[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.