Corporate Disasters in India: Bhopal, Uphaar and AMRI Hospital

December 2nd, 2014 by Kara in Case Studies

Bhopal

Part II of SPI’s India Series

By: Aparajita Pande

On the morning of December 3, 1984, India witnessed in shock what would soon be considered the world’s greatest industrial disaster. A gas leak at Union Carbide India Limited (UCIL) pesticide plant in Bhopal exposed more than 500,000 people to methyl isocyanate (MIC) and other deadly toxins. [1] A burning sensation in the lungs awoke people in the early hours of the morning. Immense panic ensued, as thousands died from the effects of the gas, and left many others with permanently disabling impairments.[2] The following months brought not only more destruction, but also sparked a furious debate about safety standards in developing countries. Yet, despite calls for stricter regulation and laws mirroring safety models in the western world, India’s corporate landscape looks quite the same as it did thirty years ago on that disastrous day. The Uphaar Cinema fire of 1997, the AMRI Hospital fire of 2011 and the recent building collapse in Chennai are all illustrations of non-existent industry safety standards and weak regulatory and judicial deterrents.

Corporate Disasters In India

1. Union Carbide Gas Leak

The gas leak from the Union Carbide plant in 1984 is a catastrophe that has popularly (and ominously) come to be known as the Bhopal Gas Tragedy. Forty tons of toxic gas accidentally leaked from Union Carbide’s Bhopal plant, which was carried by the wind to far reaching areas of Bhopal. [3] Bhopal residents awoke to clouds of suffocating gas and ran desperately through the dark streets looking for help. The few who could make it arrived in hospitals with severe breathing problems and blurry vision, while many died before they could get any help. [4] The health care system was suddenly inundated with patients, and the authorities scrambled to make sense of what had happened. The doctors in severely affected regions, predominantly low-income areas, were mostly underqualified and did not have the resources to cope with such a disaster.[5] Hospitals and clinics were terribly understaffed and unprepared for the influx of thousands of victims in the span of a few hours. By sunrise, the destruction was abundantly visible. The dead bodies of humans and animals blocked the streets, and a faint scent of the toxic fumes still lingered in the air.

Mass cremations and funerals were done over the next couple of days, and many bodies were dumped into the Narmada River, as Bhopal’s disposal system was stretched to its limit.[6] Close to 200,000 people were being treated in Bhopal’s hospitals, with scant food and medical resources. Thousands of animal carcasses were buried, and the surviving livestock and foliage in the vicinity became barren. [7] Estimates vary on the death toll. Approximately 3,800 people are said to have died immediately, and more than 15,000 died over time from gas-related injuries.[8] Over 500,000 people were ultimately affected by the gas leak, that caused various temporary injuries, as well as permanently damaging ones. Survivors suffered from gastro-intestinal, neurological, and reproductive disorders. The effects of the gas poisoning were seen in newborn babies of pregnant mothers at the time of the incident.[9] Thirty years later, the effects of the poisoning are still visible in the progeny of those affected directly by the gas.[10]

Union Carbide Corporation, the parent company of UCIL based in the United States, immediately tried to dissociate itself from the disaster. UCC originally claimed that since the pesticide plant in Bhopal was wholly managed by its Indian subsidiary UCIL, they were not culpable for the leak.[11] UCC even went as far as arguing that sabotage by former employees was involved – a claim that has been proven false by various independent investigators.[12] Finally, at the insistence of the Indian Supreme Court, UCC accepted responsibility and paid $ 470 million to the Indian government which would be distributed to the victims as settlement. Ultimately, the families of the dead were compensated with approximately $ 2,200. [13]

Uphaar

2. Uphaar Cinema Fire

One of the country’s greatest fire disasters in recent times, the Uphaar fire case is generally acknowledged as having brought radical change in civil compensation regulation in India. A fire in the cinema hall in New Delhi on June 13, 1997 resulted in 59 cinema-goers suffocating to death and more than a 100 people getting injured in the stampede that followed as they tried to escape.[14] The fire was sparked by a transformer blast in an underground parking space beneath the building housing the cinema. It spread through the parking space, which had more parked cars than the officially admissible number, and quickly spread through the building. The movie goers who tried to escape found the exit doors locked and eventually died of asphyxia. [15]

