04 May 2012

Dow Under Fire for 1984 Incident

Story first appeared in The Detroit News.

When Dow Chemical Co. inked a 10-year sponsorship agreement with the Olympic Games in 2010, the company envisioned an estimated worldwide sales boost of $1 billion.

Instead, the Midland-based chemical company has been embroiled in a public relations controversy, months before the London summer games begin July 27.

Protesters still outraged at the 1984 Bhopal gas leak that killed thousands have claimed Dow's sponsorship has no place at the Olympics. India, Amnesty International, Greenpeace and some British politicians want Dow to pay $1.7 billion to Bhopal victims on top of the $470 million Union Carbide paid in 1989.

Dow has mounted an aggressive defense, noting that it had nothing to do with the 28-year-old disaster that claimed an estimated 15,000 lives, all liability issues have been settled and that the Indian government bears responsibility for any problems at the site.

Public relations experts question whether Dow's strategy is helping to quiet the uproar, but the company and chemical industry say the negative publicity lets them clarify the issues and discuss the positive contributions of the chemical industry.

Dow has called Bhopal a terrible tragedy and said it understands the lingering concern. Dow's vice president of Olympic operations, also argued in a statement that any questions about the lack of remediation at the Bhopal plant site should be directed to the state government of Madhya Pradesh, which revoked the lease of Eveready Industries India, Ltd. (formerly Union Carbide India, Ltd.) in 1998 and took over full responsibility and accountability for the site. For 14 years under the state government's control, nothing has been done at the site.

The strategy raises doubts among some marketing experts.

It would seem unwise for Dow to not acknowledge the anger and the viewpoint in London by these protesters. Dow should consider reaching out beyond the media and carefully delivering its message to groups in London, where the protests are taking place.

The longer the controversy drags on, the more difficulty Dow will have in reducing the bad publicity.

But Dow counters in an email that the added scrutiny has benefits. An unanticipated effect of the increased attention that Dow's Olympic sponsorship has received is that the company has additional opportunities to outline its overall support for the Games and to discuss the many products it has produced for Olympic-related infrastructure and equipment.

Roots of Bhopal

The controversy started with a chemical release at a Union Carbide plant in Bhopal, India, in 1984 that killed up to 3,000 people within days. Union Carbide paid $470 million to victims through the government of India in 1989.

After Union Carbide sold the plant in 1994, it eventually was taken over by a regional government in India. In 2001, Dow bought Union Carbide. At the time, some shareholders worried that Dow could be saddled with liabilities from Bhopal.

The Bhopal incident remained off the public radar until the Dow CEO signed the 10-year Olympics sponsorship agreement in 2010.

The company will pay $100 million every four years during the agreement, which includes every winter and summer event through the 2020 Olympics. The company wants to promote its products -- from the environmentally friendly plastic decorative wrap around the London Olympic stadium prior to the opening ceremony to the specialty plastic materials in the stadium's seats.

The International Olympic Committee has backed Dow's sponsorship, even after the press in India reported that an Indian sports official asked the IOC to scrap the deal.

The IOC understands that Dow never owned or operated the facility in Bhopal, and that it is the State Government of Madhya Pradesh which owns and controls the former plant site. The company has supported the Olympic movement for over 30 years, providing financial support and bringing industry-leading expertise and innovation to the Games.

No word on boycott

Officials in India, the second largest populated country in the world, may boycott part or all of the London games, but the IOC told The News it has received no notice from the Indian National Olympic Committee about a boycott. The Indian committee did not respond to a request for comment.

There has been no evidence yet that the controversy has hurt business. The company's stock price is up about 32 percent to $33.35 a share from the 2010 sponsorship announcement. No investment firms have downgraded Dow's stock because of its Olympics deal.

Public relations expert Batra says the controversy is tricky to navigate because of legal ramifications.

Saying too much about the protests and Bhopal might come back to bite the company financially, since India and others have called on Dow to pay an additional $1.7 billion, he said.

It's a difficult balancing act for a company in this situation to show sympathy, diffuse the situation, maintain legal distance and stay away from legal judgments. To do anything more than show sympathy might make them open to the charge that they are responsible in some way for Bhopal.

Still, the uproar has turned attention to the chemical industry that could pay off in the long run, said Anne Kolton, vice president of communications for the American Chemistry Council, an industry group that includes Dow.

There are always many people watching any large industry or institution, looking for evidence of transparency, integrity, responsibility and safety in how they do business. While the scrutiny may be on the chemical industry in various contexts, the attention is welcome.

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