DowDuPont Prepares to Split Into Three With no Mention of Bhopal Liabilities

Registration Statements for the New Dow do not Reveal Potential Bhopal Liabilities
After the 2017 merger of the Dow Chemical Company with DuPont Nemours, a vast chemical company, known as DowDuPont, was formed. In September 2018, it filed a Registration Statement with the U.S. Securities & Exchange Commission, representing the first step in the process of splitting DowDuPont into three new entities, and in October filed the second.

The first of the Form 10 filings concerns DowDuPont’s combined ‘chemical materials science’ division which will be hived off to become the new Dow and, despite it being a specialist chemical company, the new Dow has dropped any reference to chemicals in its name in what might be an effort to appear a little less toxic.

The second filing submitted in October, relates to the agriculture division of DowDuPont, which comprised the combined agricultural portfolios of Dow and DuPont, and will become Corteva Agriscience. The so-called ‘specialty’ products division will form the third new company, and keep the name DuPont, with registration documents expected to be submitted imminently. The new Dow is expected to separate from DowDuPont on April 1, 2019, with Corteva and DuPont separating in June.

The Form 10 Statement filed by Dow includes a strategy overview, end-market and financial data, and other information which purports to present a fair representation of the company’s prospects to shareholders. The statement includes a handy proviso(1) explaining how “no such list should be considered to be a complete statement”

The filing document’s ‘Information Statement Summary’ describes risks associated with Dow’s business and, among the items is ‘Litigation exposures and costs’, conceding that Dow is a party to a number of claims and lawsuits.(2) The section, ‘Risks Related to Dow’s Business’, outlines what it describes as ‘Dow’s principal business risks’ and the fifth sub-section, entitled ‘Litigation’ (3), explains that various actions remain extant against Dow and, critically, specifically cites the asbestos-related liability of Union Carbide Corporation, along with matters related to the Dow Silicones Corporation. All other claims are dismissed as unlikely to have any adverse impact on Dow’s consolidated financial statements.”

Dow & Union Carbide’s Bhopal Liabilities
So, what of the various litigation, arising from Union Carbide’s business in Bhopal, in which Dow is embroiled as a named respondent and/ or summoned to appear? (4) Dow claims that a ‘full and final settlement’ was made in 1989 but that is, at best, disingenuous since criminal cases against Union Carbide and others were revived in 1991 and remain extant. The charges have never been answered by Carbide which cried ‘forum non conveniens’ in the US but has, thus far, refused to accept Indian jurisdiction. Dow, for its part, has been summoned to the Bhopal courts to explain why it should not present Carbide (its wholly-owned subsidiary) and simply refuses to attend.

Even the claimed ‘full and final’ 1989 settlement is under review with a ‘curative petition’ in the Delhi Supreme Court, where the Indian Government’s stated aim for the petition is to: ‘cure the gross miscarriage of justice and perpetration of irremediable injustice being suffered by the victims of the Bhopal Gas Tragedy… based on certain factual assumptions which have been found to be completely incorrect and far removed from reality’ Depending on which figures are used to calculate the additional compensation then Dow, along with the other respondents Union Carbide Corporation, Union Carbide India Limited and Eveready Industries, could be liable for anything up to $8.1billion to settle the case(5).

Dow is also a named respondent in public interest litigation in the Madhya Pradesh High Court 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 and refuses to acknowledge the official position of the Indian government(6) 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.”

Bhopal Liabilities Not Revealed in Dow & Union Carbide Merger Documents
At the time of the takeover of Union Carbide, in 2001, the merger agreement dated August 13, 1999,  denied that any Bhopal-related criminal prosecution pending against UCC was of material consequence: “there are no (i) civil, criminal or administrative actions, suits, claims, hearings, investigations or proceedings pending or, to the actual knowledge of its executive officers, threatened against it or any of its Subsidiaries… except for those that are not, individually or in the aggregate, reasonably likely to have a Material Adverse Effect on it.”

But, a Class Action Complaint filed by shareholders in May 2000 against Dow, and various of its officials, claimed that Dow was violating federal law and called on Dow to cease violating Securities and Exchange Commission regulations and be ordered to reveal details of the Bhopal Gas Disaster, including the facts that:

  • Union Carbide was still subject to criminal prosecution in India, for its part in the disaster, and its status was that of ‘proclaimed absconder’.
  • Investigations into the cause of known environmental contamination present “substantial potential civil and criminal liabilities to which Union Carbide is exposed”.
  • Dow would, upon merger, “assume all of Union Carbide’s costs and potential liabilities associated with these matters”.

But, perhaps most tellingly, the class action asked that Dow be ordered to disclose:

  • “The imminent danger that Dow’s Indian assets and business operations will be interrupted and attached, and Dow’s current plans for conducting and expanding business operations in India in the future would be jeopardised (just as union Carbide India assets were attached and its business prospects in Indian were foreclosed) due to the fact that union Carbide continues to be recognised in a court of India as a proclaimed absconder from existing criminal prosecutions in India

The class action explains that Union Carbide revealed, in its annual statements of 1994 and 1995, some limited disclosure of facts pertaining to Bhopal liabilities including that: it was an accused party in the criminal prosecutions for the Bhopal Disaster; it was not appearing in the court; and, consequently, the Indian court had attached all of its assets in India which, at the time, consisted of $92m in cash.

