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A few days ago, I dropped in to visit a rather rich friend of mine.
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He was at his desk, writing a cheque.
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Hey Mukesh Bhai, I said, who are you writing a cheque to bro?
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Write for me also na, starving podcaster, that's a good cause.
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There's been a natural disaster somewhere, Mukesh Bhai said.
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I am writing a cheque for the victims.
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Whenever there is any kind of natural disaster or even manmade disaster, I write a little
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See, it breaks my heart when people lose their homes or don't have access to food or medicines.
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That is very noble of you Mukesh Bhai, I said.
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But consider this, in India for the last seven decades, millions of people have been homeless.
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Millions of people have starved to death and died from water-borne diseases because they
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didn't have access to clean drinking water.
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It wasn't some natural or manmade disaster that put them there.
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They are living in the aftermath of a perennial disaster.
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Mukesh Bhai looked at me with deep admiration.
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Oh my god, you are right, he said.
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Amit, you have opened my eyes.
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My compassion should not be selective but constant.
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But tell me one thing, what has caused this continuing disaster?
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I replied, Mukesh Bhai, this is not caused by a hurricane or a typhoon, an earthquake
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or a tsunami, a gas leak or an industrial disaster.
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It is caused by government.
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Welcome to the Scene and the Unseen, our weekly podcast on economics, politics and behavioral
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Please welcome your host, Amit Verma.
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Welcome to the Scene and the Unseen.
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Today's episode is about the Bhopal gas tragedy of 1984 or rather the Bhopal gas tragedies
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My guest today, Shruti Rajgopalan, contends that there wasn't one Bhopal gas tragedy but
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I spoke to her a few days ago on why she says that.
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So without much further ado, here we go.
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Shruti, welcome to the Scene and the Unseen.
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Hi Amit, thank you for having me.
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Shruti, people often talk about the Bhopal gas tragedy but it is your case that there
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was not one Bhopal gas tragedy but three.
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Tell me about all three of them.
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Yeah, so I think there are many tragedies that happened because of the initial gas leak
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So just for those who can't remember the exact incident since it happened 33 years ago or
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for those who were born after, there was an incredible manmade disaster that happened
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in Bhopal in December 1984.
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It happened at midnight on 2nd, 3rd December.
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There was a plant set up in Bhopal in one of the most crowded areas, there was an industrial
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plant that used to produce chemical fertilizers.
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It was set up jointly as a partnership between Union Carbide Corporation and the Government
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of India and to make that the output of the fertilizer, one of the inputs required was
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an extremely dangerous gas called methyl isocyanide.
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Now for various reasons that is not pertinent to go into at the moment such as the regulatory
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system was lax, it wasn't properly enforced, the company management was extremely corrupt
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and didn't really bother to follow all the safety instructions and there was also a fair
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amount of laxity because they didn't follow first world standards in a third world country
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There was a mishap and this mishap translated into the leaking of the extremely like fatally
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deadly gas called methyl isocyanide into the atmosphere in one of the most crowded areas
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in Bhopal in the middle of the night.
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Now the consequence of that was about somewhere between 2000 to 3000 people died almost instantaneously
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and it is said that at that time on that day about an additional 50,000 to 60,000 individuals
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were affected by the gas and over a period of time they estimated that at least 200,000
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people are suffering from injuries of various degrees from mild to extremely severe all
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linked to the leak of the methyl isocyanide gas.
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So when people say Bhopal gas tragedy they usually mean the gas leak that happened on
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the night of December 2nd.
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And this is essentially tragedy one.
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Now as soon as this happened a curious class of people descended upon India, we call them
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Tell me a little bit more about that.
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Yeah so as you know Union Carbide is an American corporation.
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The plant in India was called UCIL, Union Carbide India Limited, so it was set up in
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partnership with Government of India and its management was you know part Indian, part
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foreign, it was an American company that had not followed the rules and led to a terrible
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industrial accident in India.
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So everyone realized that this kind of accident is going to end up in courts and there is
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going to be a huge liability payout right or a settlement to all the victims.
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So while the government tried to have some kind of an exercise to round up health services,
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immediate relief for the victims, collecting all the bodies of those who were dead, trying
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to match families, you know kids with their parents and so on.
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And if for those who are curious Raghu Rai, the photographer has a beautiful photo essay
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on the Bhopal gas tragedy in its immediate aftermath.
