased interest during the upcoming 30-year mark, then Dow Chemical could be forced to pay settlement fees, fines, or into a fund for the disaster.’
Interestingly, despite Dow’s claims to the SEC, the US asbestos related suits will NOT be its next legal action.
In fact Dow is summonsed to appear in the Chief Judicial Magistrates Court in Bhopal, on 12th November, where it must explain why it does not produce UCC to face the criminal charges outstanding against it (culpable homicide).
But, we believe that the Dow Chemical Company might actually perform better, financially-speaking, by taking a temporary hit on its share price.
A company this size can easily afford to settle all of the claims relating to the disaster- and then, later, profit from the increased good will toward it especially in the Indian market. In the meantime, Dow is already being harmed in material ways, the impacts of which are steadily increasing, although Dow’s management seems to be doing a fine job of keeping this reality away from its stakeholders.
This spring Dow excluded a shareholder resolution on the issue even though shareholders, including a US based investment fund, presented a body of evidence of the increasing financial, operational and reputational impact of Bhopal upon Dow. Dow management were able to get the resolution excluded from Securites & Exchange Commission 2014 proxy materials, just three days before they were due to be published.
To summarise, findings presented by shareholders to the SEC:
1. Bhopal has prevented Dow from pursuing a $5 billion strategic investment in India, whose specialty chemical sector is predicted to grow 17% annually and become the 4th largest market globally over the next decade.
2. Dow’s own documents show that the company has lost at least $300 million in Indian between 2008-16 due to Bhopal.
3. The Bhopal legacy has caused Dow’s Core Brand rating to fall 300% in six years, during which time Dow has made it into the top 20 corporations targeted by activists globally.
4. Dow management continues to mislead shareholders and regulatory authorities by denying that Bhopal is causing any financial, operational or reputational impact upon the company.
For these reasons, the Motley Fool article should be taken as a timely warning to all investors and shareholders.
This December marks two very important anniversaries. Whilst one marks the day where thousands of lives would be irreversibly and tragically changed, the other marks the publication of the Bhopal Medical Appeal’s first appeal, exactly ten years after the 1984 explosion at the Union Carbide pesticide factory in Bhopal.
As Tim Edwards, the Executive Trustee of the Bhopal Medical Appeal, writes in the BMA’s latest letter to supporters, ‘Publication was risked on the wavering hope that this was not a world without care. Nothing really prepared us for what happened in the following days. People from all over Britain responded in such numbers that our volunteers were entirely overwhelmed.’
Since this first appeal, 20 years ago, the funds generated by our supporters kindness and generosity have helped open and sustain the Sambhavna Clinic and the Chingari Trust Rehabilitation Centre in Bhopal. Our supporters should take pride in what they have accomplished, with their help we hope that these clinics will continue to help those in Bhopal who still suffer from the ongoing affects and contamination of a disaster that continues to take its toll.
In Tim’s most recent letter he thanks all our supporters and donors who in some way have been a part of the success of these clinics, giving a short recap of the history of the Sambhavna clinic and its necessitated importance to the gas survivors, and their families, in Bhopal. He also provides a brief glimpse to what supporters can expect in our much anticipated Autumn Newsletter, which will look back at the developments and achievements in Bhopal that would never have been made possible if it weren’t for all those who have made contributions to the Bhopal Medical Appeal.
This December will mark the 30th Anniversary of the Union Carbide factory disaster in Bhopal. If you would like to find out more about our plans for the anniversary, or if you would like to support us or get involved please contact us here.
On the 15th of August children, teachers, staff and family members at the Chingari trust celebrated Independence day commemorating the India’s independence from the British Empire on the 15th August 1947. some of the children at Chingari were chosen to march in a procession before the national flag was hoisted by Apa and Didi (Rashida Bee and Champa Devi Shukla). There followed a small speech by Apa and Didi and an educational and cultural programme for the children. This featured a a song sung by Zaid and Kasheesh, a group performance by Alisha, Kausar and Afreen and a tabla (percussion instrument) performance by one of the Chingari children, Devesh, who played the tabla in five different styles. To finish of the celebrations a small skit on patriotism, where Shifon played the character of a soldier fighting for his country. all the celebrations were accompanied by refreshments for the children. Videos of some of the festivities can be seen below.
