Bhopal disaster’s perpetrators used ‘dummy’ firms to keep biz on
New Delhi – Nearly three years after toxic gases from a Union Carbide Corporation’s (UCC) factory killed an estimated 15,000 people and left more than half a million seriously ill in the Indian city of Bhopal, a chemical trading firm – Visa Petrochemicals Private Limited – was incorporated in Mumbai.
Over the next 14 years, Visa Petrochemicals became a linchpin in an elaborate plan by American chemical giant UCC to discreetly sell its products in India while it evaded criminal trial for spewing lethal gases that killed the residents of Bhopal on the midnight of December 2, 1984. A Bhopal court had declared UCC’s then-CEO Warren Anderson a fugitive and ordered that the properties and products of UCC and its subsidiaries, all of which were proclaimed offenders and absconders in India for not appearing in the criminal trial against them, be seized.
Internal company records, accessed by The Reporters’ Collective (TRC) for Al Jazeera, now reveal that UCC discreetly sold its products to several firms owned by the federal and state governments, and some large private corporations. Among them was a buyer from ground zero: a firm owned by the government of Madhya Pradesh, the state whose capital Bhopal saw one of the world’s worst industrial disasters. The firm was a joint venture partner in a cable company that bought UCC products.
To create a discreet backdoor into India where the public saw it as the devil of Bhopal and courts were going after it, UCC and its associates floated three firms, one each in India, the United States and Singapore. In its internal records, Carbide employees called them “front” and “dummy” companies. At times, they referred to these companies as their “extended arms”. These firms took orders from Indian customers on UCC’s behalf, relabelled its products, routed them through multiple ports and supplied them to customers. The company sold materials that went into the making of household products ranging from telephone cables to paints.
UCC internally admitted that the dummy companies were “a legal requirement” to help it keep its “distance from India”. This admission was made in an internal business plan for UCC to keep selling its goods in India even after the Indian court had ordered the seizure of all its moveable and immovable assets in the country. The court did not explicitly declare the future sale of UCC products illegal. But it had ordered that all its assets be seized, including products and goods meant for sale.
The government companies that traded with UCC knew about this backdoor arrangement, as UCC privately informed them when its front company participated in tenders.
This backdoor arrangement continued until 2002, a year after American giant Dow Chemical bought all assets of Carbide for $9.3bn. The period saw Union governments led by both the main Indian parties, Congress and Bharatiya Janata Party (BJP).
Between 1995 and 2000, the company sold more than 55,800 tonnes of wires and cables in the Indian market, according to records. In 1999 alone, the company sold products worth $24m through this arrangement.
While media in India had reported that Dow relabelled UCC’s products and sold them in the country through a front company for a year, the group’s elaborate discreet channels – the network of front and dummy companies – and information on UCC customers, including government corporations that knowingly bought products through this shadowy channel, had been buried so far. Information on the people behind the dummy companies and their workings – active for almost 14 years – is being published for the first time.
The fountainhead of these revelatory records are documents submitted in a US court hearing when Dow, UCC and its dummy companies got into litigation over the pricing of products in the early 2000s and submitted evidence of their relationships.
The collective sent detailed queries to UCC and Dow but did not receive a response.
It was the death of a technician from phosgene poisoning on a cold Christmas eve in 1981 that first foretold an impending catastrophe and revealed cracks in the UCC factory in Bhopal. UCC’s global profits had plummeted 90 percent in the three years preceding the disaster. Its India unit could sell less than half its production capacity of Sevin, a “miracle insecticide” born on the banks of the Hudson and reborn in India on the sands of Narmada.
Layoffs took hold, and cost-cutting affected safety and maintenance protocols in the Bhopal plant. On the night of the disaster, the safety valves and alarm systems of the tank that stored the lethal chemicals, including the lethal methyl isocyanate used in the production of Sevin, did not work. Some were dysfunctional, others were turned off since malfunctioning alarms would repeatedly go off in the leaky plant.
“I remember that night,” said 60-year-old Leelabai, who lives in Bhopal’s JP Nagar, located near the disaster site. At a distance, overlooking her one-room house is the metallic carcass of the factory.
“I remember it like yesterday. Our eyes burned, and people began vomiting. There was a stampede,” she said, tearing up. A deadly fog had filled nearby slums. Death struck in seconds, and no one was prepared.
Leelabai and her husband were the only survivors in the family. Her three children died over the years as their health debilitated. “Our lives are worse than death,” she said.