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It's a little bit startling to see those pictures but all this is very well documented.
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So aside from the government relief workers and the journalists and the bureaucrats, there
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was a curious class that descended into Bhopal and it was the ambulance chasers in America.
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So it was all these American fast speaking lawyers who showed up in their suits and who
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took out all these contracts based on contingency fees.
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Contingency fees is a style of fees where the lawyer gets paid only if the victim actually
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gets a settlement and usually that proportion of the lawyers free from the settlement is
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between say 30% and 50% that's the usual contingency fee arrangement or you can have many.
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So let's say I was affected and I got, let's say I broke a leg and I got $10,000 as settlement.
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They would say that, you know, why don't you recover since you have a broken leg?
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We will sue the car that crashed into you and therefore broke your leg and we will recover
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the money, we will keep 30%, you know, $3,333 and you get the rest of the amount and that's
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So hundreds of these lawyers showed up in Bhopal, they went to all these local victims
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who were really traumatized, who barely spoke any English, who were in no emotional or intellectual
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space to make this kind of a decision.
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These American lawyers promised all sorts of things, they got signatures on all sorts
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of contracts to represent these victims and they went back to America and close to 10,000
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different claims were filed even before the first set of relief was provided to the Bhopal
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That sounds pretty rapacious and insensitive, you know, almost like the reporters these days
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who come in the scene of a tragedy and thrusts a mic in the face of the victim and say, okay,
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how are you feeling now?
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So ambulance chasers are sort of like considered the bottom feeders of the American legal system.
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It's very pejorative word to call an American lawyer an ambulance chaser or to call any
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lawyer an ambulance chaser and they did this, I mean, the feeling at the time was that Americans
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caused a tragedy because of the industrial, you know, framework and the laxity and following
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And now American individuals will exploit it for their own gain.
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And now American lawyers are going to exploit this tragedy and further make money off of
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the misery of these poor Indian victims in Bhopal.
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Most of them living in a very, very, you know, relatively low income, extremely crowded area
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of Bhopal, which was right next to the industrial plant.
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And that didn't sit well with anyone.
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Like it wasn't, you know, local versus global.
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It wasn't rural versus urban.
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It wasn't any like typical polarization left versus right split.
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It's like nobody found this unsavory mess palatable.
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Everyone wanted these ambulance chasers gone.
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Different people had different solutions.
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Now curiously enough, since all these claims had been filed in the United States in a New
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York court before Judge Keenan, all the claims were amalgamated and he was a judge who gave
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the decision on where this case would be heard because it was very clear by then that there
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is going to be a huge lawsuit.
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So what was felt was we need to have the case in one particular place.
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Curiously enough, the government of India was extremely well-intentioned and it actually
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argued that the Indian legal and judicial system doesn't have the capacity to handle
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this case and this large number of claims and that the case should be fought in the
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And ironically, the Union Carbide had representatives and people representing the Indian legal system
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who verified that the Indian legal system is excellent and is actually capable of handling
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So Union Carbide wanted the case moved to India.
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The government of India wanted the case to be heard in the United States.
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Simply because Union Carbide figured out that the American tort liability system is such
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that they would probably go bankrupt paying our legal fees and settlement fees for the
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tragedy and they felt that the Indian system wouldn't punish them in a similar way.
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Indian system didn't have a proper tort liability jurisprudence that had developed and there
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had never been a class action lawsuit in India, tort or otherwise.
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So class action lawsuits were the vogue in the United States thanks to the asbestos and
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If you've seen movies like Erin Brockovich, you know what I'm talking about.
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And such a thing hadn't yet happened in India and we didn't have good precedent for it.
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I mean, they knew that they would have to pay out large amounts because of liability
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in this case, but they thought the amount would be lower in India and so did the Indian
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And the Indian government did its very best to represent Indian interests and Julie genuinely
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wanted the victims to be heard and wanted them to be heard in an American court to get
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justice from an American company.
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Now, the interesting question that comes up here is that the ambulance chasers therefore
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would have made sure that not only were there a whole bunch of cases even if they were amalgamated,
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but that the victims would then get just 66% of the compensation, which surely many must
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I mean, why should they not get 100%?
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So what did the Indian government do to tackle this problem of ambulance chasers?
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As I mentioned across the board, across all sorts of different perspectives, everyone
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felt that ambulance chasers are just, they need to be driven out and that the victims
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are genuinely suffering.
