Ambassador Mulford and Treasury Secretary Paulson lobby for dropping of Indian government's liability claims for Bhopal

Pressed by the United States at a senior level, government functionaries in India, including a Chief Minister, indicated that they did not believe that the American multinational, Dow Chemical Company, had any liability for the 1984 Bhopal gas tragedy, U.S. Embassy cables reveal.

Unclassified “Official” communication during the period July to November 2007 [128590, 116877, 122608: all sensitive] between Washington and its Indian representatives carry reports under the name of U.S. Ambassador to India David C. Mulford, Deputy Chief of Mission Stephen J. White, and Kolkata Consul General Henry V. Jardine. They relate conversations with West Bengal Chief Minister Buddhadeb Bhattacharjee, Commerce Minister Kamal Nath, and Planning Commission Deputy Chairman Montek Singh Ahluwalia, which in each case intertwined the subject of U.S. investments in India with the Dow issue.

The cables have been accessed by The Hindu through WikiLeaks.

“Indications that the legacy issue of Dow… may be moving closer to a resolution” first appeared in October 2006, Mr. White cabled in a compilation report of “Economic highlights” from July 23 to 27, 2007. During a CEO Forum, “GOI officials including Commerce Minister Nath and Planning Commission Deputy Chairman Montek Singh Ahluwalia stated that they welcomed further Dow investment in India and did not believe that Dow was responsible for the disaster site clean-up.”

The cable recalled that “significant USG and company efforts… including a number of high-level interventions by the Ambassador and visiting Cabinet officials,” had, until then, produced no result. It reported information from an unnamed senior Dow India official that the issue might be “sent for high-level discussion in the Trade and Economic Relations Committee (TERC).”

“Embassy New Delhi will continue to forcefully press for a resolution,” Mr. White observed, “as a GOI signal that US-India economic relations are key to the bilateral agenda.”

True to Mr. White's message, another cable in October 2006 detailed Ambassador Mulford's efforts to further Dow's case during a meeting with Dr. Ahluwalia on September 14. Mr. Mulford “cited the GOI's continued third party claims against Dow Chemical in the ongoing Bhopal land reclamation lawsuit as a further impediment by Dow and others to invest in India, and he asked that the GOI drop its claims against Dow.”

The Planning Commission Deputy Chairman responded that “the GOI does not understand Dow's concern about future civil or criminal liability since the GOI third-party claims do not suggest a GOI presumption that Dow is responsible for the cleanup.”

The Government of India's problem, the cable reports him as saying, “is that the NGOs are very active and vocal in this case, and it is very difficult for the Government to now drop its claims against Dow. The GOI was hoping for a quick resolution of the case which would have settled the issue, but Dow prevented this by asking for a stay in the proceedings. Ahluwalia noted that the issue of whether a company like Dow can be held liable for the actions of another company solely on the basis of acquiring that company after the culpable activity occurred is an important and novel legal issue in India that needs to be resolved. Ahluwalia recommended that the Ambassador discuss the issue with Finance Minister Chidambaram — a noted jurist.”

U.S. Treasury Secretary Henry Paulson himself raised the issue with Chief Minister Buddhadeb Bhattacharjee at a meeting on October 28. The cable, which was cleared by Mr. Paulson's staff, reported: “Secretary Paulson commented that one of the obstacles to greater FDI in India was uncertainty over contracts and the legal process. He said that commercial disputes need to be resolved fairly and quickly and mentioned as examples disputes with Dow Chemical and McDermott International reflecting the long legal process.”

The cable reports the West Bengal Chief Minister as saying “he understood and in fact, wanted Dow Chemical to invest in West Bengal and the state's proposed chemical hub.”

In fact, “the CM did not understand why Dow should be saddled with Union Carbide's liabilities from the Bhopal accident. He assured the Secretary that if there was any investment problem, he would personally resolve the issue. He also encouraged Secretary Paulson to raise investment issues with the Prime Minister and Finance Minister.”

A letter to Ambassador Sen

These cables add weight to questions raised in June 2010 over whether the Indian government pre-empted the judicial outcome of the Supreme Court case against Dow for its liability in the Bhopal gas tragedy, under similar pressures from the U.S.

Newspapers reported a November 2006 letter from Dow Chairman, Chief Executive Officer and President Andrew Liveris to Ronen Sen, the Indian Ambassador in Washington D.C. It stated that “Government of India representatives” told a meeting of the U.S.-India CEO Forum “that Dow is not responsible for Bhopal and will not be pursued by the GOI.”

Thanking Ambassador Sen for his “support” on the Bhopal legacy issue “as a tangible deliverable outcome for the CEO Forum,” Mr. Liveris had set out “key actions” including “that the Ministry of Chemicals and Fertilizers should now withdraw its application for a financial deposit against remediation costs.”

The letter was appended with “a non-paper,” embassy speak for an unofficial note, to a Right to Information Act response obtained from the Indian Embassy by non-governmental organisations and circulated by them to the media.

The ‘non-paper' chimes with the U.S. Embassy cables in presenting “the Bhopal matter” as a kind of test case for India's investment climate. “Resolution of this issue,” it stated, “will serve as a clear example of the Government of India's commitment to progress in developing certainty and support for future foreign direct investment.”

(This article is a part of the series "The India Cables" based on the US diplomatic cables accessed by The Hindu via WikiLeaks.)