The Dow Chemical Company and Bhopal’s Second Disaster
The Dow Chemical Company (Dow), as the successor company to the Union Carbide Corporation (UCC), has a clear case to answer regarding an ongoing contaminated water disaster in Bhopal.
This disaster is a major public health issue affecting tens of thousands of poor people in the slum areas surrounding the abandoned Union Carbide pesticide factory.
It is the second disaster to befall Bhopal and is a separate matter from the 1984 Bhopal Gas Tragedy. There has been no settlement of any kind, no compensation has been paid, and there has been no attempt at meaningful environmental clean up.
There is no connection to the $470m payout made by Union Carbide in respect of the civil case pertaining to the Gas Tragedy.
The US courts accept that this ongoing contamination issue is distinct from the 1984 Gas Disaster and the ‘polluter pays principle’ sees Dow, as the successor company to UCC, liable for the contamination.
Bhopal’s Second Disaster- Facts:
The groundwater aquifer in Bhopal, around the abandoned Union Carbide factory (site of 1984 Bhopal Gas Disaster), is heavily contaminated with highly toxic chemicals.
This contaminated groundwater has been the primary drinking water source for tens of thousands of people for many years and, in some cases, since before the Gas Disaster. Although a local government scheme has seen water piped in to many of the previously affected communities these supplies can be intermittent and unreliable leaving the communities with no option other than to use the contaminated water.
A full contamination survey has never been performed and, in areas where there is no piped, or other supply, an unknown number of families still use the contaminated water as their primary water source.
The chemicals leaching in to the water are highly toxic. They attack all of the body’s organs, some are known carcinogens, and other cause birth defects.
The contamination is being caused by water leaching through toxic waste that was buried on the factory site and by leakage from solar evaporation ponds located just outside of the factory site.
The solar evaporation ponds are known to have been leaking years before the disaster (an internal Union Carbide memo from 1982 reveals this).
Union Carbide was aware of the environmental and groundwater contamination, after carrying out tests in the area, but chose to keep the findings of these tests secret.
The toxic contamination of the area only became public knowledge when Greenpeace tested the area and published a report, in 1999, labeling the area a ‘global toxic hotspot’.
The US courts accept that the water contamination is a separate issue from the gas disaster.
Dow Chemical, as current owner of Union Carbide, is responsible for the continuing contamination.
All supporting documentation available on request.
Dow’s Defence Exposed
Dow:“Union Carbide Corporation (UCC) and Union Carbide India Limited (UCIL) settled their liability for the gas release tragedy with the Government of India in 1989 and paid $470 million to the Government of India. This settlement was upheld by the Indian Supreme Court.
FACT: The water contamination has nothing to do with the gas tragedy. This settlement covers injuries caused by gas exposure and DOES NOT cover birth defects or any liabilities arising from subsequent and continued contamination of the environment or groundwater. The water contamination, as acknowledged by the US courts, is a separate matter to the 1984 Gas Disaster.
Dow:“The Bhopal site was owned and operated by UCIL, a separate, publicly traded Indian Company. With the approval of the Supreme Court, Union Carbide sold its interest in UCIL in 1994 and UCIL was renamed Eveready Industries India Limited – a company that continues to operate in India today and is the company that was involved in the tragedy.
FACT: In 1984 the Bhopal factory wasoperated by Union Carbide India Limited (UCIL) but, Union Carbide Corporation (UCC), a US based company, always retained the controlling interest in UCIL with never less than 50.9% of the stock. Union Carbide is now a 100% owned subsidiary of Dow- with Dow executives sitting on its board.
As Dow themselves point out, UCC sold its shares in UCIL in 1994- a full ten years AFTER the disaster- and thus retained control of UCIL until that point. Dow’s own statement acknowledges that both UCC and UCIL were liable for the disaster. If they accept the courts ruling, regarding the settlement, then they must accept their culpability.
UCC, for its part, consistently argued that UCIL was an entirely separate corporate entity. UCC also repeatedly claimed in the courts that it was purely a US-based corporation and denies that it had ‘operations’ in India or elsewhere outside the USA. However, UCC’s 1984 annual report stated: “Union Carbide Corporation’s business worldwide is conducted principally through the divisions, subsidiaries and affiliates listed below.” One of those listed was UCIL, which was also included in UCC’s consolidated balance sheet for the same year.
