Wednesday, June 09, 2010

Bhopal verdict: Corporate irresponsibility does not cost much in India

It took a quarter of a century to get the first court verdict in the the Bhopal gas disaster case, the worst industrial disaster in history that killed thousands of people. But the verdict was instantly and spontaneously rejected by everyone.

A local magistrate court in Bhopal convicted seven former executives of Union Carbide India Ltd after a trial that lasted 25 years. The convicts include now 85 year old Keshub Mahindra, former Union Carbide India chairman and the patriarch of India's one of the most influential business families that owns automobile maker Mahindra & Mahindra. He is currently the chairman of Mahindra & Mahindra. One of the guilty has already died.

But what has angered public is the lightness of punishment meted out to the convicts. The judgement awards two years imprisonment and Rs. 100,000 ($2000) fine each. All convicted executives were immediately granted bail so that they can file appeals in a higher court (sessions court) against the judgement. The appeal may take another quarter of a century before any outcome.

Even if the higher court finally upholds the lower court's judgement, the convicts will still be able to file two more appeals in the high court and then in the supreme court. Should we say that these appeals may take another quarter or half of a century before the appeals are exhausted?

There is a strong possibility that eventually none of the convicts will serve time in jail or not even pay a single cent in fine.

The current court order has also fined the company, which does not exist anymore, a meagre sum of Rs. 500,000 (about $10,000) for the disaster that killed over 4000 people immediately and over 20,000 people in the aftermath.

The victims' lawyer commented: "The worst industrial disaster in the history has been reduced to a traffic accident."

The case has once again highlighted the serious flaws in India's already notorious legal system, corrupt political establishment and rotten bureaucracy.

The judgement sends a wrong signal to the business community in India and to multinationals operating in India. In a way, it implies that even if a company's irresponsible actions kill thousands of people, it will take 25 years to get the first verdict out and hopefully another 50 years for appeals. It also signals that the punishment finally may not be any significant. The judgement then is in no way a deterrent judgement.

The court found these executives guilty for causing death by negligence, culpable homicide not amounting to murder and gross negligence under the Indian Penal Code. These sections of IPC do not warrant severe punishment. So the prosecution failed to bring more serious charges against the company executives. There is a widely held suspicion that the charges were diluted on instructions from senior politicians over the years.

Nevertheless, the judgement is a key milestone in a way. It is the first time a court has found the company and its executives guilty in the case. Union Carbide chairman Warren Anderson who has avoided appearing in Indian courts would perhaps have been found guilty too. India's half-hearted efforts to get him extradited from US have failed. The court has announced him an absconder and his arrest warrants have been gathering dust. There are other court cases pending where he finally may be convicted ex-parte.

The public outrage over the judgement which many called a "mockery" may however force the government to take some tough measures to hold rogue companies accountable. This can also potentially trigger a closer scrutiny of companies' behaviour in India where corporate responsibility does not exist on the agenda.

The backlash will also make it more difficult for the ruling politicians who are desperately trying to pass a nuclear disaster liability bill in parliament that aims at putting a cap on the maximum liability for nuclear plant operators and their equipment suppliers in case of a disaster. The international nuclear lobby has been pushing for such legislation before they start selling equipment to India or bid for nuclear plants. There is already a strong NGO campaign in India against such attempts.

Nervous politicians are already trying to play to the gallery. Even the law minister has said he is disappointed by the judgement. The environmental minister has said he wants the first of the proposed green courts to be set up in Bhopal.

But the government has acted with greater irresponsibility than Union Carbide over the past 25 years. Union Carbide paid $470 million to the Indian government in a settlement to cover compensation to victims. Only a fraction of that money has been disbursed so far. Victims' families and survivors complain that government officials want bribes to entertain their claims. As a result, a large number of survivors who suffer from diseases resulting from the exposure to the poisonous gas leak continue to rely on relief and treatment provided by NGOs.

See a comprehensive story on the Bhopal Gas Disaster that we published in the current issue of Ethical Corporation magazine.

And if you like, listen to my brief interview on the Bhopal judgement on Radio Australia here.

No comments: