Saturday, December 10, 2011

[TSS] Interlude - The Bhopal Disaster

One of the most impactful lectures I ever had in my life happened last week, when my Strategy professor, Dr. Gautam Ahuja, took an hour out of our regular class time to teach us about business ethics.  With significant emotion, he told us about how people within companies make strategic decisions to cut costs to better compete in the environment, often without recognizing that there are humans on the receiving ends of those decisions.  As future business leaders, it is imperative we take responsibility for our actions.  We are taught to believe so strongly in the market and in the forces that guide it, the ability of individuals acting selfishly in a collective fashion to punish firms that behave badly and reward those that do well, but this often does not work as a leveling mechanism.

Professor Ahuja asked our class, "What is the value of a human life?"  We all debated this awkwardly for some time, talking about future earnings potential, health profiles, etc.  He nodded in agreement with all of us, stating that of course those are important considerations for determining the economic value.  Then he said, "Based on that discussion, then... what is the value of an Indian life?"  Implying, of course, that many Indians make much less money than Americans do, have a shorter life expectancy and less access to quality healthcare.

He illustrated this point by sharing with us the story of the Union Carbide gas leak in Bhopal, India.  Sadly, many of my classmates had never heard of this disaster, and it seems to have generally been forgotten in collective memory.  So today, I'd like to share the story with you in the hopes that you can get a small inkling of just how important this lecture was to me and to all my classmates.  It takes so much courage for a man to get up in front of 100 students, three days in a row, and tell them with so much emotion and guilt, exactly why business ethics are important.  It was a true act of bravery, and I hope it gives you pause as well.

On the night of December 2nd, 1984, there was a gas leak of methyl isocyanite at the Union Carbide pesticide plant in Bhopal, India.  Several factors led to this leak including very low safety standards and maintenance in place at the plant, due partly to very lax government regulation and partly to a very hands-off approach by Union Carbide's upper management in the United States and partly to communication problems between US and Indian managers.  Hundreds of thousands of people were exposed to the toxic gas.  Estimates vary about how many died from the exposure and on what time frame should be used in attributing deaths to the disaster.  Much of this speculation is due to how tight-lipped the government was.  The plant was closed off to outsiders completely (including Union Carbide officials) and the government forbade information to be made public until 1994, a decade after the disaster occurred.

Over the past 27 years, somewhere between 10,000 and 25,000 people have died from gas leak-related causes.  A government affidavit in 2006 attributed over 550,000 injuries to the disaster, including tens of thousands of people who were either temporarily, partially or permanently disabled.  Immediate effects were sore eyes, difficulty breathing and frothing at the mouth.  3,000 people died in the 24 hours following the disaster.  All the leaves on trees in the area fell off.  As the gas stayed low to the ground, many of those were children.  In the weeks following the disaster, 50,000 people were treated for a wide variety of symptoms ranging from blindness to kidney and liver failure.  There have also been fertility problems and birth defects attributed to the accident.  Union Carbide immediately shut down the plant.  This caused massive protests.  No one wanted toxic chemicals leaking into a densely populated city, but neither did they want such a major employer to shut down.  On Union Carbide's website dedicated to the disaster, the company maintains its belief that the leak was caused through sabotage and that the company did everything it could to help the victims after the disaster.

How do you place a value on the lives that were lost and incredibly altered due to the gross negligence involved in this situation, not just by employees at the plant but also by the government?  What sort of thinking goes into the decision to build a plant that produces toxic chemicals in a developing country with very low health standards, and then to build that plant near a densely populated city?  When we so divorce ourselves from a situation, look at it clinically and strategically, do we completely forget the repercussions involved?  As a manager, you can say, "I need to cut costs to maximize shareholder value."  As a shareholder, you can say, "I don't make the decisions, I just own the stock."  And so the humanity inherent in our own individual decisions are lost in the corporate environment.

The Indian government, in 2010 (26 years after the accident) charged seven ex-employees, including the former Union Carbide of India chairman, with causing death by negligence.  They were each sentenced to two years in prison and fines of $2,000, which is the maximum amount under the law.  Union Carbide offered to pay damages totaling $350 million- the amount covered by their insurance.  In 1989, they paid out $470 million, which was the insurance amount plus interest.  $470 million for over at least 200,000 injuries is equal to about $2,350 per person.

$2,350.  The value of an Indian life.


16 comments:

  1. Thank you for posting about this, Aarti! Have to say, I wept through half your post.

    I was so incensed when the ex-employees weren't even significantly punished. To me that was just a mockery of the people who died. Nothing anyone does can erase what happened or bring back the dead, and accidents happen all the time, sure. But do we give just a 2-year sentence to someone for causing death of a child by gross negligence? That money won't even cover basic care for the people. And to compare it with how swiftly the US government responded to the BP oil leak issue!