Dow:“Dow acquired shares of Union Carbide in 2001, seven years after UCIL became Eveready Industries India Limited. Union Carbide had no assets in India at the time of the transaction with Dow. Dow never owned or operated the UCIL plant site.”
FACT: Union Carbide is now a 100% owned subsidiary of Dow. Under the ‘polluter pays’ principle, enshrined in the law of both the US and India, Union Carbide is responsible for the environmental damage. Under the ‘successor liability’ principle, also established in both US and Indian law, the current owner of UCC, Dow Chemical, is liable for the continuing environmental contamination and the damage to people’s health caused by it.
In the takeover of 2001 Dow acquired all of Union Carbide’s assets AND its liabilities; and Dow has accepted Union Carbide’s liabilities in the US. Outstanding liabilities of Union Carbide are directly addressed by Dow representatives and, once paid, are registered as charges on Dow’s consolidated earnings.
FACT: In a 2006 speech to the UN Andrew Liveris (Chairman and CEO of Dow) said: “Water is the single most important chemical compound for the preservation and flourishing of human life… “And yet today, more than a billion people are in peril every day because they do not have enough water or the water they have is unhealthy. Lack of clean water is the single largest cause of disease in the world and more than 4,500 children die each day because of it.”
The Dow Chemical Company’s Bhopal Related Legal Liabilities
The Dow Chemical Company (Dow) claims that all legal matters concerning the Bhopal disaster are closed. This is simply not true. Dow has summons to appear in a number of ongoing cases arising from Union Carbide’s business in Bhopal:
1. Dow is a named respondent in a forthcoming ‘curative petition’ in India’s Supreme Court that aims to address inadequacies within the 1989 civil settlement (U.S. $470 million) and a hearing date is due after postponement of the originally scheduled date of August 5th, 2014.
The Indian Government’s official position is that the ‘gross inadequacy’ of the 1989 settlement with UCC resulted in an ‘irremediable injustice’ and is seeking additional compensation of up to $1.24billion, based on higher figures for the dead and injured. But, the Bhopal survivors groups are quoting the Government of India’s own previously published numbers (Indian Council of Medical Research, epidemiological report, 2004) which are considerably higher and would raise the required settlement to $8.1billion. The other respondents are Union Carbide Corporation, Union Carbide India Limited and Eveready Industries.
2. Dow’s wholly owned subsidiary Union Carbide Corporation (UCC) is wanted on CRIMINAL charges of ‘culpable homicide not amounting to murder’ and is a ‘proclaimed absconder’ from Indian justice. Dow has total control of UCC but has not produced UCC in court. Instead, Dow used another wholly owned subsidiary to block a 2005 judicial summons, addressed to its Michigan HQ, requesting it explain the non-appearance of UCC in the courts. The Bhopal Chief Judicial Magistrate removed the blocking order, in 2012, and a summons has now been issued to Dow requiring it attend court on November 12, 2014. Dow will be required to explain why UCC has repeatedly ignored court summons in the ongoing criminal case.
Audrey Gaughran, Amnesty International’s Director for Global Issues, recently said: “The time has come for Dow to appear in an Indian court and account for the failure of its wholly-owned subsidiary, Union Carbide, to respond to the criminal charges against it.”
3. Dow is a named respondent in a public interest litigation in the Madhya Pradesh High Court (2004) seeking remediation of the abandoned Union Carbide factory site. But Dow continues to resist the Ministry’s 2006 request for a £16 million deposit towards initial costs.
Dow refuses to acknowledge the official position of the Indian government, as expressed in a letter to the Lower District Court, Manhattan, dated June 8, 2004, viz: “It is the official position of the Government of India that the previous settlement of claims concerning the 1984 Bhopal Gas Disaster between Union Carbide and Union of India has no legal bearing on or relation whatsoever to the environmental contamination… Pursuant to the ‘polluter pays’ principle recognized by both the United States and India, Union Carbide should bear all the financial burden and cost for the purpose of environmental clean-up and remediation. The Union of India and the State Government of Madhya Pradesh shall not bear any financial burden for this purpose.”
4. Union Carbide Corporation is subject to a federal class-action lawsuit (Sahu II v. UCC) in the Southern District New York Court. The action seeks relief and medical monitoring for the ongoing contamination in Bhopal caused by the indiscriminate dumping of toxic waste in and around the Union Carbide factory.
