Ethics & Entrepreneurship

1. BHOPAL GAS TRAGEDY
By Pinkey Gupta
CIMS B-SCHOOL

2. Introduction:-
 In the early morning hours of December 3rd ,1984 a poisonous grey cloud
(40 tons of toxic gas) from UCIL’s pesticide plant at Bhopal spread
through out the city of 120k residing near plant and 8 lac people in city.
Water carrying catalytic material had entered methyl Isocyanate (MIC)
storage tank no. 610. Dead body of humans and animals blocked the
street, leaves turned black, the smell of burning chilly peppers lingered
in the air. At least 2k people died immediately, although local estimation
was 10k and 30k to 50k people are too ill to return to their job.

3. Root causes of the Disaster
 The pesticide factory was built in the midst of densely populated
settlement.
 The MIC plant was not designed to handle a runaway reaction.
 MIC in the tank was filled to 87% of its capacity while the
maximum permissible was 50%.
 MIC was not stored at 0 degree centigrade as prescribed & the
refrigeration & cooling system had been shut down 5 months
before the disaster, as per the UCC’s global economy drive.
 As part of UCC’s drive to cut cost, the work force in the Bhopal
factory was brought down by half 1980 to 1984. the maintenance
supervisor position had been eliminated & there was no
maintenance supervisor. Even the period of safety training of
worker in the MIC plant was brought down from 6 months to 15
days.
 A/c to the American engineers report who surveyed the plant in
May 1982, that the surrounding of the site as being ‘strewn with
oily old drums, used piping, pools of used oil & chemical waste
likely to cause fire’. It also reported leaks of Phosgene, MIC &
chloroform, ruptures in pipework & sealed joints, absence of any
earth wire on 1 of the 3 MIC tanks & poor adjustment of certain
devises where excessive pressure could lead to water entering the
circuits.

4. Possibility of avoiding the disaster.
 Location of the factory should be at least 1:200 distance from residential area.
 The hard core negligence is done in the proper maintenance of the factory and its equipment even
after the inspection made and report submitted by the American engineers to cut the cost of
production.
 Being several accidents occurred inside the factory, the top management is changing the managing
people instead of changing the equipment in factory. So, an conscious management can avoid the
date.
 Production is done more than its handling capacity (output > input).
 The refrigeration and cooling system operation can cause the harm less but the blast occurred due to
mismanagement of oily old drums which can be avoided by proper management of disposals.
 The employee to workforce ratio is half to cut the cost with less experienced to handled the
situation. Proper ratio of workforce employee with skills and safety training could avoid the date.

5. Legal Action.
 In the context of the Bhopal gas tragedy in 1984, the Indian penal code (IPC) was the only
relevant law specifically criminal liability for such incidents.
 The CBI acting on behalf of the victim, filed charges against the accused under section 304 of
the IPC section 304 deals with punishment for culpable homicide and requires of intension of
causing death. In 1991, the government of India negotiated a deal with UCC on behalf of the
victims which stipulated, that legal jurisdiction was restricted in India.
 By the Judgement date September 13, 1996. The supreme Court held that there was no
material to show that “Any of the accused had a knowledge that by operating the plant on that
fateful night where at such dangerous and highly volatile substances like MIC was stored. They
had the knowledge that by this very act itself they were likely to cause death of any human
being”. The Supreme Court thus directed that the changes be reframed under section 304A of
the IPC (causing death by negligence).
 UCC paid $417 Million in compensation and accepted moral responsibility. In return, all
pending Legal action against the company was dropped.

6. Impact of disaster on society & community at large.
 By the end of October 2003, according to the Bhopal Gas Tragedy Relief and Rehabilitation
Department, compensation had been awarded to 554,895 people for injuries received and
15,310 survivors of those killed. The average amount to families of the dead was $2,200 [9].
 Major organs exposed were the eyes, respiratory tract, and skin. Although mortality was initially
high, it declined over time, but remained elevated among the most severely exposed population.
 Studies conducted during the early recovery period focused primarily on ocular and respiratory
systems. Major findings included acute irritant effects on the eyes and respiratory tract.
 In follow-up studies, investigators observed persistent irritant effects, including ocular lesions
and respiratory impairment. Studies conducted during the late recovery period focused on
various systemic health endpoints.
 Significant neurological, reproductive, neurobehavioral, and psychological effects were also
observed. Early and late recovery period studies suffered from several clinical and
epidemiological limitations, including study design, bias, and exposure classification.

7. Ethics and Values.
 The Bhopal case typifies the complexity, mixed motives, and potential for benefit or
harm characteristic of contemporary business activity. Merely reciting the facts or
reviewing the legal decisions will fail to tell us what values have priority and how we
might approach difficult issues.
 In the face of the intricacy of the various strands of thinking, it is critical that we can step
back and work out a normative response, that is, what we should do.
 In this case, the Indian government had made value-laden decisions about the
desirability of foreign investment, and Union Carbide was looking to realize a profit for its
shareholders.
 The company’s actions reveal certain assumptions about safety and the environment, at
least in the Indian context, because UCC appears to have applied less stringent safety
standards than at their American plants. Therefore it will be valuable at the outset to
seriously examine the conceptual foundations underlying business and how they are put
into practice.

8. Ethics and Values
 A business may lay off workers without notice because it believes that employees who
know they will soon be out of a job will slack off and lower the morale of the firm.
However, we might question the empirical claims involved and whether they will have the
result management suspects.
 We are often misled by clever rhetoric or invalid arguments, and one of the philosopher’s
tasks is to sort out sound reasoning about any particular claim. In this case, the employer
is making a causal claim about human behaviour and comes to a conclusion primarily
based on the effect on company efficiency. That is, a slacking worker will lower
profitability, and profitability is the thing that matters most.
 Perhaps there are moral reasons to treat people decently that are independent of the
bottom line. If layoffs are imminent, perhaps it might be appropriate to give employees
some time to adjust and make plans rather than escorting them to the door on a Friday
afternoon. Thus we need to look carefully at both the assumptions at work in an
argument and at the way these assumptions are linked to come to a conclusion.

9. Conclusion
 The rewards for prudential actions may not come soon or be measured easily, but that may not
matter as long as the person involved believes in the reward system.
 Hence a faithful believer might resist temptation and do charitable works because of a promise of
eternal salvation, even though there is no evidence that will occur; as a practical matter the
evidence is secondary to the individual’s belief.
 We might say business dealings are analogous, because despite the difficulty in proving that a
business will benefit by doing good works, it may become self-verifying if everyone involved in
commerce adopts the belief as a matter of course.
 A further confound is that companies that do a lot of good works and do well in the market – such
as Johnson & Johnson, Merck, or Dayton-Hudson –tend to be well established, stable, and
profitable anyway. This is not to deny that firms that act morally may do well in the marketplace,
especially over time.

10. A NEW JOURNEY STARTED FOR US WITH
NEW RULE’S IN BUSINESS …