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And secondly, that American ambulance chasers can't possibly represent the interests of
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Indian victims from so far away and we don't know if they'll actually end up paying them
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So they had to figure out some ways.
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So what the government did was it legislated, it did what it does best.
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So at this time, we're already talking about the Rajiv Gandhi government.
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It first passed an ordinance, which later turned into an act.
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It's called the Bhopal Gas Leak Disaster Act.
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And what the act essentially did was it said that no one except the government of India
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can represent the Bhopal gas victims in a court of law.
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So it got the exclusive right to represent the victims.
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Now that exclusive right essentially means that you're not going to have any ambulance
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And at the same time, the Bhopal gas victims are going to get the best legal help because
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think about it, the attorney general of India and his team are going to fight the case for
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And what's more, they're going to get a hundred percent of the compensation.
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So they'll get a hundred percent of the compensation and this hundred percent won't come from like
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some ordinary lawyer who doesn't know what he's doing.
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It's going to come from the attorney general of India and his team.
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So it's a highly sophisticated set of legal minds who are fighting this case.
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And they thought this is the best way of protecting the victims.
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And meanwhile, the government gave interim relief.
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So we did everything right in some sense, right?
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So it gave relief and the judge ordered that the government and union covered has to pay
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some money immediately while the case is being fought.
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It also set up all these health centers and everyone thought this is the best way to tackle
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this problem of ambulance chasers who are trying to make money out of the misery of
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an Indian tragedy caused by American companies.
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So the scene effect of this legislation is number one, you get the greedy, rapacious
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ambulance chasers out of the way who don't have enough local knowledge anyway and may
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not be able to properly represent them.
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Number two, you make sure that the victims get a hundred percent of the compensation.
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Number three, you make sure the victims are represented by the attorney general of India,
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which who has all the legal services and the local knowledge at his disposal.
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So it seems that, wow, what a great legislation.
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But as you point out, this legislation actually led to Bhopal gas tragedy number two and three.
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So Bhopal gas tragedy number two and three are both linked and separate.
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So Bhopal gas tragedy number two, essentially what happened was once the government of India
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passed the Bhopal gas leak act, which gave it the exclusive right to represent, they
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started figuring out how they will represent the people of India.
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Meanwhile, judge Keenan in New York, after hearing all the arguments, decided that the
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best place for the case to be fought is in India.
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So the case bounced back to the district courts in Bhopal and then moved its way up to the
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While all this was going on, the powers that be both in the judiciary and in the government,
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in the executive, felt that this case will go on forever and ever and they need to enter
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a speedy settlement so that Union carbide can just release the money and government
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of India can get the money.
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So what happened to the second tragedy was because all this was done so hastily by a
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government which wanted to put a bandaid on this problem and didn't care too much about
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the constitutional rights of people, their right to represent themselves, their right
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to be heard after a tragedy, their right to a proper legal process that is followed to
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It entered into a very hasty settlement.
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The settlement was for $470 million, which in those days in 1989 came to about 750 crore
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rupees, which was a large sum of money.
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This settlement was hastily entered based on the following numbers.
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So they thought there would be 3,000 deaths and 52,000 victims total, right, aside from
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And these 55,000 victims, we will split the pot of 750 crores, the victims who died get
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a larger sum of money and the other 52,000 victims based on the severity of their injury,
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you pay them a certain amount.
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Part of this legal tragedy or this government created mess was they absorbed through the
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settlement, they absorbed Union Carbide Corporation of all past, present and future liability.
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This is really peculiar in a case like this.
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And there were a lot of fingers pointed and raised at, you know, corruption and scam by
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the Rajiv Gandhi government and the then attorney general saying that this is really peculiar.
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We still don't even know what are the terrible effects of methyl isocyanide.
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It's already entered the groundwater system in Bhopal.
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Unborn children after the case, women who were pregnant at the time and the kids were
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not yet born, they were born with deformities.
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Women who became pregnant after drinking the groundwater, say 5 to 10 years later, still
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had children who were born with deformities because there was methyl isocyanide in that
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So given that it was such a deadly gas and we weren't entirely sure what are the health
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effects and other effects of this gas, it was ludicrous at the time to absolve a company
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of future liability, right?
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So this was another big part of the tragedy.