The US courts accept that this is a distinct matter from the 1984 gas disaster and has not been part of any pre-existing settlement. UCC has argued in New York that only an Indian court can order a clean-up in Bhopal. However both UCC and Dow have pleaded (in the Madhya Pradesh court) that Indian courts have no jurisdiction over them.
On 31st july 2014, Judge Keenan ruled in favour of UCC finding that the company could not be sued for ongoing contamination from the chemical plant. Union Carbide’s defence is based on their claim to have not been involved in the design, or construction, of the plant but the plaintiffs, represented by EarthRights International, Sharma & Deyoung LLP, and the Law Offices of Curtis V. Trinko, argued that they had presented evidence that a UCC employee, Lucas John Couvaras, managed the construction of the plant.
EarthRights et al believe that an appeal may well be successful but they must hope that Judge Keenan recuses himself from the case as he previously sat on Sahu I and never found in favour of the plaintiffs.
Marco Simons , Legal Director of EarthRights International, assisting the Bhopal plaintiffs in the case said: “Seemingly undeniable evidence demonstrates otherwise: John Couvaras, the project manager who directly oversaw the construction of the Bhopal plant, testified that he worked for Union Carbide at the time. A manager from Union Carbide’s Indian subsidiary confirmed this assertion.”
“Astonishingly, the court simply didn’t care. Couvaras’s own testimony about the company he worked for is “unsubstantiated,” Keenan decided. Instead, Union Carbide’s statements that Couvaras worked for its subsidiary were “conclusive” evidence. If you ever thought you knew your own employer’s identity, think again — your testimony on that subject isn’t even really evidence.”
“After the Bhopal debacle, Union Carbide packed up and left a mess that’s still poisoning residents and their environment, and its mess is now Dow’s problem. People living near the plant continue to suffer physical ailments, live on contaminated property, and drink poisoned water. Not only have the victims been denied justice at every door they’ve knocked on, they have also been sued for seeking justice in the first place.” (Note: Dow has tried to sue Bhopal activists four different times in Indian courts over their continued protests against the company).
The Dow Chemical Company’s Position Regarding the Bhopal Disaster
The Dow Chemical Company (Dow) defends itself against any liability relating to the Bhopal Disaster using incorrect and/ or misleading statements. Some of these claims are examined here and documentary evidence can be provided, on request, for all of the counter statements made by The Bhopal Medical Appeal.
Dow falsely claims that:
Dow: All Bhopal related litigation was settled by court-supervised settlement in 1989.
FACT: This is entirely untrue. Dow is a named respondent in both criminal and civil cases in India relating to Bhopal. The Union Carbide Corporation (UCC), a wholly-owned subsidiary of Dow, has never answered the criminal charges, of culpable homicide, outstanding against it and Dow has been summonsed to explain UCC’s non-appearance in the court on 12th November, 2014.
Dow: UCC had no substantial involvement in design, operation, or management of the Bhopal plant.
FACT: Extensive documentation exists of UCC’s role in designing, building, operating and managing the Bhopal plant. Two Indian courts have found UCC prima facie liable for the gas disaster but have been unable to enforce their own judgments.
Dow:Any environmental remediation issue is the responsibility of Indian authorities.
FACT: The Indian authorities did not design, install or oversee management of waste disposal systems in Bhopal, but UCC did. The legal principle of ‘the Polluter Pays’, enshrined in both US and Indian law, dictates that UCC must pay for the clean up. To claim otherwise is an attempt to place the burden for private environmental abuse upon the Indian taxpayer.
Dow: The Bhopal Disaster is a historical event and Dow was not involved at the time of the disaster and the civil settlement.
FACT: Whilst factually correct, this is designed to mislead and to obfuscate, amongst other things, the issue of ‘successor liability’, enshrined in both US, and Indian law that sees Dow liable for the legacy of Union Carbide’s business.
Dow: Union Carbide remains a separate business or legal entity to Dow Chemical.
FACT: This claim is at the root of Dow’s refusal to accept responsibility for Bhopal but their own regulatory filings are entirely contradictory, stating: “Union Carbide Corporation’s business activities comprise components of Dow’s global operations rather than stand-alone operations… there are no separable reportable business segments for UCC”.
FACT: Stating that it is an entirely separate corporate entity to Union Carbide is not, of itself, a sufficient statement of law to divorce Dow from UCC’s legal liabilities. It is not possible to say, given that information, that “there is no justification for a claim being brought against Dow”.
