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Union Carbide to Pay $470 Million For Bhopal Disaster

February 15, 1989 GMT

NEW DELHI, India (AP) _ Union Carbide Corp. agreed Tuesday to pay $470 million to the government of India in a surprise court-ordered settlement resulting from the 1984 gas leak at Bhopal that killed more than 3,300 people in the world’s worst industrial disaster.

Activists in Bhopal denounced the settlement as a betrayal of the 20,000 victims who still suffer from exposure to the deadly gas that escaped from a pesticides plant on Dec. 3, 1984. The government had sought $3 billion in damages.

Chief Justice R.S. Pathak interrupted a government prosecutor’s routine argument when the court reconvened after lunch, and ordered the company to pay the damages by March 31.

Attorneys for the government and Union Carbide promptly agreed.

″It was apparent that there was an out-of-court agreement between Union Carbide and the government,″ said a court official who spoke on condition of anonymity. ″For such an order there should have been excitement, but there was no murmur even.″

Pathak, citing ″the enormity of human suffering,″ said a settlement was needed to ″provide immediate and substantial relief.″

More than 2,000 people were killed almost immediately when the white vapor of methyl isocyanate seeped from a storage tank at the plant operated by Union Carbide’s Indian subsidiary and drifted over nearby shantytowns and into Bhopal.

The leak occurred shortly after midnight, and some victims died in their sleep. Others, blinded by tears and gasping for breath, tried to flee but collapsed in death.

More than 20,000 people still suffer from exposure to the gas and victims continue to die at a rate of at least one a day, according to a government gas relief board. It says the death toll has reached 3,329.

Pathak, speaking for a five-judge Supreme Court panel, ordered Union Carbide to pay $470 million to the Indian government ″in full and final settlement of all claims, rights and liabilities related to and arising out of the Bhopal gas disaster.″

He also ordered all civil proceedings transferred to the Supreme Court, and quashed all criminal charges, including one of culpable homicide filed in 1987 against former Union Carbide chairman Warren Anderson.

Pathak gave no details of how the money should be paid to the victims, but he directed government prosecutors and attorneys for the Danbury, Conn.-based company to submit a detailed agreement Wednesday.


″This is a fair and just settlement,″ Gopal Subramanium, one of the chief government attorneys, told a reporter.

In New York, Union Carbide spokesman Earl Slack said Pathak’s order ″was based on its review of all pleadings in India and the U.S., applicable law and facts, and the enormity of human suffering that requires substantial and immediate aid.″

Union Carbide’s stock price soared $2 to close at $31.125 a share in New York Stock Exchange trading Tuesday, and industry analysts endorsed the settlement.

″Psychologically, it’s terrific. Financially, it’s reasonable,″ said Leslie Ravitz, a research director for Salomon Brothers in New York. ″This relieves the pressure on Union Carbide and the stigma.″

James Wilbur, a vice president with Smith Barney, Harris Upham and Co. Inc. in New York, said Union Carbide had set aside $200 million and had $250 million in insurance coverage for Bhopal.

″The risk is minimal,″ he said.

In Bhopal, a city of nearly 1 million people, many politicians and activists were angered by the settlement.

″This is a betrayal of the gas victims,″ said Babulal Gaur, a state legislator from the opposition Bharatiya Janata Party. He called the settlement ″negligible.″

″The government has once again come under the pressure from the lobby of multinationals,″ said Abdul Jabbar Khan, who mobilizes demonstrations of gas victims.

Many of the victims of the disaster live in burlap and cardboard shacks, and were unaware of the settlement because they are too poor to own radios.

Pathak ordered the settlement as the Supreme Court heard Union Carbide’s appeal of an order to pay $166 million in interim compensation to gas victims and a counter-appeal by the government to raise the amount to $233 million.

The interim order was issued April 4, 1988, by the high court in central India’s Madhya Pradesh state, where Bhopal is located.

Union Carbide had argued the order would prejudice the case’s outcome.

It maintained the gas leak was the result of sabotage by a disgruntled employee, and Slack said the company stood by the contention. The Indian government said the disaster was the result of negligence.

The disaster produced fierce debate around the world about the moral and legal responsibilities of multinational companies that set up shop in developing countries.

Critics charged that rich corporations from industrial nations exploit Third World countries. Union Carbide officials complained privately that they were hamstrung by local restrictions.

In accordance with Indian law, the Bhopal pesticide plant was owned by Union Carbide of India Ltd. and operated by local employees.

Efforts to bring the case to trial in the United States were rejected by judges who said they had no jurisdiction.

The case began in the Bhopal District Court and made its way through the labyrinthine Indian judiciary, where cases can languish for years and even decades.

One Bhopal judge was dismissed when it was discovered he was among the 500,000 people who filed damage claims. Another judge was dismissed on grounds he was prejudiced against Union Carbide.

Some of the claimants lived thousands of miles from Bhopal but said they suffered mental anguish from worrying about the fate of loved ones, including railroad passengers whose trains might have been near Bhopal at the time of the leak.