The Government of India will intervene in the battle for control of Union Carbide Corp. on grounds that the company is trying to protect itself at the expense of the victims of the Bhopal poison gas disaster, a lawyer for the Indian Government said today.
Alarmed over Carbide's moves to sell its highly profitable consumer-products division and other operations, the Indian government plans to ask the federal courts to block the disposition of assets that should be earmarked for the tens of thousands of victims of the world's worst industrial accident, the lawyer said.
"Our concerns have increased dramatically," said Michael Ciresi, the chief U.S. lawyer for the Indian government in the Bhopal case. "The company is attempting to illegally invert priorities and is putting the shareholders ahead of" Bhopal claimants, he said.
The Indian government's decision to step into the takeover battle is the latest sign that the high-stakes fight between Carbide management and hostile raider GAF Corp. is having consequences that extend far beyond the financial interests of the two parties.
Essentially, some lawyers say they fear that, in fending off the hostile advances of GAF, Carbide is disposing of so many assets and saddling itself with so much debt that it will be unable to compensate the families of the 2,000 dead and estimated 60,000 injured by the poison gas leak at Bhopal. And if Carbide loses and actually is taken over by GAF, the situation could be even worse, some critics say. GAF already has said it would have to bust up Carbide and sell off at least half its assets to pay for the acquisition.
That fear was echoed today when lawyers for Carbide squared off in a federal courtroom against lawyers for the victims of the Dec. 3, 1984, Bhopal disaster and lawyers for the Indian government to argue Carbide's motion that more than 120 lawsuits filed in the United States over the tragedy should be heard in India instead.
Stanley Chesley, a U.S. lawyer who represents the Bhopal claimants, urged U.S. District Judge John F. Keenan to reject Carbide's motion and to keep the case in the United States as the only means of protecting against the dismemberment of Carbide assets. Plaintiffs' attorneys are seeking to enjoin the disposal of any assets that could intefere with a settlement of the Bhopal case.
"If this court cuts this case adrift and it goes back to India, we don't even know whether next month or next year there will be a Union Carbide," Chesley said. "And once this case goes to India, it's gone."
The fight for control of Carbide formally began last Dec. 9 when GAF, a specialty chemical firm that is based in Wayne, N.J. and is one-tenth the size of Carbide, announced an offer to acquire the company for $4.3 billion, proposing to finance the purchase through the sale of so-called "junk bonds." Since then, Carbide has struck back with a series of antitakeover moves that culminated Thursday when the company board announced its plans to sell off one of the firm's "crown jewels" -- its $1.9-billion-a-year consumer-products division -- in order to keep it out of GAF's hands. Carbide also has moved rapidly to sell other assets, including its engineering-polymers and composites business and its film-packaging business, in an effort to raise cash to buy back company shares.
But GAF this week sweetened its bid for Carbide stock from an original offer of $68 a share to $78. GAF yesterday also extended from Thursday to Jan. 24 its offer to buy Carbide shares.
Although the implications of the takeover fight were not addressed by Carbide in today's arguments before Judge Keenan, company lawyer Bud Holman dismissed the charges that the firm's antitakeover defenses will prevent a settlement of Bhopal.
Holman said that Bhopal claimants had no grounds "to usurp the management rights" of Carbide in deciding whether to dispose of assets, and, in any case, there are more than enough assets to cope with the Bhopal litigation.
"There is insurance and there is still a very large, viable company," Holman said. "We don't expect they will seriously push that."
Today's arguments were the start of a critical phase in the legal battle over Bhopal. Most participants say that it has been extremely difficult to achieve a settlement in the case because of uncertainty over whether it would be tried before U.S. juries, who are traditionally symphathetic to victims in personal injury cases, or in India, where damage awards are much smaller.
Once Keenan rules on this threshold issue, the pressure will be on whichever side loses to move rapidly to settle, lawyers on both sides of the case have said. Keenan today carefully declined to tip his hand and challenged assertions made by lawyers on both sides.
Holman, for example, repeated Carbide's assertions that the Bhopal disaster may have been caused by saboteurs -- possibly Sikh extremists who were responsible for the assasination of Indian Prime Minister Indira Gandhi. But Keenan questioned Holman closely as to whether there was any direct evidence to support this contention and finally said, "I'm not persuaded there was sabotage. I'm not saying there wasn't. . . . But I don't think that issue is in any way controlling" in arguments over where the case should be heard.