Dow’s public position undermines India’s attempts to gain redress and relief for victims of the two Bhopal disasters: the 1984 Gas Disaster; and the ongoing water contamination disaster caused by toxic waste abandoned by the Union Carbide factory while it was in production.
Dow neglects to acknowledge the official position of the Indian government, as expressed in a letter to the Lower District Court, Manhattan, dated June 8, 2004, viz: “It is the official position of the Government of India that the previous settlement of claims concerning the 1984 Bhopal Gas Disaster between Union Carbide and Union of India has no legal bearing on or relation whatsoever to the environmental contamination… Pursuant to the ‘polluter pays’ principle recognized by both the United States and India, Union Carbide should bear allthe financial burden and cost for the purpose of environmental clean-up and remediation. The Union of India and the State Government of Madhya Pradesh shall not bear any financial burden for this purpose.”
Dow neglects to acknowledge the 2005 application by India’s Ministry of Chemicals and Fertilisers requiring a deposit of Rs1billion, towards environmental remediation from joint tortfeasors, including Dow, named in public interest litigation in the Madhya Pradesh State High Court. Dow refuses to pay the deposit.
Dow neglects to acknowledge the grounds of India’s ‘civil curative petition’ to the Supreme Court which challenges the 1989 settlement with UCC because its ‘gross inadequacy’ resulted in an ‘irremediable injustice’. Incorrect data was used for the numbers of deaths, and injuries, and to assess the severity of injury. Dow is a named respondent, before the Supreme Court, and India seeks an additional $1.24 billion.
Dow refuses to acknowledge that its 100% owned subsidiary Union Carbide is a ‘proclaimed absconder’ from criminal proceedings relating to the Bhopal Disaster and is evading charges of culpable homicide not amounting to murder. A summons has now been issued requiring Dow attend the Bhopal Chief Judicial Magistrates Court, on 12th November 2014, to explain why UCC has repeatedly ignored court summons in the ongoing criminal case.
Other key legal facts obscured by Dow attempting to evade responsibility for Bhopal:
UCC is at the very least a joint-tortfeasor, sharing responsibility for the contamination with Union Carbide India Ltd (UCIL) and, as UCC’s parent company, Dow is legally obliged to shoulder UCC’s share of the liability.
UCC bears a clear responsibility for the contamination that occurred once key systems failed- as predicted by UCC operatives. UCC engineers in the US, designing waste disposal systems for the Bhopal site in 1972, expressed worries that the facilities were unsuited for the site and would lead to contamination of groundwater and thus of community water supplies. These worries were overridden.
By 1990 UCC (and UCIL) knew that groundwater and soil at the Bhopal site, and in the surrounding area, were contaminated by toxic substances emanating from the Union Carbide facility. They kept this knowledge to themselves and took no action to warn, or protect, local people.
In US courts UCC and Dow argue that only an Indian court can order a clean-up in Bhopal. But in Indian courts they claim that India has no jurisdiction over them.
Dow spokespersons regularly claim that Dow and UCC are separate companies, yet Dow owns 100% of UCC’s shares, elects every director to UCC’s board and is UCC’s only ‘customer’, the current UCC CEO, is a senior Dow management official.
Dow claims that it has not settled any UCC liabilities. But, Dow has accepted liability for asbestos claims against UCC in the United States pre-dating the merger. When Dow settled a suit on behalf of UCC on Jan 9, 2002, it wiped $7.16 billion from Dow’s share price.
UCC and subsequently Dow have consistently sought to hide behind the ‘corporate veil’ in order to evade justice and to enable Dow, in the form of DCIPL (Dow Chemical India Private Limited) and other affiliates, to continue trading in India. UCC is banned from trading in India due to its non-appearance in the criminal proceedings but Dow has knowingly flouted the ban. An Indian government run business was forced to withdraw from a contract with Dowafter a statement was retracted claiming that Dow owned a particular technology. This activity amounts to a fraud against the courts of India and provides sufficient grounds to pierce the corporate veil if and when the two companies can be brought to court.
Dow has sought to use its economic muscle and high level U.S. government influence to pressure the Government of India into taking action that would release it from its Bhopal liabilities. In 2010, U.S. national security official Michael Froman, one of President Obama’s top economic advisors, threatened that the lawful pursuit of Dow, within India’s own courts, could “have a chilling effect upon our investment relationship.”
