Business Today

Bhopal gas tragedy case: Past horrific, present tense

The re-opening of the Bhopal case has industry bodies worried.

twitter-logo Manu Kaushik        Print Edition: April 17, 2011

The Supreme Court decision on February 28 to issue notices to Union Carbide Corporation, Dow Chemical and two others, on a curative petition filed by the Indian government seeking higher compensation for the Bhopal gas tragedy victims, has not gone down well with foreign investors.

Many industry experts also fear the government's drastic change of stance on the case could affect the country's investment climate. Ron Somers, President of the USIndia Business Council, says the move could send wrong signals to foreign investors. Already both FDI and FII inflows have slowed following both the global economic recovery - which has prompted foreign capital to remain in Western markets - and investors' worries over the political scams lately unearthed in India.

"Competition for capital is going to be fierce. For GDP to grow at more than eight per cent, India requires around $4.5 trillion in the next five years." The bogey of slowing foreign investment may be exaggerated but Somers may still have a point.

In February 1989, the Indian government had agreed to a Supreme Court-brokered out-of-court settlement of the Bhopal victims' compensation case, providing them a sum of $470 million (Rs 750 crore at the time). But the curative petition it filed last August - following which the apex court sent out notices - seeks a total compensation of Rs 7,844 crore.

Says Venu Srinivasan, Chairman of TVS Motors: "The apex court had agreed when the last time settlement was done. To reopen that will create uncertainty." Srinivasan, who stepped down as CII chief in April 2010, is also critical of the government's overall approach. "In India there's never a red or a green light; it's always a yellow light," he says. Somers stresses the need for an industrial accident policy that can help companies quantify liabilities and ensure faster and fair settlement.

The curative petition was filed by the Centre after nationwide outrage over the trial court judgment of June 2010, which imposed a punishment of just two years on the eight people - senior officials at Union Carbide India Ltd, or UCIL - held responsible for the Bhopal disaster on the night of December 3, 1984. On that night, methyl isocyanate gas leaked from UCIL's pesticides plant killing over 3,000 people instantly and affecting the health of another 500,000. Since then UCIL had been bought over by McLeod Russel in 1994 and UCC by Dow Chemicals in 2001.

UCIL, renamed Eveready Industries since, is 40.55 per cent owned by the Khaitan family, promoters of McLeod Russel, and the rest is held by institutional and public shareholders, according to its latest annual report.

Keeping with the Centre's new approach, the CBI too moved a Delhi court on March 22 for a renewed mandate to get Warren Anderson, UCC Chairman when the disaster occurred, extradited from the US.

Dow's consistent position is that it has nothing to do with the Bhopal tragedy. It maintains the apex court made no mistake in agreeing to (and subsequently re-approving) the 1989 settlement. "The attempt to hold Dow responsible is based on the government's erroneous belief that Dow and UCC are the same company," says Dow spokesperson Scot Wheeler.

Rights activists say the reopening of the case is entirely justified as the compensation paid in 1989 was grossly inadequate. Karuna Nundy, counsel for the Bhopal victims, says even the curative petition does not capture the sheer magnitude of the damage caused. "Government figures put the death toll at around 5,300, whereas a study says 25,000 people had died from the gas exposure till 1994," she says.

India certainly needs more stringent norms for dealing with industrial disasters - more so after the Fukushima accident in Japan in March - without which instances like the Bhopal case could rear in Indian courts.

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