The Bhopal Medical Appeal rolls out campaign to protest Dow Chemical and DuPont Merger

The Bhopal Medical Appeal has rolled out a campaign to protest the forthcoming Dow Chemical and DuPont Merger.


On the night of December 2nd, 1984, a Union Carbide plant in Bhopal, India, began leaking 27 tons of the deadly gas methyl isocyanate. None of the six safety systems designed to contain such a leak were operational, allowing the gas to spread throughout the city of Bhopal. Half a million people were exposed to the gas and 25,000 have died to date as a result of their exposure. More than 150,000 people still suffer from ailments caused by the accident and the subsequent pollution at the plant site.

These ailments include blindness, extreme difficulty in breathing and gynaecological disorders. The site has never been properly cleaned up and it continues to poison the residents of Bhopal. In 1999, local groundwater and well-water testing near the site of the accident revealed mercury at levels between 20,000 and 6 million times those expected. Cancer, brain-damage and birth-defect-causing chemicals were found in the water; trichloroethene, a chemical that has been shown to impair foetal development, was found at levels 50 times higher than EPA safety limits.Testing published in a 2002 report revealed poisons such as 1,3,5 trichlorobenzene, dichloromethane, chloroform, lead and mercury in the breast milk of nursing women . In 2001, Michigan-based chemical corporation Dow Chemical purchased Union Carbide, thereby acquiring its assets and liabilities. However Dow Chemical has steadfastly refused to clean up the site, provide safe drinking water, compensate the victims or disclose the composition of the gas leak, information that doctors could use to properly treat the victims.

The first Bhopal Medical Appeal, appeared in The Guardian and The Observer on the 10th anniversary of the disaster, in December 1994, producing a massively generous response.

The first project, with the funds generated from this ad, was to open a clinic in Bhopal and the Sambhavna Trust was formed to run it. Working together, they were able to buy a building and the preliminary work, including purchasing a suitable building and recruiting the doctors and staff, took just over a year. The Sambhavna Trust Clinic opened its doors in 1996.

Dow Chemical nowadays

Dow Chemical completed a merger with DuPont on 31st August 2017, to create the world’s largest chemical company.

This is despite concerns being raised over apparent attempts, by both companies, to conceal vast liabilities connected with their respective contamination legacies.

After announcing the merger, both companies withheld critical information from shareholders regarding Bhopal liabilities pending against Dow subsidiary Union Carbide.

DowDuPont and Dow’s Bhopal Legacy

Just as Dow Chemical’s $9 billion purchase of Union Carbide made it responsible for Bhopal, so the merger of Dow and DuPont places the new DowDupont directly in the centre of the single most iconic corporate social responsibility issue of the 20th century.

For over three decades, Bhopal’s survivors – some of the poorest people on earth – have struggled against all odds to make one of the world’s richest corporations provide proper healthcare, a clean environment and adequate recompense for their unending pain.

The legacy of Bhopal has continued to have a material impact upon Dow Chemical’s reputation and business. Dow is named in civil, environmental and criminal actions in India. In one case, Dow faces claims totalling $8.1 billion. In another, Dow’s Corporate Secretary is summoned to manslaughter proceedings (but doesn’t show up). Dow & DuPont have chosen to share none of this with shareholders and investors, yet soon DowDuPont will be party to these same actions.

DowDuPont and DuPont’s Contamination Legacy

In the case of DuPont, C8 (or PFOA), a toxin used in the manufacture of Teflon remains a major issue despite DuPont recently making a $670.7 million offer to settle C8 lawsuits connected with contamination emanating from its Washington Works plant in Wood County, Ohio. This settlement, if agreed, would include three cases previously tried in a federal court which each received awards running in to the millions of dollars. This makes the $670m proposed settlement look an extremely paltry amount given the 3,500 cases in the class action seeking damages.

Elsewhere, there are known to be serious issues with C-8 contamination around the US, as well as in the Netherlands, Korea, Australia and other countries. In fact, C8 contaminates every continent and country on the globe, and has been detected in the Pacific Ocean and other bodies of water, where the largest concentrations are in the top surface levels.

Worse still, recently emerging stories suggest that, once DuPont finished using C-8, it moved on to another toxic chemical, known as GenX, and continued dumping it in rivers:  Little data exists on the health effects of GenX, but scientists who have reviewed the few studies available say it may pose many of the same risks as C8.