Dow Chemical to face civil & criminal cases over Bhopal
‘Curative Petition’, Indian Supreme Court on August 5th &
Bhopal Chief Judicial Magistrate, in Criminal Case, 12th November.
US chemical giant Dow Chemical faces a ‘curative petition’ in the Supreme Court, New Delhi, on Tuesday 5th August. This curative petition is designed to address inadequacies within the 1989 settlement on the basis that the correct figures for dead and injured were not used.
The Indian government is now seeking an additional amount of up to $1.24billion, but the Bhopal survivors groups are quoting the Government of India’s own previously published numbers (Indian Council of Medical Research, epidemiological report, 2004), which are considerably higher, and would raise the required settlement amount to $8.1billion.
The other respondents are Union Carbide Corporation, Union Carbide India Limited and Eveready Industries.
Dow Chemical owns 100% of Union Carbide Corporation, which, in turn, always owned the controlling interest in Union Carbide India Ltd- the company operating the doomed pesticide plant in Bhopal, India, site of the 1984 Bhopal Gas Disaster.
Dow Chemical maintains that it’ ‘never owned nor operated’ the plant and that a ‘full and final settlement’ was reached (a 1989 civil settlement of $470m).
Whilst the first statement is not relevant, in the eyes of the law, the second statement is simply untrue.
In addition, Dow Chemical has been summonsed to appear in front of the Chief Judicial Magistrate, in Bhopal, to explain why Union Carbide along with erstwhile CEO Warren Anderson have never faced the criminal charges of culpable homicide outstanding against them. Despite 1989’s civil settlement, Union Carbide Co, have refused to face the criminal charges outstanding against them and are proclaimed absconders from Indian justice.
Dow Chemical is expected to argue that it should be immune from liability. Dow Chemical states that it is an entirely separate corporate entity to Union Carbide but that is not, of itself, a sufficient statement of law to divorce it from Union Carbide’s legal liabilities (see notes).
Colin Toogood, of the Bhopal Medical Appeal said: “Lifting the corporate veil between Union Carbide Corporation and Dow Chemical would be a major step towards seeing justice finally come to the survivors of A DISASTER THAT IS STILL GOING ON ALMOST THIRTY YEARS AFTER IT BEGAN.”
1: Dow Chemical’s Role in the Outstanding Criminal Case
2: Dow Chemical Company’s Ownership of Union Carbide Corporation
3: Appeal Letter to Indian PM from Survivor’s Organisations
1: Dow Chemical’s Role in the Outstanding Criminal Case
Dow’s wholly owned subsidiary Union Carbide Corporation (UCC) is a ‘proclaimed absconder’ from Indian justice. It is wanted on CRIMINAL charges of ‘culpable homicide not amounting to murder’. Dow has total control of UCC but has not produced UCC in court. Instead, Dow used another wholly owned subsidiary to block a 2005 judicial summons, addressed to its Michigan HQ, requesting it explain the non-appearance of UCC in the courts. The Bhopal Chief Judicial Magistrate removed the illegal blocking order, in 2012, and a summons was issued to Dow in 2014 originally requiring it attend court on July 4th. This will now be delayed for a further 12 weeks. Dow will be required to explain why UCC has repeatedly ignored court summons in the ongoing criminal case.
2: Dow Chemical Company’s Ownership of Union Carbide Corporation
The Dow Chemical Company continues to maintain that it is not responsible for the acts of its wholly owned subsidiary the Union Carbide Corporation
Dow states that it is an entirely separate corporate entity to Union Carbide but that is not, of itself, a sufficient statement of law to divorce Dow from UCC’s legal liabilities. It is not possible to say, given that information, that “there is no justification for a claim being brought against Dow”.
A parent company may be held liable for the debts of its subsidiary in circumstances which vary between legal systems. But Dow has the legal power to control, and therefore the legal responsibility for, UCC’s current behaviour with regards to Bhopal.
This is because:
· UCC is a wholly owned subsidiary of Dow. UCC’s board of directors is appointed by Dow and Dow can, through its shareholding, exercise actual control over UCC. If Dow wishes UCC to take, or refrain from taking, any steps with regard to its business, Dow can in practice require UCC to take those steps.
