45% 11:04 pm BUSINE SS E THICS ASSIGNMENT # Financial Compensation for the Victims of Bhopal On December 3, 1984, some 2,000 people were killed and 200,000 were injured when a cloud of poisonous methyl isocya- nate gas was accidentally released from the Union Carbide Com- pany plant in Bhopal, India. The methyl isocyanate was used to manufacture Sevin, a plant pesticide that was distributed widely throughout India for use on that country's corn, rice, soybean, cotton, and alfalfa crops. It was said that the use of Sevin in- creased the harvest of the food crops by over 10 percent, enough to feed 70 million people. The accident apparently occurred when between 120 and 240 gallons of water were introduced into a tank containing 90,000 pounds of methyl isocyanate.' The tank also contained approx- imately 3,000 pounds of chloroform, which is used as a solvent in the manufacture of methyl isocyanate; the two chemicals should have been separated before storage, but that had not been done for some time in the operating process at Bhopal. The water reacted exothermically (producing heat) with the chłoroform, generating chlorine ions, which led to corrosion of the tank walls, and the iron oxide from the corrosion in turn re- acted exothermically with the methyl isocyanate. The increase in heat and pressure was rapid but unnoticed because the pressure gauge on the tank had been inoperable for four months and the operators in the control room, monitoring a remote temperature gauge, were accustomed to higher-than-specified heat levels (25°C rather than the 0°C in the operating instructions) due to the continuał presence of the chloroform and some water vapor in the tank. The refrigeration unit built to cool the storage tank had been disconnected six months previously. The "scrubber," a safety device to neutralize the methyl isocyanate with caustic soda, had been under repair since June. An operator, alarmed by the suddenly increasing temperature, attempted to cool the tank by spraying it with water, but by then the reaction was unstoppable, at a probable 200°C. The rupture disc (a steel plate in the line to prevent accidental operation of the safety valve) broke, the safety valve opened (just before, it is assumed, the tank would have 60 CHAPTER 2/MANAGER II 45% 11:04 pm CASES 59 burst), and over half the 45 tons of methyl isocyanate in storage were discharged into the air. Following the accident, Union Carbide officials in the United States denied strongly that their firm was responsible for the trag- edy. They made the following three statements in support of that position: 1. The Bhopal plant was 50.9 percent owned by the Ameri- can firm, but the parent corporation had been able to exercise very little control. All managerial and technical personnel were citizens of India at the insistence of the Indian government. No Americans were permanently employed at the plant. Safety warn- ings from visiting American inspectors about the Sevin manufac- turing process had been ignored. 2. Five automatic safety devices that had originally been in- stalled as part of the Sevin manufacturing process had, by the time of the accident, been either replaced by manual safety methods to increase employment, shut down for repairs, or dis- connected as part of a cost-reduction program. The automatic temperature and pressure warning signals had been removed soon after construction. The repairs on the automatic scrubber unit had extended over six months. The refrigeration unit had never been used to cool the tank and had been inoperable for over a year. 3. The Bhopal plant had been built in partnership with the Indian government to increase employment in that country. Union Carbide would have preferred to make Sevin in the United States and ship it to India for distribution and sale, because the insec- ticide could be made less expensively in the United States due to substantial economies of scale in the manufacturing process. Warren Anderson, chairman of Union Carbide, stated that while he believed that the American company was not legally lia- ble for the tragedy due to the three points above, it was still "mor- ally" responsible, and he suggested that the firm should pay prompt financial compensation to those killed and injured in the accident. Q1 Class Assignment. Assume that the question of legal liabili the accident at Bhopal never will be settled, due to diff in the law between the two countries and the diffic 2/MANAGERIAL ETHICS AND MICROECONOMIC THEORY ....... . II