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A tangential question though, if the government itself isn't the victim, I mean the individuals
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are the victim, let's say I'm a victim of that for whatever reason and I get lung cancer
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because of whatever the gas is, how can the government absolve the company of its liability
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There was a case called Chamanlal Sahoo versus Union of India, which challenged this particular
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legislation on various grounds, including the fundamental rights of these individuals,
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which included a right to a proper legal procedure and their right to be heard.
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You're taking away the autonomy of all the individuals concerned if the government just
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says that on their behalf, I absolve you.
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So this was a very big constitutional tragedy, right?
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The fact that the government could take away such an important right.
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Now I'm not minimizing the fact that the gas leak happened and it was a terrible industrial
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disaster caused by a firm which was frankly just interested in profit and nothing else,
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not even long-term profit.
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It was extremely corrupt.
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I don't deny any of that, but now let's say an industrial disaster has happened and you
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set the clock from that point.
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The government contributed as much to the misery of the people as Union Carbide did by
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taking away their rights.
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There's a second problem with Chamanlal Sahoo, the case actually addressed.
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Remember that there was a huge conflict of interest because the government of India was
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half the owner of Union Carbide India Limited.
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No foreign company could set up a hundred percent investment plant in India in those
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So you mean they absolved themselves?
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And that was many people said that that was one of the ostensible reasons was to protect
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the people, but they were so keen to pass this legislation and get the exclusive right
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so that the government is absolved of all problems.
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So there was a terrible conflict of interest through this act because remember the government
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One the government partially owned the company.
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Second the government regulators did not enforce all the industrial regulation.
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So yes, Union Carbide was lax on its safety standards, but what were all the government
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industrial inspectors doing who were supposed to go and inspect every factory, especially
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those factories which actually have extremely fatal poisonous gases in a contained space
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right in a highly urban area.
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So the government was at fault.
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It wasn't completely blameless, but because of this conflict of interest this case happened
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and then I think by then everyone was sort of exhausted and no one wanted to create a
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new legal problem because if you take the government's exclusive right away, you reset
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the clock, the ambulance chases come back.
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Like there was just too much uncertainty.
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So I think at some level, not because of good jurisprudence, but just because of expediency,
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the courts decided to favor the government.
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It held that the Bhopal Gas League Disaster Act was constitutional.
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So Chamanlal Sahoo lost.
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Chamanlal Sahoo, that case was not in his favor and the law held and it continued to
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have the exclusive right to represent and therefore the settlement also held.
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So this is tragedy two that the government settled in 89 for a much lower sum of money
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than it should have and that it absorbed Union Carbide India of which it was half owner.
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So this is tragedy two.
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Tragedy three is a little less obvious.
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So remember we were talking about all these terrible ambulance chasers who showed up in
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India, the Bhopal Gas League Act, many feel at that time rightly legislated against these
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ambulance chasers by giving the government the exclusive right to represent.
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Now let's not go into tragedy two that also happened because of the exclusive right to
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Let's focus on the fact that now only the government can represent these people and
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the ambulance chasers can't.
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Now on the face of it, these people, you know, the settlement has already been made 750 crores
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has already been collected.
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So without ambulance chasers, the government's not going to take the cut.
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So it's going to give 100% of the money to the victims and everything should be fine.
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And yet every time I'm in Jantar Mantar, Bhopal Gas victims are still either protesting through
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a hunger fast or something else and these still haven't received their claim.
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Every time an American president lands in India, Bhopal Gas League victims are extremely
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upset that the CEO of Union Carbide wasn't criminally prosecuted and wasn't extradited.
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So this is still a persisting problem after 33 years of the event.
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And after 27 years of 28 years of the settlement, we still don't have any way of reaching the
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The reason is that ambulance chasers take a third of the cut or half the cut of the
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settlement, but they only get paid that money if the victim actually gets the settlement.
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So if the victim is not getting the settlement, they don't get paid the money.
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So you know where I'm going with this.
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This is a highly incentive compatible system.
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The incentives of the ambulance chasers are perfectly aligned with the incentives of the
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Now what about the incentives of the bureaucrats and the attorney general and the judges and
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all those wonderful, well-meaning, well-intentioned people that the Bhopal Gas League Act actually
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enabled to represent the victims?
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They have no incentive to figure out the correct number of victims, the severity of their problem
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and how much compensation they should be given because they get paid their salary irrespective
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of whether these victims get paid their compensation or not.