· Dow’s relationship with UCC is much closer than a simple parent/subsidiary relationship: Dow manages all major aspects of UCC’s business: legal, accountancy, treasury, procurement, human resources, environmental, health and safety, management, etc. For all material purposes Dow runs UCC. This means that not only is Dow able to control UCC indirectly through its share ownership as a parent, it is able to control UCC directly because it manages all its business, including crucially its legal affairs. As a consequence, Dow cannot say that it is not responsible for UCC’s current behaviour when that behaviour is controlled, directly and indirectly, by Dow itself.
· Dow’s and UCC’s operations are so intertwined that it is difficult to separate the two. UCC’s submissions to the US Securities and Exchange Commission present its business as a “component” of Dow’s business. UCC’s business is fully integrated with Dow’s. In addition, UCC sells substantially all its products to Dow (and Dow sells UCC’s products under Dow’s name). This means that a distinction between the two companies exists only in terms of formal “corporate personality”. In commercial and reporting terms the two companies are one.
· UCC’s behaviour actually benefits Dow in so far as not paying a debt enhances a subsidiary’s ability to pay dividends to its parent. Importantly, Dow has almost certainly procured that conduct (denying Bhopal liabilities) since it is responsible for legal and accountancy services for UCC. UCC has paid dividends to Dow since completion of the acquisition in 2001. From 2009-2011 these dividends amounted to $2200m. Dow has made the choice not to require these funds to be used to compensate Bhopal survivors or decontaminate the affected area.
· Dow is wholly responsible for the current conduct of UCC, and for how UCC chooses to deal with the “issues outstanding in Bhopal, particularly in relation to the remediation of the site”. It follows that Dow is necessarily responsible for UCC’s refusal to give further compensation to the victims of the Bhopal disaster, and its refusal to pay for the environmental clean-up of the Bhopal site. To state that “these outstanding issues are not the responsibility of the Dow Chemical Company” is therefore incorrect.
· Dow distances itself from UCC implying that it does not have a relationship with UCC but Dow provides UCC products and dealing with Dow is no guarantee that products supplied are not UCC products. Given the total convergence of Dow’s and UCC’s business, stockholders and management, there is no substantive difference between dealing with UCC and dealing with Dow. For all material purposes, including those relating to ethics and corporate responsibility, any suggested dichotomy between Dow and UCC is a false one.
· If UCC refuses to compensate victims of the Bhopal disaster, pay for the environmental clean-up, or submit to the jurisdiction of the Indian Court in criminal proceedings, those are all decisions for which Dow has direct management control and therefore responsibility (further to point 2 above).
· Dow is no less responsible for UCC’s conduct with regards to Bhopal than any other supplier would be with regards to a fully owned subsidiary found to be abusing human rights. For example, if UCC was found to be employing slave labour, then Dow, the supplier, as parent would rightly be held “responsible” for the acts of its subsidiary.
3: Appeal Letter to Indian PM from Survivor’s Organisations
Honourable Prime Minister,
Government of India,
New Delhi 110 011
August 1, 2014
Sub. Urgent Directions for Filing of Application for Amending Civil Curative Petition No 345-347/2010 for Additional Compensation before Supreme Court on August 5, 2014.
On behalf of the survivors of the December 1984 Union Carbide gas disaster in Bhopal we wish to draw your urgent attention to the hearing of the Curative Petition filed by the Government of India on December 3, 2010 that is scheduled to be heard on August 5, 2014.
For the last several years we have attempted to apprise the Prime Minister’s office that the figures of exposure related deaths and injuries in the Curative Petition filed by the Government of India are wrong and without any basis.
The government’s curative petition mentions a figure of 5,295 deaths caused by the disaster, which happens to be one fourth of the figures of death reported by Indian Council of Medical Research (ICMR) in its epidemiological report published in 2004. Likewise, the petition mentions that 93 % of the victims were only temporarily injured which is against the findings of the ICMR.
You can stop a great injustice being done to the Bhopal victims by issuing directions for filing an application before the Supreme Court on August 5, 2014 for amendment of the Curative Petition. Figures based on ICMR’s scientific research can then be incorporated in the amended Curative Petition.
We request you to issue directions to concerned officials in the Ministry of Chemical & Fertilizers for filing an application before the Supreme Court for amendment of the Curative Petition on August 5, 2014.