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  2. Thank you for this timely reminder, Aarti. I find it very disheartening that many of your classmates hadn't heard of this scandal. In 2001 Union Carbide was taken over by Dow Chemical - I've copied this from the Bhopal Medical Appeal Website
    http://www.bhopal.org/

    In 2001, Michigan-based chemical corporation Dow Chemical purchased Union Carbide, thereby acquiring its assets and liabilities. However Dow Chemical has steadfastly refused to clean up the site, provide safe drinking water, compensate the victims or disclose the composition of the gas leak, information that doctors could use to properly treat the victims.

    Still the disgraceful legacy of Bhopal continues.

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  3. Well, good to hear business ethics is being taught, although I wonder how much will sink in! One can only hope. I can't believe so many hadn't heard of Bhopal! Actually, just last night I was reading about all the mutations among the children of victims of Chernobyl. Seems like it has to keep happening each generation since we can't seem to remember. Or that we try to get away with cost cutting and valorizing profits over safety as much as we can until suddenly something happens, and we've just been lucky all the times it HASN'T happened!

    Thanks for this post!

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  4. Oh, Aarti, this post was composed so poignantly and it made my heart sink down to my feet when I read that last line. I had never heard of this disaster, and it makes me so heartsick to think of all the people that suffered and dies due to the selfishness and negligence of this company. I have always had a love of India and it's people, and it saddens me to think that others just write them off as valueless. This was such an important post, and I thank you for sharing it with us. It couldn't have been said with more sincerity or heart.

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  5. Thanks for sharing, I remember seeing a good story about this on 60 minutes once, horrid

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  6. Thanks for sharing about the lecture and this disaster. Sadly, I had not heard of it before - I was born the year it happened, and apparently, as you said, collective memory has dropped it.

    I read a book earlier this year about the abolitionist movement in England. The arguments against ending the slave trade and ending slavery were often couched in terms of the economy. I get leery when business success or economy in general is seen as the highest priority - because it leads to tragedies such as happened in Bhopal. It's sobering.

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  7. Thank you for this post, Aarti. I remember the disaster and have followed the story through the years. I am glad to hear that your professor is bringing this discussion to you classroom as taking about these incidents, not forgetting them, is one way we can start to end unethical business behavior.

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  8. Such an important topic and I can tell the professor's lecture/class really had an impact on you. That's what great education is all about.

    We used to have a similar discussion in my class each year when I taught WWI because how do you figure out the reparations the Germans owed? It was often based on a price per life. It really is an awkward discussion to have

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  9. Thank you so much for writing this post. Aarti, I have never heard of this disaster and sadly many people my age and younger probably haven't either.

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  10. Thanks for posting about this. I was on a train from London in a terrible snowstorm the year after the Bhopal disaster and happened to be sitting opposite a chap who had worked in chemical factories in that area of India. What he said about the accident was dreadful, apparently there had been numerous concerns raised by locals about what would happen in the event of an accident. All their concerns were ignored. The whole story of the Bhopal disaster has been a terrible injustice to the people of India from start to finish. Thanks for bringing it to the forefront again.

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  11. Thank you for sharing about this incident. So many like it happen around the world and it seems we only care when it happens in our own country (oil spills, for example?). Something that many businesses / shareholders / buyers seem to be in the dark about - I wonder how much I don't know about my products and about companies I buy from. Scary for sure.

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  12. Thank you. I don't know what else to say. I hope you are not an exception in biz-school to care about ethics.

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  13. That is sad and tragic and it's repeated worldwide time and time again. What's human life to profit? Nothing, apparently. Big decisions and small ones, we all contribute to the wanton destruction of others.

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  14. Anonymous12/16/2011

    Hello Aarti

    yes, thanks indeed for writing this excellent post.

    It looks like you are at school in Michigan so I would guess that you are aware some of Dow's other transgressions.
    With their track record, I would argue that Dow are one of only a very few companies that would have even considered acquiring Union Carbide given their clear liabilities in Bhopal.
    Now, here in Great Britain, the London Olympic organisers have awarded Dow a sponsorship contract for the Olympic Stadium- despite having consistently touted London as the most 'sustainable' games ever!! Go figure.
    Please sign/ spread this petition opposing the deal. Thanks!

    http://www.change.org/petitions/drop-dow-chemical-as-partners-for-the-london-2012-olympic-games-bhopal

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  15. Just wanted to add my voice to those who have already expressed their appreciation for your having re-raised this subject for discussion. It's one way we can be sure that we do not forget, just the mere mentioning of it! The tendency to express everything -- life itself -- in economic terms in this age is one of the central themes of F.S. Michaels' Monoculture; it came to mind immediately (again: it haunts me regularly) upon reading your post.

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