Pressure building on Dow ( #DowChemical ) over Bhopal gas leak case
THE HINDU reports:
The Dow Chemical Company came under renewed pressure from human rights organisations this week as the date for its court appearance in Bhopal edged closer, to answer the court on why its wholly owned subsidiary, the Union Carbide Company (UCC), “repeatedly refused to appear in the ongoing criminal case,” concerning the 1984 industrial disaster involving the leak of deadly methyl isocyanate and the subsequent deaths of many thousands.
According to Amnesty International, Dow has been called upon to explain why UCC has not yet answered to the charges of “culpable homicide not amounting to murder,” and in addition they underscored that the companies were embroiled in two civil suits in India relating to the gas leak and ongoing environmental contamination at the former plant site.
Commenting on the court appearance issue T. Kumar, International Advocacy Director at Amnesty International USA, said, “Dow should not hide from the summons. Why is Dow afraid to face the courts in Bhopal?”
Mr. Kumar added that the Bhopal victims were “closer than ever to realising justice,” and so it was critical to keep public pressure on Dow to attend the July 4 court hearing to ensure meaningful corporate accountability for those affected and their families.
Although The Hindu reached out to UCC and its parent company, Dow Chemicals, for a response, no comments were received at the time this report went to print.
Last week, Amnesty International organised a rally outside Dow’s Washington DC offices to pressure the company to comply with the summons.
The Bhopal Medical Appeal, a UK-based disaster relief and charity organisation, added its voice to the protests, and said that Dow had responded to the demand that it appear before the Indian courts saying, “UCC is, and remains today, a separate corporate entity responsible for its own debts and obligations.” (more detail, see below)
However BMA argued, “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.”
Earlier in 2014, plaintiffs in the case brought against UCC released new evidence that was said to demonstrate the company’s “direct role in designing and building the pesticide plant” in question.
According to reports that new evidence comprised statements by former UCC and Union Carbide India Limited (UCIL) employees and evaluations by experts in waste disposal systems, all of which were said to establish that UCC “provided critical design for the plant and its waste management system and that this design caused the ongoing toxic waste problem in Bhopal.”
In February, in the case of Sahu II v. UCC, a Southern District Court of New York class-action lawsuit filed by residents of Bhopal whose land and water remain contaminated by waste from the chemical plant, plaintiffs’ evidence reportedly also showed that it was “a Union Carbide employee that oversaw and approved construction and design implementing Union Carbide’s plan for the Bhopal plant.”
However, in an email to The Hindu, a UCC spokesman, Tomm Sprick, denied that the evidence suggested that UCC was responsible for the creation of contaminated water in the area, arguing that the U.S. Second Circuit Court of Appeals had recently dismissed “a nearly identical case” against UCC, Sahu I.
Mr. Sprick added that the court said that documents created at the time events took place established conclusively that “no reasonable juror could find that UCC participated in the creation of the contaminated drinking water.”
At the time co-counsel to the plaintiffs Rajan Sharma added, “These families have been living with Union Carbide pollution for decades and they deserve justice. Union Carbide refuses to submit to the jurisdiction of India’s courts and asserts that American courts may not grant relief without the participation of the Indian government.”
Further Information on Dow Chemical’s ownership of the 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. 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.