After the Dow Dupont merger, the new company will be split into three and there is real concern as to where the Bhopal and C8 liabilities will lie. In so far as Dow and Bhopal is concerned, Dow has contrived to maintain a corporate veil between itself and Union Carbide and there has been no statement as to what form Union Carbide may take, nor where it may sit among the three new entities post-merger. This would only suggest further complication before Union Carbide is finally held to account for its actions.

The Campaign Letter

Part of the campaign involved sending the following letter to the EU Outlining Concerns Over Concealed Liabilities:

Text of letter to Mrs. Margrethe Vestager, EU Competition Commissioner:

“I write on behalf of the Bhopal Medical Appeal, a UK registered charity which works closely with grassroots organisations in India representing survivors of the Bhopal Gas Disaster and which funds two innovative, free clinics in Bhopal helping the long-term injured, along with second and third generation sufferers. The purpose of this letter is to express our grave concern over issues concerning the proposed merger between Dow Chemical and DuPont.

Antitrust laws, and investigations thereunder, are fundamental in market economies as they serve to promote and maintain fair competition whilst preventing firms from distorting competition in a way that is detrimental to markets. Although we understand that in considering merger proposals the EU, much like the SEC in the US, focuses on competition issues and there is no obvious mechanism for examining a merger deal on human rights or international law grounds, we believe that certain human rights issues should be recognised as likely to engender unfair competition and, on that basis, accepted as integral to any anti-trust investigation.

It has become evident that both Dow and DuPont are attempting to conceal and/ or evade material liabilities which are of a potentially vast scale for each company, as a stand-alone entity, and there is good reason to believe that both companies hope to further evade these liabilities in the event of a successful merger. Though these liabilities have human & environmental rights implications, they are of sufficient scale that they would undoubtedly, when imposed, represent a significant portion of the combined value of the merged companies. To offset such a financial burden, or even just to appear to have done so, must represent a major competitive advantage for both companies and for the later merged entity, an advantage that will have been unfairly – or, quite possibly, illegally – gained.

Competitive advantage can be gleaned merely from concealing liabilities from potential investors. According to the Forum for Sustainable and Responsible Investment, in a 2014 report on U.S. sustainable, responsible, and impact investing (SRI) trends, the total US-domiciled assets under management using SRI strategies expanded from $3.74 trillion at the start of 2012 to $6.57 trillion at the start of 2014 and accounted for more than one out of every six dollars under professional management in the United States. The report also noted that the number and proportion of shareholder proposals on social and environmental issues that receive high levels of support has been trending upward and, on this basis, to conceal information of material concern to all investors, but of critical importance to those wishing to invest in a socially responsible manner and who control over 15% of the overall market, must be seen as gaining an unfair competitive advantage.

Prior to the July 20, 2016, special shareholder meetings for stockholders of Dow Chemical and DuPont, inadequate or misleading disclosures were made in the companies’ joint-merger proxy materials. Dow appears not to have respected its fiduciary duties to shareholders, including disclosure of all facts material to the stockholders’ consideration, with undisclosed items including material liabilities facing Dow as the sole shareholder of Union Carbide which is still embroiled in civil, criminal and environmental litigation regarding the legacy of the Bhopal Disaster.

Three court cases remain outstanding against Dow/ Union Carbide in India, with claims amounting to billions of dollars in potential damages:

  • Dow maintains that the 1989 civil settlement negotiated between Union Carbide and the Government of India (GoI) is ‘full and final’ but, in 2010, the GoI filed a Curative Petition in the Delhi Supreme Court seeking to remedy its inadequacies. Curative petition no. 345-347, of 2011, states that: “The present Curative Petition is an attempt by the Union of India to cure gross miscarriage of justice and perpetration of irremediable injustice being suffered by the victims of the Bhopal Gas Tragedy. It is submitted that the settlement compensation amount determined by this Hon’ble Court was based on certain factual assumptions which have been found to be completely incorrect and far removed from reality…” India seeks an additional amount in excess of $1 billion, whereas additional filings in support of the petition by impleaded parties request an additional $8.1 billion to address the original shortfall.
  • A criminal case against Union Carbide Corporation remains unresolved over three decades after the disaster and involves several serious charges including ‘culpable homicide not amounting to murder’. As a consequence of its refusal to attend court, Union Carbide has been proclaimed an ‘absconder’ by the Indian courts. Parent company Dow, which has not compelled its wholly-owned subsidiary’s appearance at trial, has itself ignored four notices to appear before the Bhopal criminal proceedings to explain the actions of that subsidiary. On July 13th, 2016, the court was moved to consider ex parte proceedings against Union Carbide. Under Indian law, criminal courts have the power to impose fines with no upper limit.
  • The unresolved issue of toxic ground and water contamination at the former Union Carbide plant site in Bhopal is still subject to litigation in the Madhya Pradesh High Court and Dow has been asked to provide a $15 million advance payment prior to determination of liability.