The victims’ families united to form ‘The Association of Victims of Uphaar Fire Tragedy’ (AVUT) demanding punishment for the owners of Uphaar Cinema and filed a civil compensation suit.[16] The subsequent enquiry done by the Central Bureau of Investigation (CBI) and other independent organizations brought to light severe fire code violations in the cinema house which led to the disaster. The absence of a public announcement system, exit lights and emergency lights, and blocked passageways (due to the illegal addition of seats in the hall) and locked doors were found to be key causes of the destruction.[17] The transformer installed and maintained by the Delhi Vidyut Board (DVB) which started the fire also displayed serious code violations, including the absence of an insulator and fire extinguisher. The transformer did not undergo periodic maintenance. [18] The AVUT sought, and won the case against Sushil and Gopal Ansal – the owners of the cinema hall, and the Delhi Vidyut Board.

On November 20, 2007 the final verdict on the case was released and 12 people including the Ansal brothers and officials from the DVB were convicted of causing death by negligence.[19] Gopal and Sushil Ansal were sentenced to two years imprisonment and fined 1000 rupees ($20) each for violating Section 14 of the Cinematography Act. The DVB officials, cinema gatekeeper and former Uphaar managers were sentenced to seven years in prison and paid fines of 5000 rupees each (approximately $100).[20] In 2011 however, the Supreme Court reduced the promised compensation to the victims’ families by nearly half from the original amount of 25 crore rupees (nearly $6.1 million). [21]

3. AMRI Hospital Fire

Despite the history, fire safety is not considered of primary importance in India, and recent events prove the inattention. In the early morning of December 9, 2011, a fire in the basement of the Advanced Medical Reseach Institute (AMRI), a private hospital in Kolkata caused the deaths of 95 people including patients and staff.[22] The fire was allegedly caused by negligence, as medical waste and chemicals inappropriately stored in the basement caught fire after a short circuit in the electric system.[23] A First Information Report (FIR) was filed against the hospital and its license was revoked. The owners of the hospital RS Goenka, SK Todi and other directors were taken into police custody on the charge of culpable homicide.[24] The hospital later announced a compensation of 5 lakh rupees (approximately $8,300) for the kin of each of the deceased. [25]

Not a month after the incident, the Federation of Indian Chambers of Commerce and Industry (FICCI) came to the defense of the arrested AMRI Board members. It urged the West Bengal government to release the directors who were not responsible in “day to day operations”, in order to appease investors. This FICCI action caused great public outrage.[26] The Chief Minister of West Bengal, Mamata Banerjee rejected the request. The city court followed the Chief Minister’s decision with a rejection of the bail plea by the accused. The hospital was partially reopened on December 30, 2013, and became fully functional in July 2014.[27]

Lessons not Learned: The Aftermath of Corporate Negligence

Corporate negligence is a term used when a company breaches legal norms and regulations resulting in damage to a third party. Moreover, the concept of vicarious liability holds liable not only the person who committed the negligent act, but the company itself and its directors. Of all the ‘man-made’ disasters that have occurred in India, corporate negligence has probably caused most of them – and the Bhopal Disaster, the Uphaar fire and AMRI Hospital fire are not exceptions.

In November 1984, most of the safety systems in the Union Carbide plant in Bhopal were not functioning or in poor condition. Additionally, a major issue was the tank of methyl isocyanate contained 42 tons of the chemical – more than safety rules permitted.[28] The general consensus is  the disaster was caused by a combination of badly maintained facilities, an undertrained staff, and a careless attitude towards safety. This mix culminated in procedures that allowed water to enter the MIC tanks creating a reaction that led to the gas leak. According to the operators, the MIC tank pressure gauge had been malfunctioning for roughly a week and had not been repaired.[29] The faulty pressure gauge could have led to the build-up inside the tank that contributed to the intensity of the gas leak.