“None of us knew they had chemicals this dangerous,” Savitribai, another resident of JP Nagar, told TRC.
More than 2,000 people died over the following days after breathing a cocktail of deadly fumes, one being hydrocyanic acid, a chemical that causes a series of reactions leading to loss of blood flow to the brain and resulting in immediate death.
As per estimates by survivors’ groups, 13,000 people died over the next few years from damaged lungs, brains, kidneys, and nervous and immune systems. Hundreds were disabled for life. The poisonous chemicals polluted (PDF) Bhopal’s soil and water for decades, causing a perpetual health tragedy for residents.
Three days after the disaster, when Anderson – still one of the West’s most powerful industrial leaders – visited India, he was placed under house arrest in UCC’s luxury guesthouse over charges including culpable homicide, causing death by negligence. Three hours later, Anderson, whose factory poisoned a city, was released on a bail of 25,000 rupees (about $300 at the current exchange rate). Within 24 hours, he was mysteriously flown out of Bhopal in state Chief Minister Arjun Singh’s jet and then to the US in the company’s plane. Anderson never returned. He never faced trial. And died peacefully in 2014, aged 92, on US soil where he rose from a salesman in UCC to its CEO.
UCC was still the US’s third-largest chemical manufacturer and 37th among the top 50 US companies in 1984. The Bhopal accident was bad for business. It was a public relations nightmare and would run up several millions in legal costs. UCC had to find a way to continue trade. Who would help the company move past this?
For up to two years after the disaster, UCC did its business in India as usual despite protests and outrage from survivors and activists. In December 1987, India’s Central Bureau of Investigation (CBI) filed charges against Anderson, UCC and its subsidiary that oversaw Asia operations, Union Carbide Eastern, which was incorporated in Delaware, US. By then, UCC had set in motion a series of events that would help retain its grip on the Indian market while keeping a safe distance from courts. The first among them was the birth of Visa Petrochemical Limited.
The company was a “spin off from UCIL [Union Carbide India Limited]”, said Visa Petrochemical’s Annual Business Plans, submitted to the UCC in 1994. Ravi Muthukrishnan, the then India country manager of Dow Chemical, noted in an email to his bosses in 2001 that Visa Petrochemical was formed by former UCC employees engaged in “international trade” after the “government advised them to exit totally out of India”. He also noted that Visa, whose name was changed to MegaVisa Marketing and Solutions in 1999, was UCC’s “extended arm” into India.
UCC signed an agreement with Visa Petrochemical on 14 November 1987, 15 days before the CBI filed charges against the former, and designated the new company its “non-exclusive distributor in India”. The arrangement allowed UCC to route its products through Visa. Under the contract, Visa’s “duty” was to “canvas and promote sales” of UCC products. It was to do all this while “representing” UCC. The latter’s business could now proceed without the taint of its past.
In the next few years, UCC incorporated a new subsidiary – Carbide Asia Pacific – in Delaware, which slowly took over the operations of Carbide Eastern, an accused party in the Bhopal case. This ensured UCC’s Asia businesses, including the agreement with Visa Petrochemicals in India, were carried out by a firm not named in the case.
In 1989, UCC paid $470m as compensation for the disaster in response to the civil lawsuit, which the survivors’ representatives said was a meagre $500 for each victim, and one-sixth of the compensation initially claimed by the government. But the government accepted the proposal without consulting the victims.
In 1992, after all the foreign parties who were accused evaded Indian courts in the criminal lawsuit, Bhopal’s chief judicial magistrate seized all of UCC’s moveable and immovable properties in India. It did so after noting: “The accused Union Carbide USA wants to evade the prosecution going on in this court by transferring its properties in India by any means.” The magistrate labelled Anderson, UCC (parent company based in the US) and Union Carbide Eastern as “absconders”.
For UCC, continuing trade now would be tougher and more complicated than before. UCC and its affiliates had to come up with a new plan.
In February 1994, a young businessman called Ajay Mittal from Mumbai met UCC officials in Danbury to discuss the shipment of its products. The officials found the meeting with Mittal “excellent” and “frank”, as per a fax sent by UCC officials to Mittal a day after their meeting, a copy of which was submitted in court documents.
Mittal, an American business school graduate, is an heir to the realty business family Mittal Group and currently owns and runs Arshiya Limited, a logistics and supply chain firm. A 2001 Dow India internal report described his family as a “fairly…