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Exactly, and just to be clear, the ambulance chasers therefore plays a filtering process
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He can filter out the false patients from the real patients and do the entire filtering
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work because it is in his interest to do so.
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He only gets paid when the victims get paid.
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So he doesn't want to waste time on false cases.
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So this, I'm glad you raised this point.
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So one of the part of the third tragedy is that the victims have still not gotten paid.
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Now one of the reasons the victims haven't gotten paid is that the government says it
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can't tell which cases are real and which cases are spurious.
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Now remember the figure that there were supposed to be 3,000 deaths and 52,000 other cases
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Within about two years of the settlement, the government of India admitted that the
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number is maybe closer to 5,000 deaths and closer to 100,000 cases, something like that.
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As of say 2004 or 2005, over one lakh claims have been filed.
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So yes, time has passed.
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So more fatalities may have happened which were actually linked to the Bhopal gas leak.
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So even allowing for all of those things, this is a ridiculously large number compared
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to what the government originally estimated.
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So now two things are going on.
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One either the government misestimated and all these claims are genuine or the government
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misestimated and some of these claims are still fake or spurious claims, right?
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Now how can we tell the genuine claims from the spurious claims?
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How do we make sure that the genuine victims get paid and the spurious victims don't get
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So government did what it always does.
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It demanded everything in triplicate.
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It demanded that you go to a health official and then a second health official and it can
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only be this kind of a hospital in that neighborhood that you're from and then this particular
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guy needs to sign off on it and only then you will get your compensation award, right?
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Now imagine if you are a victim of a gas leak and you have all these health problems and
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your family members have died, what is your ability to go through this process?
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I mean it just adds suffering to suffering.
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It adds suffering to suffering and also you don't have the agency to go through this kind
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of a very severe legal vetting process to actually get your claim.
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And imagine 28 years of this.
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Now you have 28 years of this of going.
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So at last count, there are 6,000 gas victims a day that go to Bhopal hospitals to get treated.
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So clearly the health problems are persisting and the money needs to be given and they're
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in and out of hospitals.
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So how are they going to navigate this complex procedure?
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Second, there is obviously a lot of corruption in this, right?
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Lot of people withhold their signature and say if you give me money, they're saying this
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So they're going to go straight to hell.
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But they tell the gas leak victims that if you're going to give me money, only then I
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will sign off on the 50 forms that you need signatures on, so on.
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That's one part of the problem.
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Simultaneously, there are fake claims of people who are hail and hearty, who happen to know
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what's going on, who happen to know the compounder in a hospital or the doctor in another government
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hospital, who managed to get all these signatures and process their claim.
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So because this was such a huge problem, about 10 years ago, the government just stopped
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processing claims because it said we can't tell the genuine from the spurious claims.
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The 750 crores that came in the settlement sat in an account in the RBI.
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It has collected interest and 1,500 crores is yet to be dispersed.
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We still haven't paid 1,500 crores to these victims.
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So there's money, there are victims, there is a mechanism, none of it works.
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There's a problem of type one and type two errors, as we call it.
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So type one errors are false positives, type two errors are false negatives.
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A false positive in this context would be a fake claim, that is someone who is not genuinely
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a victim of a gas leak, false a claim, his claim should not be paid.
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A false negative is someone who is a genuine victim of a gas leak and should be paid.
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So you want to separate these two cases.
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I guess you want to make sure no false negatives happen.
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If some false positives happen, that's okay.
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It's really interesting that you say that because a lot of criminal law is based on
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We will let a thousand guilty men go free, but not hang one innocent person, which is
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exactly, most criminal law has really tight procedural rules to avoid the problem of false
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positives, even if there are a lot of false negatives.
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So that's the trade-off made in the most extreme cases like death penalty in criminal law.
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In this case, there is a trade-off, you're right, and one would like to avoid both kinds
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One would want to avoid cases where genuine victims don't get paid and spurious victims
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But having said that, you're absolutely right.
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I mean, if there is a trade-off or a problem, it is better that both genuine and spurious
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victims get paid as opposed to nobody getting paid, right?
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So that's certainly, I agree with you on that.
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Now, having said that, the ambulance chasers solve both type one and type two error problems
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or rather minimize type one and type two error problems, and every system has to be about
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error minimization, right?
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Now how do they do that?
