Quiz 11: Multinational Corporations

Business

The city B gas tragedy was one of the worst industrial accidents in modern times. It transpired at one of the 500 plants of the company UC, a multinational chemical company, in Bhopal, India. On the wee hour of 2nd and 3rd December 1984, the plant released roughly 40 tons of poisonous MIC gas, exposing 35 tons of MIC gas to approximately 500,000 people. The tragedy occurred due to the entry of water in 610 tank that contained MIC gas. As a result, it produced a chemical reaction and formed CO2 in the tank. This reaction amplified the temperature inside the tank, reaching a staggering high of over 200 °C (392 °F). The pressure accumulated surpassed the level that the tank could withstand. The tank had regulators to control the exceeded pressure. However, the safety systems were inoperative at that time, which resulted in the release of large quantities of poisonous gases in the atmosphere, rendering 3,500 and 25,000 people perished after contacting with the lethal gas and leaving 500,000 people harmed. In addition, the chemicals also led to birth abnormalities and left permanent wounds to thousands of people. This led to the question of who should be held accountable for this man-made disaster. Various parties were involved in the culmination of this tragedy. Although the country I public held UCC responsible for the tragedy, based on analysis and assessment, it can be asserted that the parties accountable for this tragedy would be the UCC, the country I government, and to a certain degree, the country I state MP government. The UCC should be responsible since it owned 50.9% shares of UCIL, making them the major shareholder and the country I Controlled banks and the Indian PSUs owned 49.1 percent of the company shares. UCC should be culpable for its inadequacy to undertake several safety measures that could have averted the disaster. The austerity of the catastrophe could have dwindled, had UCC conducted regular visits to check the safety systems of the factory. Moreover, the UCC employed separate technology in the city B plant as compared to other subsidiaries in the United States. The technology utilized in this plant was not up to standard. The UCIL should be made accountable for storing MIC in huge tanks, and filling this gas beyond the recommended level, and using harmful gas such as MIC rather than less hazardous gases. Also, the act of collecting these chemicals in large containers in place of 200 steel drums and lack of maintenance of the plant after it halted production was a blunder. The country I government should be responsible for inflicting several regulations and restraints to cut expenses cost the lives of thousands. The deliberate attempt to make UCIL an Indian own plant by imposing various restrictions compelled the UCIL to cut off half of its workers and to shut the safety systems to save money. The plant workers' act of ignoring the increasing logged tank pressures and not properly alerting the news of leakage to the people dwelling in nearby regions was against the company norms and signs of showing negligence of duty. Before the tragedy, there were subsequent leaks, which directed one journalist to highlight the menace of the MIC gas. Nevertheless, the country I state MP government paid no attention to it. It is also liable for allowing UCIL to establish a pesticide factory near public areas. Had the MP government ordered the plant to set up 15 miles away from residential areas, then the consequences would have been lessened.

The city B gas tragedy was one of the worst industrial accidents in modern times. It transpired at one of the 500 plants of the company UC, a multinational chemical company, in city B, India. On the wee hour of 2nd and 3rd December 1984, the plant released roughly 40 tons of poisonous MIC gas, exposing 35 tons of MIC gas to approximately 500,000 people. The tragedy occurred due to the entry of water in 610 tank that contained MIC gas. As a result, it produced a chemical reaction and formed CO2 in the tank. This reaction amplified the temperature inside the tank, reaching a staggering high of over 200 °C (392 °F). The pressure accumulated surpassed the level that the tank could withstand. The tank had regulators to control the exceeded pressure. However, the safety systems were inoperative at that time, which resulted in the release of large quantities of poisonous gases in the atmosphere, rendering 3,500 and 25,000 people perished after contacting with the lethal gas and leaving 500,000 people harmed. In addition, the chemicals also led to birth abnormalities and left permanent wounds to thousands of people. As the major stakeholder of the companies UCIL and the UCC should have fairly compensated and respected the human rights of those affected by its activity, which cost the lives of thousands. Since corporate social responsibility requires companies to be ethically and socially responsible, the UCC should have adopted a cleaning- up plan to decontaminate the poisoned soil and groundwater, and provided environmental rehabilitation to reinstate the original condition of the nearby regions of the plant, instead of only paying remuneration to the affected victims. Any MNC must adhere to the host government's commitment and engagements. However, UCC failed to comply with the set rules. The country I government, including the country I state MP government, instead of relying on blame game tactic with the UCC, they should have taken measures to properly rehabilitate the affected victims since they are also liable for this tragedy. UCC declares that they only had restricted contact to the sight since they have already paid the compensation, and it has become the burden of the Indian government to support the people and disinfect the environment. The survivors have not received the remuneration that UCC paid to the country I government. The politicians should have distributed the remuneration rendered by UCC to the victims. Nonetheless, the government was ridden with corruption, and the victims were not compensated properly. It revealed the unethical and irresponsive nature of the government that were governed by vested interest. The government should also work on cleaning up the environment.

The case here is about a chemical plant tragedy in city B of country I. The death toll of this tragedy was more than 16,000 and millions of lives were affected. The company was UC and was a subsidiary of a foreign company. There were problems of carelessness, cost cutting, and accountability seen in this accident. The legal system in domestic country performed very poorly in this case. Here, the victims faced a long trial and had to wait for a very long time to get justice. Even after the settlement, the victims found difficulty in getting the settlement amount and the settlement amount that they finally received was much less than what was decided initially. The decision of having trail in domestic country was correct because, the incident happened in domestic subsidiary and the problems of the people could be better understood in the region where incident happened. Every country has their own laws and regulations and companies should follow laws of the country where they are operating. The incident happened in country I and it will be fair if the trial is there only. It is so because now victims could seek justice as per the laws of their own country. The compensation given to people was much less than previously negotiated and fair amount. This incident had long-lasting effects on generations and such misconduct which killed so many people should be dealt harshly. The decision of trail in domestic country was blessing for main company as the punitive damages were not awarded very high in domestic country. The punishment that main company got was big, but not sufficient as the people suffered much more and they were not at fault. The main company was holding majority of shares and so they had controlling rights as well. They could have exercised strict rules and norms, but they seek convenience and downplayed their role.