The Acid Wash Effect

his is the story of an American MNC, accused of bribing Indian officials and influencing policymakers. It's about The Dow Chemical Company (Dow), the second-largest chemicals maker in the world and an inheritor of our worst industrial accident, the Bhopal gas tragedy. Apart from Dow chairman Andrew Liveris, the dramatis personae include Planning Commission deputy chairman Montek Singh Ahluwalia, Indian ambassador to the US Ronen Sen, and Tata Sons chairman Ratan Tata, one of the country's most powerful and credible businessmen.

In the recent past, they have all interacted several times with each other. Montek heads the Indo-US Economic Dialogue Committee, which aims to help India become a knowledge economy and usher in a second green revolution in agriculture through technological inputs. An important ingredient of the umbrella negotiations between the two nations is the Indo-US CEO Forum, which is chaired by Tata and includes Liveris, one of the 10 American CEOs handpicked and appointed to the forum by US President George Bush. Ronen Sen is obviously diplomatically involved in all these parleys.

Therefore, it was natural for Dow—and Liveris—to use the interactions to distance itself from the cases relating to the poisonous gas leak from the Union Carbide factory in 1984. After Dow took over Union Carbide's global operations in 2001, the former insisted that it should not be dragged into criminal, environmental and financial liabilities for the incident that led to the death of nearly 20,000 people. In official backgrounders, Dow has consistently maintained that it had "never owned nor operated the (Bhopal) plant" and, therefore, it "has no responsibility for Bhopal".

But in recent times, Dow has been asked by the Indian government to cough up money to clean up the toxic wastes—above and below ground—still present at the factory site. Satinath Sarangi, an International Campaign for Justice leader, explains, "The issue of who will pay for cleaning up of the site remains." In May 2005, while responding to a public interest litigation on the issue, the Union ministry of chemicals and fertilisers (MOCF) urged the Madhya Pradesh High Court to order Dow to deposit an initial amount of Rs 100 crore for the purpose. Adds Yashveer Singh, officer-in-charge, Bhopal cell, MOCF, "This is against a final figure that may be around Rs 400-500 crore."

It's now clear why Dow is not keen to get entangled in the Bhopal tragedy case. On November 8, 2006, Liveris shot off a letter to Ronen Sen saying "it was a pleasure to see you again at the US-India CEO Forum in New York on 25 October. I especially appreciated your support in discussing resolution of the Bhopal legacy issue as a tangible, deliverable outcome for the CEO Forum." The letter added that since the Indian government representatives admitted at the meeting that "Dow is not responsible for Bhopal and will not be pursued by the GoI, it will be important to follow through to ensure that concrete, sustained actions are taken that are consistent with these statements".

The Dow chairman suggested a two-pronged action plan for India. One, the central and state governments should use the opportunity that existed to join hands with local CEOs and foundations to 'remediate' (or clean up) the Bhopal site. Two, the Indian leaders needed "to work closely with all ministries of the central government to ensure that their stated position is reflected in any and all of GoI's statements, legal files, and dealings with the Indian court system". In short, Liveris wanted the MOCF to withdraw its court application asking for the Rs 100 crore deposit. (Despite several telephone calls, Outlook could not speak to Sen in Washington.)

Spin The Top
Lobbying is on by Dow Chemicals to force India to absolve it of liabilities in the Bhopal gas case

Montek feels he is just a facilitator, so not in a position to take a stand. But he chairs the Indo-US economic dialogue forum, hence Ratan’s letter to him about Dow’s concerns.

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Liveris is using powerful friends to garner support in the Bhopal gas tragedy case. If he suceeds, it’ll help in Dow’s bribery case too.

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Ronen is in the loop as he is involved in the Indo-US parleys and is also the diplomatic link for US firms, which have India-specific issues.

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Ratan asked for Montek’s help in the Dow case. He’s also offered to find the funds to clean up the toxic waste at the Bhopal site. If the idea is accepted, it’ll work to Dow’s advantage.

Interestingly, while responding to an application filed by Bhopal's International Campaign for Justice under RTIA, Naseem Ahmad, APIO, Planning Commission, admitted that the Dow chairman had met Montek twice. In a letter (March 14, '07), Ahmad wrote that "Liveris had met Ahluwalia at the Indo-US CEO Forum in New York (25 October) and subsequently he had also paid Ahluwalia a courtesy call at the 2007 World Economic Forum meeting in Davos." But there are no indications whether the Bhopal gas tragedy cases came up during these discussions.

