Dow Chemicals, which
has been insisting that it was not liable to clean up the toxic dirt
left by its Indian subsidiary Union Carbide, does not seem to have any
support for its position from the Union law ministry.
An internal note obtained by activists from the Prime Minister's Office
(PMO) and dated February 2 this year says that the Ministry of Law
believes that "irrespective of the manner in which Union Carbide has
merged or has been acquired by Dow, if there is any legal liability it
would have to be borne by Dow Chemicals."
The note also puts a question mark on the prospects for future
investments by US-based Dow in India.
The note referring to comments of the law ministry in a Cabinet note
prepared by the department of chemicals on Dow's legal liabilities in
Bhopal says: "It has categorically stated that in view of the pendency
of the writ petition in Madhya Pradesh High Court and the legal
position stated above, it cannot be said that the investment proposed
to be made by Dow Chemicals will be immune from the orders of the
court."
This is with reference to the proposal of Dow Chemicals to invest $1
billion in India. This document contradicts Dow's stated position to
its shareholders, and clearly outlines the risks faced by Dow
Chemical's investments in India. The document was unearthed on May 8,
2008, through Right to Information from the PMO by survivors
organisations of 1984 Union Carbide disaster in Bhopal.
In 2005, Dow began intense lobbying for legal immunity against
Carbide's liabilities prompted by a May 2005 application by the
Ministry of Chemicals in a case relating to toxic waste clean-up in the
Madhya Pradesh High Court.
The application sought Rs 100 crore ($25 million) from Dow towards
clean-up costs. Dow claims that its 100 per cent subsidiary, Union
Carbide, is a separate legal entity with its own system of liability
management, and that Dow has inherited only assets and not Carbide's
liabilities.
Responding to requests from Dow and its allies, the prime minister
instructed the chemicals ministry to prepare a note on Dow's legal
liabilities in consultation with the law ministry. While the actual
note prepared by chemical and law ministries is not available, the
internal briefing note prepared by PMO director Shaleen Kabra dismisses
any possibility for immunity.
Bhopal activists said they will bring the law ministry's opinion to the
notice of Dow shareholders at the company's annual general meeting at
Midland, Michigan, on May 15. The company is keeping its shareholders
in the dark about its business in India, said Rachna Dhingra of the
International Campaign for Justice in Bhopal, an organisation which has
been protesting in Delhi since last month seeking justice for victims
of the 1984 Bhopal tragedy.
Giving a background for the preparation of the Cabinet note mentioned
above, the note marked "internal" says: Department of chemicals and
petrochemicals sent a Cabinet note on legal liabilities of Dow
Chemicals for environmental remediation of plant site.
The matter was referred to the department on the basis of deliberations
of Trade and Economic Relations Committee in the PMO in which it was
noted that Dow Chemicals was proposing an investment of $1 billion in
India and was seeking an assurance from India that their executives
should be able to visit India freely to take care of their business
interests.
Referring to these, the note says: At the same time, the ministry has
mentioned that the company's executives have been moving around in the
country freely and taking care of their business interests.
According to the note, the department of chemicals has suggested that
the orders of the high court be awaited since the matter is sub-judice.
A Dow India spokesperson, when asked to comment, said reaction was
awaited from the main Dow Chemicals office in the US. The note obtained
from the PMO has comments from Prime Minister Manmohan Singh saying
that while his office need not give any comments on the Cabinet note,
it should be sent to industry ministry, finance ministry and Planning
Commission for their comments.
Commerce Minister Kamal Nath, Finance Minister P Chidambaram and
Planning Commission Deputy Chairman Montek Singh Ahluwalia had earlier
written letters to the PMO recommending the case of Dow Chemicals for
consideration with reference to its legal liabilities in the Bhopal
case.
These documents were also obtained last year through a Right to
Information application by activists.
Said Satinath Sarangi of Bhopal Group for Information and Action: "The
Industry and Finance Ministers and Planning Commission's Montek Singh
Ahluwalia are the ones to watch out because they endorsed Dow's demand
for immunity in 2006."
The revelations made today could have ramifications on the joint
venture agreement between Dow Chemicals and Gujarat Alkalies and
Chemicals Ltd last April to set up a 200,000-tonnes-per-annum
chloromethanes factory in Dahej, Gujarat.
This is Dow's first major investment announcement since its acquisition
of Carbide. Dow has shied away from large investments in India, both
because of its perceived risks and the hostile reaction to its entry
from various quarters.
In January this year, Dow Chemical's attempts to construct a Rs
300-crore R&D facility in Chakan, Pune, was stalled after villagers
dug up approach roads to the construction site. The villagers have
forced the government to rethink the permission given for Dow's
proposal, says Sarangi.
Meanwhile, Dow's attempts to forge alliances with the Indian Institutes
of Technology have also run into rough weather. Citing Dow's
mishandling of the Bhopal issues as a reason, students and teachers at
six prestigious engineering institutes around the country have joined
hands to bar the company from any truck with IIT.
Responding to queries, Dow Chemicals spokesperson Scot Wheeler recently
told to Business Standard that the company was excited about doing
business in India while maintaining that the Carbide site was owned and
maintained by the state government and it was responsible for cleaning
it.
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