The India Cables

Sops for chemicals?

The cable drew an outline of politicians seeking to exploit Dow's handicap in India - arising from its association with Union Carbide and the legacy of the 1984 Bhopal gas look disaster - for direct or indirect personal benefit. The abandoned Union Carbide factory in Bhopal. File Photo: A.M. Faruqui   | Photo Credit: A_M_faruqui

The Dow Chemical Company, an American multinational that bought the infamous Union Carbide, appointed a public relations manager recommended by a Shiv Sena parliamentarian at a generous monthly salary of $20,000. This was done in the hope that it would put an end to the protests the politician was spearheading against its proposed research facility in Pune.

Over in Gujarat, the company had to put on hold a proposed investment by its European arm in a state-owned unit because a Union Minister allegedly “demanded a large sum of money” to clear the project, which Dow refused to pay.

These allegations are contained in a confidential Mumbai Consulate cable sent to the U.S. State Department in late-2008 and accessed by The Hindu through WikiLeaks.

Asked by The Hindu to respond, the two politicians, Shiv Sena MP Shivajirao Adhalrao Patil and Ram Vilas Paswan, at the time the Union Chemicals and Fertilisers Minister, denied the allegations as totally baseless. Attacking Dow and Union Carbide as “criminals in my mind,” Mr. Paswan asserted that they were trying to tarnish his image because he and his Ministry “strongly opposed their plans to establish a presence” in Gujarat even while “the case of remediation costs for the Bhopal disaster” remained unresolved.

The cable was sent under the name of Consul-General Paul A. Folmsbee ( >173725: confidential , October 15, 2008) after Consulate officials reported they had heard detailed separate versions of Dow's troubles from company representatives and the Shiv Sena MP, Shivajirao Adhalrao Patil.

The cable drew an outline of politicians seeking to exploit Dow's handicap in India – arising from its association with Union Carbide and the legacy of the 1984 Bhopal gas leak disaster – for direct or indirect personal benefit. But even where politicians and government functionaries were reassuring or sympathetic, when crunch-time came, they were of no help.

As for Dow, the Mumbai Consulate concluded it did not have the nous to grasp the political implications of being associated with Union Carbide and the legacy of the Bhopal gas disaster, especially with the 2009 parliamentary elections just months away.

Dow's Pune facility was to come up on 100 acres of grazing land in Chakan, Shinde village. Just a day before the Maharashtra government ordered a temporary halt to the construction at the site on September 26, 2008, and appointed a commission to inquire into the complaints against it, the Consul General had met Mr. Patil, the Shiv Sena MP from Shirur in Pune district, to talk about the protests against Dow.

Dow's behind-the-scenes manoeuvres

The politician had expressed “a desire to resolve the dispute peacefully.” The villagers should have been informed about the project, he said.

The Mumbai Consulate noted that the Warkaris, a local community, worshipped a river shrine and were convinced that Dow's activities at the facility would pollute the river and groundwater sources.

Mr. Patil told the U.S. officials that the villagers had learnt about Dow's connections to Union Carbide. He said the approvals Dow had received for the facility related to the manufacture of chemicals, which was at variance with Dow's description of the facility as a scientific research centre.

The Shiv Sena MP also said he had advised Dow to explain the project to the villagers, “preferably through a public relations company that was experienced at this.” However, he lamented, the company had ignored his advice and instead relied on police force and started work at the site.

“Patil noted that it was because of this decision that the Warkaris started protesting and a Dow vehicle was burned,” the cable informed the State Department.

Mr. Patil then reiterated advice he said he had given Dow in July 2008 about hiring a public relations outfit for this purpose — “like the one that the local company Bharat Forge hired when it ran into problems, and give donations to local villagers to resolve the situation.”

On September 29, Rakesh Chitkara, Dow's Head of Corporate Affairs, met Consulate officials (the cable does not name them). He told them that three months earlier, Dow “hired the public relations specialist Patil recommended for USD 20,000 per month.” In parenthesis, the cable added: “Chitkara said that the PR specialist is a ‘close associate' of Patil.”

Dow had also hired a number of local villagers for construction projects, helped refurbish a local school, expanded water services, and acted on a number of other public works projects that were requested in writing by the local village council — all to no effect.

Mr. Chitkara's version was that Dow had met Mr. Patil several times “to clarify issues.”

Patil's denial

However, when The Hindu asked Mr Patil for a response, he characterised the allegations as “101 per cent baseless information.” He said he had opposed the Dow project, which was in his constituency. He also flatly denied he had recommended any PR agency or specialist to Dow: “There is no question of advising Dow on hiring anyone or convincing anyone. I don't know any PR agency and never advised Dow on whom to hire.”

Warkaris meet Pawar

As reported in the press at the time, Warkari leaders had made a representation to Union Minister for Agriculture Sharad Pawar on September 25, only to have their complaints brushed off by the Minister. But when the Warkaris publicly denounced Mr. Pawar and threatened protests against the October 2009 Commonwealth Youth Games in Pune, the senior Union Minister beat a swift retreat.