Faulty equipment aside, the plant’s safety features were nearly non-existent. Those that did exist were in sub-par conditions. Four of the five vent gas scrubbers used to treat MIC were not operational, and the tank alarms had been out of service for over four years before the incident.[30] UCC admitted in their report that most of the available safety features were not operational on the night of the leak. Furthermore, past safety audits revealed approximately 61 hazards in the methyl isocyanate plants in Bhopal and substandard worker performance.[31] While some of the hazards were temporarily fixed in 1982, conditions had deteriorated again by 1984. Investigations also revealed the plant had no emergency action plans to deal with such disasters. UCIL and UCC were clearly guilty of knowingly disregarding potential hazards and chose to skirt legal safety measures to save money, thereby putting their workers’ and nearby residents’ lives in danger.

Since the incident, UCC has attempted to manipulate and withhold scientific information that can be of use to the victims. Thirty years later, the company has not released an official statement disclosing the exact composition of the gas cloud that caused so much devastation that night.[32] Moreover, UCC’s withdrawal of their original statement recommending the use of sodium thiosulfate for treating victims has prompted discussion that it tried to cover up the evidence of hydrogen cyanide in the gas leak.[33] These actions on the part of the UCC display corporate negligence and deliberate malfeasance after the fact.

The fire in the Uphaar cinema hall escalated due to negligence of the cinema owners as well as the DVB officials. Had certain safety procedures been in place, and standard procedures been followed, the fire would not have caused destruction of the magnitude it did. Firstly, the DVB officials who installed the transformer that sparked the fire displayed serious negligence by not insulating the transformer from the surrounding area, and not periodically looking after its maintenance.[34] Secondly, the cinema hall had various safety breaches that led to the deaths of 59 people. The addition of unauthorized seats in the hall to make a few extra bucks caused the pathways to become very narrow, hindering safe exit. Against standard procedures, the exit doors were locked. Serious violations in the Uphaar hall had been reported 14 years prior to the incident, yet none had been corrected.[35]

The AMRI Hospital fire of 2011 again displayed a gross violation of standard safety protocols. The corporate negligence argument holds true for this case because all health-care facilities are responsible for the well-being of their patients and staff. Any hospital that fails to maintain a safe environment, hire competent employees and oversee safety procedures is liable for any damages that occur. There are strict procedures and guidelines about the safe disposal of medical and chemical waste at health care institutions. These procedures were evidently disregarded in AMRI, causing the fire to spread. Had the flammable medical waste been disposed in a safe manner, the fire would not have spread to such magnitude.

Clearly, corporate negligence is a way of life in many Indian companies. The lack of strict laws, a lackluster attitude towards safety, and perhaps most importantly, corruption and cost-cutting actions of companies increase the threat of such disasters occurring. To save money, many companies in India invariably end up compromising on safety. The mild punishments meted out to offenders do little to deter other companies from improving safety.

Punishment and Compensation: Too Little, too Late?

The judicial system rarely acts as a deterrent against crime in India as there is little punishment involved in most cases. Most companies, especially high profile ones, tend to get away with almost no punishment for breaking the law. Ironically the victims suffer the wrath of the judicial system, if unintentionally. The Bhopal Gas Tragedy is the poster child for big companies and powerful people avoiding consequences for their wrong doings in India. Although employees of UCIL were convicted in 2010 of causing death by negligence, this verdict came too late to be considered an appropriate punishment. Moreover, the guilty, including the Chairman of UCIL at the time, were sentenced to a mere two years in prison with a petty fine of $2000 each.[36] After a long wait of 16 years, such a humiliatingly small sentence does not offer justice to the victims and their families. Warren Anderson, the Chairman of the UCC, fled to the United States and refused to come back to India for the case of manslaughter pending against him. He has been free living in his three homes in New York, Connecticut and Florida since Bhopal.[37] Anderson died on September 29, 2014 in a Florida nursing home at the age of 92.