The reputational impact of the Bhopal legacy upon Dow, which identified India as “a key component of Dow’s global business strategy and a significant potential contributor to Dow’s corporate growth and profitability” (Dow in India “Facts and Figures”, 2008) can also be seen as having a material impact with its Indian divisions suffering numerous setbacks in their efforts to invest as a result of public protest and political engagement on Bhopal. Financial analysts have estimated the total business loss in India, from 2008 to 2016, to be as much as $300 million and, as Motley Fool observed in 2012, “Dow’s refusal to take responsibility for Bhopal has hit the company’s bottom line well beyond the associated legal costs. The unaddressed liability has hurt its reputation, resulted in protests and media backlash, and even limited its ability to invest overseas”

For its part, DuPont would seem to be attempting to evade liabilities relating to the contamination of drinking water with ammonium perfluorooctanoate, a carcinogenic chemical otherwise known as C-8 or PFOA, used in the production of Teflon.

Adjudication of injury cases resulting from C8 contamination has only just begun and a test-case last October, in which a woman who developed kidney cancer was awarded $1.5 million in compensation, was the first result of a class action involving over 3,500 plaintiffs. In July of this year DuPont was ordered to pay more than $5.5 million to a man who developed testicular cancer after drinking water polluted with the chemical. The jury imposed a further $500,000 in punitive damages after finding DuPont guilty of malice.

According to Bloomberg Intelligence, potential payments related to health claims from exposure to C8 could reach $1.9 billion whilst clean-up at the 174 polluted sites already disclosed could total $900 million. A further 19 sites are under review.

DuPont may face additional C8 lawsuits in the Netherlands after The Dutch Inspectorate for Social Affairs and Employment announced in June that the Public Prosecutor is officially investigating the use of hazardous chemicals at DuPont’s facility in Dordrecht, after testing revealed C-8 at levels as high as several thousand parts per billion in the blood of residents and workers in the region, a figure enormously beyond the US EPA limits.

Yet, just over a year ago, DuPont spun-off its ‘Performance Chemicals’ division into a separate company named Chemours, which took with it 62% of environmental claims ongoing against DuPont, including those deriving from C-8, along with $4 billion of existing debt. Chemours debt is only 20% less than that of DuPont, a company with 35x the market capitalisation and a 6x more favourable ratio of debt to earnings before interest, taxes, depreciation, and amortization, leading financial website Citron Research to describe the company, in a report from June 2nd, 2016, as “a bankruptcy waiting to happen”.

Though DuPont agreed to cover some of Chemours’ liabilities, the company admitted in regulatory filings that this may not be sufficient to cover them all. DuPont has claimed that Chemours is required to pay damages whilst, in July this year, Chemours indicated that it may fight efforts to force payment, saying it “retains legal defenses” to DuPont’s claims of indemnification. Suggesting that any bankruptcy would be held off until after the DowDuPont merger, Citron concluded Chemours to be “the most morally and financially bankrupt company that we have ever witnessed.”

Neither Dow nor DuPont have offered clarity to involuntary creditors on what will happen to existing liabilities in the aftermath of a merger that will also see DowDuPont split into three different entities within 18 months of the deal going through. It is inconceivable that this obfuscation, or evasion, of liability is not a matter of material consideration within the merger agreement discussions.

In conclusion, we accept that the issues we describe may be interpreted, by some, to be outside of the normal EU antitrust investigation remit but humbly request that their validity as issues material to a complete antitrust investigation is given proper consideration.”



Related posts

Leave a Comment

This site uses Akismet to reduce spam. Learn how your comment data is processed.