  • “On April 30, 1992, the Bhopal district court in the criminal proceedings against proclaimed Union Carbide, Union Carbide Eastern, and Anderson as absconders, the Chief Judicial Magistrate, in response to the attachment applications, ‘ordered the seizure of all assets of the Danbury Connecticut chemical company as part of continuing criminal proceedings against (Union) Carbide’”.

It goes on to explain how there was no further mention of these liabilities from 1996 onwards: “Though union carbide also stated it’s 1994 & 1995 Annual Reports that the pending criminal trial “should not have adverse financial consequences for the corporation outside of India,” the implication is clear that Union Carbide also understands that there is a very high probability that the criminal proceedings would lead to substantial adverse financial consequences if Union Carbide were to appear in India and defend itself against the criminal charges. Indeed Union Carbide appears to have calculated that it was more prudent to forfeit as much as $92 million in cash than to expose itself to the obviously high probability of much greater losses in criminal fines, restitutionary damages, and sanctions.

“Nevertheless despite the fact that its exposure to substantial losses in India did not diminish as long as its legal predicament remained unresolved Union Carbide omitted without comment all such disclosure from its form 10-K Annual Report from 1996 and for each year thereafter. Union Carbide continued to be an absconded criminal defendant whose assets were attached and held in its name in an ongoing effort by the Indian court to compel Union Carbide to appear in criminal court as ordered to face serious charges and the possibility of heavy penalties. However, no mention of these facts was made from 1996 onwards in direct violation of applicable disclosure requirements.”

The class action was dismissed on 29 December 2000.  

Bhopal Liabilities Not Revealed in Dow & DuPont Merger Documents
Before special shareholder meetings for the respective stockholders of Dow Chemical and DuPont in July 2016, a joint proxy statement was issued containing information pertinent to their proposed merger.(7) But Dow appeared, once again, not to be respecting its fiduciary duties, including disclosure of all facts material to the stockholders’ consideration, by not declaring any potential Bhopal-related liabilities. This, despite being urged by the Bhopal Medical Appeal, and others, to comply with its legal obligations.

Worse, the shareholders of DuPont stood to inherit a share of these liabilities with no statement from Dow other than their claim that the disaster was fully, and finally, settled in 1989.

What we see is a pattern whereby the official Securities and Exchange Commission filings of a major American multinational corporation have, by removing any reference to Bhopal, continued to deny the legal system of a rapidly developing nation, and major trading partner of the United States, any authority over its own actions. It is a misrepresentation of several decades and, now, into its third major corporate reshuffle.


U.S. Securities and Exchange, Form 10 as filed with the Commission on September 7, 2018

1:While the list of factors presented here is, considered representative, no such list should be considered to be a complete statement of all potential risks and uncertainties. Unlisted factors may present significant additional obstacles to the realization of forward-looking statements. Consequences of material differences in results as compared with those anticipated in the forward-looking statements could include, among other things, business disruption, operational problems, financial loss, legal liability to third parties and similar risks, any of which could have a material adverse effect on DowDuPont’s, Dow’s or DuPont’s consolidated financial condition, results of operations, credit rating or liquidity.”

2: Litigation exposures and costs —in the ordinary course of its business, Dow is a party to a number of claims and lawsuits, including those related to product liability and patent infringement claims, employment matters, governmental tax and regulatory disputes, and contract and commercial litigation, for which Dow could have significant costs and incur significant liabilities.”

3: Pp 29-30 Litigation: Dow is party to a number of claims and lawsuits arising out of the normal course of business with respect to product liability, patent infringement, employment matters, governmental tax and regulation disputes, contract and commercial litigation, and other actions.

Certain of the claims and lawsuits facing Dow purport to be class actions and seek damages in very large amounts. All such claims are contested. With the exception of the possible effect of the asbestos-related liability of Union Carbide Corporation (“Union Carbide”) and Chapter 11 related matters of Dow Silicones Corporation (“Dow Silicones”) as described below, it is the opinion of Dow’s management that the possibility is remote that the aggregate of all such claims and lawsuits will have a material adverse impact on Dow’s consolidated financial statements.

4: Dow’s Bhopal-related Legal Liabilities

5: GoI is seeking additional compensation, based on higher figures for the dead and injured, of $1- 1.5billion. The Bhopal survivors’ groups have challenged the Government to use its own, previously published, figures (Indian Council of Medical Research, epidemiological report, 2004) for the dead and injured which would require a settlement of $8.1billion. More detail on the Curative petition.

6: as expressed in a letter to the Lower District Court, Manhattan, dated June 8, 2004,

7: Dow Chemical conceals Bhopal liabilities from investors ahead of merger with DuPont



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