The Uphaar fire case too, is evidence of the inefficiencies of the Indian judicial system. The final verdict convicting the Ansal brothers and the other guilty parties came out 10 years later, in November 2007. The Ansal brothers both received an inadequate prison time of two years.[38]

If unsatisfactory punishments are not humiliating enough for victims, the compensation they are promised (and sometimes never even provided) more than make up for the shortfall. The victims of the Bhopal gas disaster were awarded only $2,200 each as compensation. Although the $470 million UCC paid as compensation was greater than those paid by their Indian counterparts, it was still a meagre sum compared to the $3.3 billion they were previously asked to pay but refused.[39] UCC was insured for, and worth more than US $10 billion at the time, and a payment of $472 million to be divided among more than 500,000 people was shameful.[40] The Ansal brothers and the DVB too, were originally supposed to pay the victims of the Uphaar fire close to $6.1 million collectively, which was eventually halved by the Supreme Court.[41] Obviously, the compensation that eventually reaches the aggrieved is either too little to make any difference, or too late, and sometimes both. While preventing these disasters from happening is another issue, the least that can be done to mitigate the damage and suffering is to fairly and speedily compensate victims.

Policy Recommendations

Stronger Laws

In the past, India witnessed significant judicial rulings relating to disasters. Despite greater transparency now than ever before, lax laws and the outdated penalties are not effective in dealing with disasters. Indian industries therefore, have the near freedom to shirk their corporate responsibilities. The Companies Act listed under the Ministry of Corporate Affairs need to be amended to ensure stricter punishments for acts of corporate negligence. Sharper and well defined laws explicitly stating basic safety standards and norms should be followed.[42] The judicial system however, only comes into play in the aftermath of the incident. Regulatory bodies must have strict rules specifying disaster management guidelines for the industry they govern to prevent disasters.

Better Regulatory Standards for Industries

In the United States, the Securities & Exchange Commission (SEC) makes it compulsory for companies, stock brokers/advisors, exchanges and any other entities involved in the stock market, to comply with basic Disaster Management guidelines to protect the interests of their investors. In contrast, an RTI (Right to Information Act) filed by an independent entity reveals the SEC’s counterpart in India – the Securities and Exchange Board of India (SEBI) – has not issued any circulars or guidelines about Disaster Management for business entities listed in the Stock Exchange.[43] Investors’ true interests lie in the well-being of the firm, and disasters pose a direct threat to those interests. SEBI, on the other hand, is mandated to protect investors, and it is well within reason to expect the regulator to impose disaster management guidelines on firms it oversees. Similarly, regulatory bodies are expected to protect the interests of the entities they control by imposing strict disaster prevention and risk reducing rules and procedures. For instance, the Reserve Bank of India (RBI) must ensure the protection of the interests of banks it regulates, by enforcing disaster prevention rules.

Improved Retributive and Compensatory Justice

Another factor that can deter companies from evading lawful safety practices is stronger and quicker punishment for the guilty. Cases that take decades to resolve do not persuade potential law breakers to mend their ways. In fact, the absence of any real consequence for perpetrators encourages many companies to act dishonestly. India still grapples with a lack of resources that makes it difficult for every case to be dealt with quickly, but there is a need for courts to fast track urgent cases. Corporate disasters fall in this category. Moreover, outdated laws that punish negligent deaths with just two years imprisonment need amendment. Judicial reform is especially difficult to institute on a large scale, especially in a corrupt political system. However, small changes incentivizing speedy judicial action can be implemented with comparative ease. For instance, offering promotions or pay-raises to judges who complete maximum cases can prevent cases from persisting for years. In fact, such incentives can act as precedents for most judicial elements to act swiftly. Small changes, such as reducing adjournment periods for sensitive cases bring about a significant improvement in the state of the judiciary, and act as better deterrents.

