The Multinational Monitor

SEPTEMBER 1991 - VOLUME 12 - NUMBER 9


L E T T E R S


To the editor:

The Bhopal article in the July/August 1991 issue contained bad politics and worse reporting, in at least the following three respects:

1) The article recycles Wall Street propaganda that Union Carbide has suffered financially from Bhopal when in fact the real story is that UC's shareholders profited enormously in the wake of the Bhopal disaster. The quote from the [Wall Street] Journal comparing share prices before and after Bhopal is factually in error because it compares numbers that are not comparable. In 1986, after the Bhopal disaster, there was a three-for-one UC common stock split, meaning that the post- Bhopal $30 share was equal to a $90 pre-Bhopal share. Even in a recession UC shares are presently selling at more than $22, well in excess of the $50 pre-Bhopal share value, if the value is properly adjusted for the split to $66. Of course this is after UC paid a special dividend to its shareholders in 1986 of about $33, which if added to today's value would give a $100 equivalent share value, double the pre-Bhopal value, but still $24 less than the highest adjusted share values reached post- Bhopal.

2) The article accepts at face value that the GAF takeover bid was a real threat to UC, instead of a sweetheart operation and intentional smokescreen for fraudulent transfers to UC shareholders of assets that might otherwise have been subject to a potential Bhopal legal judgement requiring payments to its victims in excess of equity. In any event, UC shareholders, including GAF, all profited from the "takeover bid." Meanwhile UC ran its assets down to a level where a judgement for much more than the current settlement amount could be defended against by bankruptcy.

3) Union Carbide's profits in 1988 and 1989 were the two highest on record. Therefore a decline in profits of a cyclical producer of industrial raw materials in the 1990 recession was not remarkable, and certainly no indication of any adverse effect of the Bhopal legacy on profits, as the writer suggests. Nor was a 1990 increase in debt surprising in light of the election of V. P. Singh's pro-Bhopal government at the end of '89. Union Carbide can be expected to remain highly leveraged until the risk of liability for Bhopal is finally put to rest. This high debt load, particularly in the current period of low interest rates, does not in any way impair UC's profitability. Profitability has, in fact, significantly improved after Bhopal, as reflected by its consistently higher adjusted share values.

This is all readily available in briefs I have filed in India, all now collected and published with other materials by the Bhopal Justice Campaign, Tel: 1-800-888-6423 ext. 3859.

Rob Hager
Washington, DC


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