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Remember what I talked about when I was discussing contingency fees.
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It seems terrible that someone who's a victim of an industrial disaster while they are suffering
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must part with a third of their compensation that is actually given to them to make them
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whole because of their suffering, right?
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So it seems like a very unsavory and terrible thing.
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This class of people seem to be making money out of someone else's misery.
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Having said that, the flip side to it is none of these victims would get paid in the first
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place if they didn't have anyone to represent their interests.
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And who better to represent their interests than someone who actually gets a third of
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So why would ambulance chasers solve the false positive problem?
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A lot of these claims would actually have to go through a judicial system.
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False positive claims won't hold up in court.
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Because the opposition, which in this case would be union carbide, would poke holes.
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Union carbide is interested in paying as little liability as possible, right?
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So it's in their interest to go through all the paperwork and the vetting procedure themselves
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to make sure that they don't have to pay every additional claim.
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Now, union carbide is not interested whether it's a genuine or a spurious claim.
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They're just going to try and poke holes through all claims.
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But resources are scarce and ambulance chasers will only pick the cases that they have the
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highest likelihood of winning.
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So they will themselves minimize the number of spurious claims because they'll have to
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spend their own energy on it and they'll get paid no money for it.
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And they will get paid money for the genuine claims because they would be harder to poke
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holes through by the opposition.
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And therefore the genuine claims and the spurious claims would be filtered by this private adjudicating
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process without even before a judge or a government official gets involved simply because that's
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the incentive compatible system.
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So that's a question of spurious claims.
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Now what about genuine claims?
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Ambulance chasers are going to go forward with the most genuine claims first because
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those will make the best case and come out with the highest payment and then move down
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So there seems to be some natural and intelligently incentive compatible selection of the kind
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of cases that actually get heard because ambulance chasers end up paying all the costs up front
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and only get paid if the victims get paid.
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So ambulance chasers and a competitive adjudication system where you have a common law system
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that is you have a for and an against as opposed to civil law systems where a judge goes on
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an inquisition and figures out the merits of a system.
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These two things combined actually have the ability to minimize type one and type two
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errors and while we have a common law adjudicating system where you have opposing sides who will
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go through every claim, we subverted that when the government of India got the exclusive
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And the second aspect that we completely eliminated was the ambulance chasers who actually
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managed to do the right thing without meaning to do the right thing but end up doing the
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right thing simply in the interest of getting a third of the contingency fees.
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Which is a precise thing.
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You might have found ambulance chasers greedy and obnoxious and insensitive but the bottom
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line is that just by the virtue of the incentives at play, they were performing a very useful
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function which the government A, eliminated and B, could not perform themselves.
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To sum up therefore, these are the three Bhopal gas tragedies.
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Bhopal gas tragedy one is of course the events of December 1984 where the gas leaked, thousands
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of people died, hundreds of thousands of people perhaps were affected and this continued for
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decades, a terrible tragedy.
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Tragedy number two is the first unseen effect of the act that the government passed, that
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is barring the ambulance chasers and taking the onus upon themselves to represent all
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the victims, was when they accepted A, a smaller settlement than they should have and B, most
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shockingly, they absolved Union Carbide India of all liabilities, thereby unilaterally taking
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away the autonomy and decision making of all the individuals who were affected by that
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which just seems to me to be morally perverse, it's just completely flat out wrong.
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And the third great tragedy is that for 28 years, and you spoke about how protests happen
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when every US President comes to India, Bhopal gas victims will protest, will consider that
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the settlements happened in 1989 and these protests have probably been happening from
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the time of George Bush senior, through Bill Clinton, through George Bush junior.
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It happened when Obama came.
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It happened when Obama came and if Mr. Trump comes, I'm sure it will happen again.
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And it's 28 years of, to use Larkin's phrase, misery spiling on, deepening like a coastal
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It's a terrible, terrible tragedy.
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Shruti, thanks so much for being on the show today.
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Thanks for having me, Amit.
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Good evening ladies and gentlemen, this is your captain speaking.
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Sorry to say but there's been a slight delay due to the apocalypse having suddenly begun.
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As you can see there's death, destruction and chaos taking place all around us.
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But don't you worry, food and drinks will be served shortly and I would recommend checking
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out IVM Podcasts to get some of your favorite Indian podcasts.
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We'll keep you going till this whole thing blows over.