Instilling a Culture of Risk Prevention

Finally, if India is to ensure corporate disasters do occur frequently, a culture of risk-prevention needs to be created and nurtured within industries. There are of course, a set of rules and standards by which every company must abide, but disasters can only truly be prevented if individuals managing the company believe in those standards. Change can be brought about through higher level intervention, with company leadership actively working towards promoting a risk-free culture. Periodic safety seminars and policy changes can be implemented. Management commitment to safer practices encourages and influences other employees to follow by example. Safety policies must be conveyed effectively to all employees by eliminating verbose and complex policy documents and delivering regular reminders of risk prevention policies to all workers. Finally, encouraging and rewarding actions that involve self-regulation and prevent risks can help build the foundation of a risk-free culture. Indeed, promoting risk management and inculcating the tenets of corporate social responsibility in company workers through incentives, as opposed to coercion has a better chance of preventing disasters.[44]

 

  1. “Bhopal trial: Eight convicted over India gas disaster”. BBC News. 7 June 2010.
  2. Ibid.
  3. Eckerman, Ingrid (2005). The Bhopal Saga—Causes and Consequences of the World’s Largest Industrial Disaster, Universities Press.
  4. Ibid.
  5. Ibid.
  6. Ibid
  7. Ibid
  8. AK Dubey (21 June 2010). “Bhopal Gas Tragedy: 92% injuries termed “minor””. First14 News
  9. “Madhya Pradesh Government : Bhopal Gas Tragedy Relief and Rehabilitation Department, Bhopal”.
  10. Eckerman, Ingrid (2005). The Bhopal Saga—Causes and Consequences of the World’s Largest Industrial Disaster, Universities Press.
  11. Fortun K. Advocacy after Bhopal. Chicago , University of Chicago Press; 2001.
  12. Ibid
  13. “Incident Response and Settlement”. Bhopal Information Center, UCC.
  14. Upahar Cinema Fire Accident Case- Judgement. Delhi, India: Delhi Trial Court.
  15. Ibid.
  16. Upahar Cinema Fire Accident Case- Judgement. Delhi, India: Delhi Trial Court.
  17. Chakravarty, Sayantas (14 July 1997). “Burning questions – Inquiry committee report exposes management’s callousness behind Uphaar cinema tragedy”. India Today.
  18. Ibid.
  19. Delhi court finds 12 guilty in Uphaar cinema fire Reuters, Tue, November 20, 2007
  20. Ibid
  21. SC reduces compensation to kin of victims Times of India, Thursday, October 13, 2011.
  22. “AMRI hospital fire: 73 killed, several injured”. The Times of India. 9 December 2011.
  23. Firstpost (2011-12-09). “Horror hospital: Fire dept asked AMRI to clear basement in July”. Firstpost.
  24. “AMRI hospital fire: 73 killed, several injured”. The Times of India. 9 December 2011.
  25. Firstpost (2011-12-09). “Horror hospital: Fire dept asked AMRI to clear basement in July”. Firstpost.
  26. “FICCI for release of AMRI Hospital directors – India – DNA”. Dnaindia.com. 2012-01-03
  27. “AMRI Hospital in Dhakuria starts admitting patients once again”. ZEE NEWS. 6 July 2014.
  28. Eckerman, Ingrid (2005). The Bhopal Saga—Causes and Consequences of the World’s Largest Industrial Disaster. India: Universities Press
  29. Ibid.
  30. Ibid.
  31. Ibid.
  32. Review The Union Carbide disaster in Bhopal: a review of health effects, Dhara VR, Dhara R
  33. Ibid.
  34. Transformer had caught fire in the morning too Rediff.com, June 14, 1997.
  35. Uphaar verdict: Very uplifting Business Line, May 8, 2003.
  36. Gupta, Suchandana (10 June 2010). “Chief secretary told me to let Anderson go: Ex- Collector”. The Times of India.
  37. Ibid.
  38. Delhi court finds 12 guilty in Uphaar cinema fire Reuters, Tue, November 20, 2007
  39. Eckerman, Ingrid (2005). The Bhopal Saga—Causes and Consequences of the World’s Largest Industrial Disaster. India: Universities Press.
  40. Ibid
  41. SC reduces compensation to kin of victims Times of India, Thursday, October 13, 2011.
  42. http://indiacode.nic.in/acts-in-pdf/182013.pdf
  43. See Attached Document
  44. http://www.em.gov.au/Documents/Preventing_disaster_by_building_a_risk_prevention_ethnic.pdf

 

 

 

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