BP chief executive Tony Hayward (in a stiff British accent): "Members of
congress, I come here not to apologize but to express my irritation at being
here in the first place. BP is a foreign company, and we operated Deepwater in
the Gulf of Mexico as an offshore facility regulated as a ship (not a drilling
well) under US law. Everything we did was acceptable under US law. We cut
corners and costs, in order to produce the oil demanded by your people. Our
suppliers such as Halliburton and Transocean are American companies so this is
all your fault really. You bought our oil for all this time, and made our
shareholders rich, so thank you for that.
"Accidents happen, and I am afraid you will have to live with the consequences
of this one. Look at the positive side of things. If no oil had leaked, we
would have simply sold all of it to your SUV
drivers and the resulting carbon dioxide - or C02 - emissions would have
polluted the whole world. Instead, all that leaking oil only pollutes the
waters off the southern USA, a relatively small part of the world.
"If you don't like my answer, I have one word for you: Bhopal."
A fictitious exchange between BP and the US Congress, in a parallel universe.
Watching Hayward being mauled in front of congress on Thursday, the thoughts in
the back of my mind related not so much to sympathy for the American point of
view but rather for the CEO. Instead of agreeing with the generally held
opinion that BP is to blame for all the problems in the Gulf of Mexico - a view
that has been cemented by an apparent history of cost-cutting that led to the
mishap - my feelings are now tending towards the Karmic perspective, that is,
that what BP is doing to America is pretty much what American companies have
done and are doing to the rest of the world.
Perhaps BP, formerly British Petroleum, is merely exacting vengeance on
Americans on behalf of Britain's former colony, India. Two wrongs don't make a
right for sure, but when Americans sit around bawling about the sheer injustice
of it all, the rest of the world could well use examples like Bhopal to still
feel less than sympathetic.
The worst such incident by any measure is Bhopal. In 1984, an American company,
Union Carbide, faced a similar litany of problems in a plant making pesticide.
It was located right in the middle of a densely populated city in central
India, Bhopal. Reacting to the declining profitability of the plant in the
early 1980s, management enacted a number of cost savings as well as holding
back much-needed capital expenditure that would have helped restore various
safety systems to acceptable standards.
The end result was that on December 3, 1984, water entered tanks storing methyl
isocyanate (MIC), a poisonous gas that should never have been stored in this
form in the first place; the resulting build-up of pressure caused a leak that
spread the gas over Bhopal, killing more than 2,000 people, according to the
official figure, and maiming tens of thousands more. Additionally, subsequent
generations of people in Bhopal have shown the effects of MIC poisoning with
deformities, congenital health problems, cancer and painful deaths. (Some
estimates say that more than 15,000 people died after the initial leak.)
Adding insult to injury, US courts ruled that Union Carbide couldn't be tried
in US courts for the crimes against Indians (it is interesting that various US
politicians make the case for trying foreigners for alleged crimes against
Americans even though its own citizens can never be tried for crimes against
foreigners in their courts). The parent company, Union Carbide, was put into
liquidation and subsequently acquired by another company (Dow Chemical). After
this acquisition, the name Union Carbide is still used, even though Dow
Chemical has refuted all responsibility for the 1984 catastrophe.
The response of Union Carbide to Indians has been on the lines of "Accidents
happen. You can use the Bhopal plant as collateral to take any payments that
will be used to compensate our victims. Make that your victims."
After years of meandering through the Indian court system, the verdict on the
1984 catastrophe was handed down in an Indian court earlier this month.
Britain's Guardian newspaper reported:
An Indian court today convicted
seven former senior employees of Union Carbide's Indian subsidiary of causing
"death by negligence" over their part in the Bhopal gas tragedy in which an
estimated 15,000 people died more than 25 years ago.
The subsidiary company, Union Carbide India Ltd, which no longer exists, was
convicted of the same charge. The former employees, many now in their 70s, face
up to two years in prison ...
... Union Carbide was bought by the Dow Chemical Co in 2001. Dow says the legal
case was resolved in 1989 when Union Carbide settled with the Indian government
for US$470m ... and that all responsibility for the factory now rested with the
government of the state of Madhya Pradesh, which owns the site.
So there you have it, courtesy of a British newspaper - the exact strategy that
BP needs to follow against America. Put up a few of its American employees for
trial (at vast public expense), hand over the Gulf of Mexico site to the
government, and pretty much say "Ta".
Karma
Americans have mass cognitive dissonance with respect to their self-image. In
their own minds, they view the American system as "fair, equitable,
meritocratic, innovative and good". They also perceive that this view is
considerably different in the minds of foreigners: "greedy, evil, litigious,
hypocritical, lazy". Americans view their enterprise system through companies
like Apple, Google and Boeing. The rest of the world views the system through
the eyes of companies like GM, Goldman Sachs and McDonald's.
Reaction in the US media after the Bhopal verdict on June 7 was muted. My
random sweep through Google revealed factual news items, but virtually no
expression of outrage in the American or European media. Sure, there was much
outrage expressed in the Indian media but then again, that appears to have been
directed (justifiably) against their own courts and politicians rather than
(also justifiably) a foreign company.
The evils of Union Carbide cannot be swept under the carpet. There cannot be
sympathy for the American plight after accidents like BP, when the same
accidents in the rest of the world (at much higher cost to people and
livelihood) are underplayed.
Over the past three years, American claims to innovation have been severely
tested. The "innovative" approach to providing mortgage financing for
undeserving borrowers has erupted into the greatest financial crisis the world
has seen since 1929. American investment and commercial banks stand accused of
gross incompetence, greed and malice in their dealings with financial
institutions in the rest of the world. American industry is suffering and has
all the characteristics of a terminal decline. American policymakers have
blithely ignored the advice they so willingly proffered to the rest of the
world, and indulged in rampant moral-hazard actions instead.
The lack of reaction to the Union Carbide issue renders comical the US media
reaction to the BP situation where a "mere" 11 people died compared with the
thousands in India. It is a big environmental disaster, but then again, if all
that oil hadn't been lost to the sea it would have simply ended up in the gas
tanks of American vehicles and polluted the whole world. In that respect,
having it leak and polluting "only" the swamplands of southern US can be
considered a "good" thing for the rest of the world.
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