“Dow representatives” told the Mumbai Consulate officials that Mr. Pawar then instructed Maharashtra Chief Minister Vilasrao Deshmukh to order a halt to the construction and appoint a commission to review the charges. This is what Mr. Deshmukh did.

The commission would be the second to enquire into Dow's Chakan facility; a first commission had already given it a clean chit.

“Dow representatives” further told the Consulate's officials that the Chief Minister also called Andrew Liveris, the global head of the company, “to reassure him about Dow's investments, and said the commission will take two months; Liveris, increasingly frustrated, told Deshmukh that it needs to take less than one month.”

Maharashtra Chief Secretary Johnny Joseph did his bit too. He called Dow (the cable does not say who in Dow) “to express his support but asked for time to defuse the situation.”

Dow CEO Ramesh Ramachandran told Consulate officials (the cable does not specify if they met him with Mr. Chitkara or separately) that the protestors were “seeking a ‘buy-out' but have not ‘ internalised' yet that Dow will not pay.” Mr. Ramachandran said the company was losing $250,000 a month.

The cable said “Dow representatives” (it is not clear if this reference throughout the cable is to Dow officials other than Mr. Ramachandran and Mr. Chitkara) had told Consulate officials that Dow “do not have infinite patience for the political and other problems faced by their business in India.” The company could write off $15-20 million of its investment in the country so far, but feared it would face similar protests and harassment wherever it went, the cable noted.

As it turned out, the second commission cleared the Chakan project. But the protests continued and on September 10, 2010, Dow announced scrapping it. The company returned the land to the Maharashtra government, and said it would scout for an alternative location.

At about the same time its troubles in Chakan intensified in 2008, Dow's troubles with its Gujarat project came to a head. In April that year, Dow Europe GmbH and Gujarat Alkalis and Chemicals Ltd had signed an MoU for a joint venture but unexpectedly, this had to be put on hold.

At his September 25, 2008 meeting with officials of the Mumbai Consulate General, Mr. Chitkara said the investment needed approval from the Foreign Investment Promotion Board (FIPB), which it had expected because both the Gujarat government and the Union Finance Ministry supported the venture.

However, Dow had learnt that the Union Ministry of Chemicals and Fertilisers had put a hold on the project.

“According to Chitkara, however, when agents of Dow met with Union Chemical and Fertilizer Minister Ram Vilas Paswan, he demanded a large sum of money from the company before he would support the project. The company refused to pay and the investment remains on hold.”

Paswan's denial

Asked by The Hindu about the allegation contained in the cable, Mr. Paswan said it was a “total lie.” He said no one from Dow had even met him to discuss the matter. “If they are saying this, they are lying.”

Mr. Paswan added: “The Dow company and Union Carbide are criminals in my mind and I strongly opposed their plans to establish a presence here. That is why they are trying to tarnish my image. The Commerce Ministry gave clearance for the [Gujarat] project without asking us. Our Ministry opposed this because the case of remediation costs for the Bhopal disaster was still unresolved.”

Dow even took its case to the powerful Deputy Chairman of the Planning Commission, Montek Singh Ahluwalia. He offered them sympathy, “but [he was] unable to overcome this opposition.”

Writing on the wall

The Mumbai Consulate was able to read the writing on the wall.

“Clearly,” its confidential cable observed, “Dow has become an easy target for politicians seeking to exploit the company's situation, especially as state and national elections are just around the corner.”

It commented that Maharashtra was run by “a coalition under a weak and ineffective Chief Minister” and the Dow case had presented to opposition politicians “a combination of issues close to the hearts of their voters: land, environment, livelihood, and religious devotion.”

On the other hand, the Mumbai Consulate concluded, Dow just did not get it.

“In relying on the promises of protection of the state, Dow continues to underestimate the political ramifications of the company's connection to the legacy of Bhopal and Union Carbide.”

But the story does not end here.

The Hindu forwarded two questions to the Dow Chemical Company through its Mumbai office.

The first question related to the privileged information provided by American sources that in September 2008, Mr. Chitkara met U.S. consulate officials in Mumbai and reported that the company had hired the public relations specialist whom Shivajirao Adhalaro Patil, MP, had recommended for $20,000 a month to deal with public protests against the proposed Pune project. So what was the name of the PR specialist and for how many months did Dow retain his or her services?

The second question related to information gained from the same sources that Mr. Chitkara had told them Dow was having trouble get FIPB clearance for an investment in a Gujarat state-owned company. What was the name of that company and was FIPB clearance eventually secured? If so when?

The written response from a Dow spokesperson was this: “Like all global companies, it is common for Dow leaders to meet with government leaders and officials wherever we do business and have plans to grow. It is also common for companies to discuss challenges and opportunities related to investment. This is an important part of doing business in any geography. The questions raised by you pertain to US Government's internal correspondence and should be directed to them.”

It sounded very much like the good old runaround.

(With inputs from Meena Menon and Siddharth Varadarajan)

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

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