Less than three weeks after Liveris' letter to Sen, Ratan Tata took a seemingly pro-Dow stance. In a letter to Montek, the Tata Group chairman referred to the contents of the Liveris-Sen exchange. He added that the withdrawal of the MOCF court application "is obviously a key aspect and I wanted your assessment as to whether this is possible". Taking Liveris' arguments forward, Tata wrote that his offer "to lead and find funding for the remediation of the site...still stands. Perhaps it could break the deadlock?"

Written In...

Ratan Tata’s letter to Montek offering to find funds for the clean-up

And Liveris’ Nov 8, ’06, missive thanking Ronen for support on the Bhopal matter:

In fact, the Tata group has been serious about its cleaning-up initiatives. On July 10, '06, Tata wrote to finance minister P. Chidambaram that "remediation of the gas tragedy site be considered because of the likelihood of contamination of the soil and groundwater in the area, which would endanger the health and lives of the people of Bhopal". Talking about a local remediation fund, Tata added that "should the government and the courts endorse such a line of action, an effort could be made to bring (together) like-minded corporate houses to contribute to such a fund. These suggestions are totally independent of the issues being addressed in the courts."

This brings us to several crucial questions. Is the Tata group trying to bail out Dow? Are legal liabilities the only reason for Dow to lobby so aggressively? Why is the Tata group so intent in pursuing site remediation? Finally, is Dow's case being pushed by powerful Indian officials like Montek in any form whatsoever?

The latter dismisses the last question out of hand. "Ratan (Tata) wrote to me about Dow in my capacity as the chair of the Indo-US Economic Dialogue Committee and I have forwarded his request to the MOCF. I can only play the role of a facilitator here as neither am I an expert nor am I authorised to make any such recommendations," Montek told Outlook in a telephonic conversation.

His take on the Tata-Dow connection is simple. "I cannot with all certainty say what is the exact motivation that could have prompted Ratan to take this course. But his role as the chair of the Indo-US CEO Forum could have something to do with it as Liveris is also one of the CEOs representing American business interests in the forum," explains Montek. A statement issued by the Tata group said that its suggestions to Montek or Chidambaram were no different from "any public-spirited initiative to clean a polluted river or a site damaged by some abnormal phenomenon".

here is a risk that health issues may emerge, which impact not only the unfortunate victims of the Bhopal tragedy but also those citizens of Bhopal who were not affected by the tragedy but who may be impacted by possible contamination of underground water. It is surely imperative that some initiative be undertaken to clean the site, which has remained neglected for the last 22 years," adds the Tata Group statement. Agrees Montek, "I don't think that Ratan's offer to front-end the remediation exercise at the Union Carbide plant should be misconstrued and seen negatively."

But the fact is that if the Tata offer is accepted, it will benefit Dow. Legally, it will be construed as a signal that the American firm has nothing to do with the Union Carbide cases. And it will force the MOCF to withdraw its application asking Dow for the Rs 100 crore deposit. As Liveris said in his letter to Sen, "Certainly a withdrawal of the (MOCF) application would be a positive, tangible demonstration that the GoI means what it says about Dow's lack of responsibility in the (Bhopal) matter. "

If Dow is absolved of the legal liabilities, it will be in a better position to pursue its strategy to invest $1 billion in India over the next few years. Recently, it received a positive indicator when the industry ministry, after a green signal from the law ministry, approved Dow's collaboration with Reliance Industries. It meant that India had not blacklisted Dow. Clarifies Montek, "Yes, Dow is viewed as a strategic investor. But that will not have any bearing on its legal liabilities and I have not responded to any such requests that have come my way. I believe justice must be meted out in this case given the gravity of the crime... ."

Finally, the Bhopal fallout may impact the investigations in the Dow bribery case too. On February 13, '07, the American firm reached a settlement with the US Securities Exchange Commission (SEC). It agreed to pay a penalty of $3,25,000 for allegedly bribing Indian central and state officials to secure faster registration and approval for three molecular products in the 1996-2001 period. Dow had deliberately falsified records to hide the $1,00,000 payments.

Union agriculture minister Sharad Pawar has stated that India has ordered a CBI probe and asked the authorities to re-examine the clearances of the three products. When asked whether Dow would be blacklisted, Pawar said that "after investigations, definitely action will be taken against the company".

However, the argument for blacklisting Dow in the bribery case may be diluted if it gets a reprieve in the Carbide case. Its supporters will point out that Bhopal is a much bigger issue and, therefore, India should be more lenient in the bribery case too. And if Dow is neither blacklisted nor asked to pay for the Bhopal remediation, it will enable it to quietly pursue its India-specific strategy.