20 May 2008 18:23 [Source: ICIS news]
SINGAPORE (ICIS news)--Eight investors in US chemical giant Dow Chemicals have filed a complaint against the company with the Securities Exchange Commission (SEC) for alleged non-disclosure of its potential liabilities for the remediation of contaminated groundwater and soil in Bhopal, India at the site of the former Union Carbide facility.
“In terms of the SEC filing, we stand behind all of our disclosures,” said Scott Wheeler, spokesman for Dow Chemicals, on Tuesday.
Wheeler added: "Where there are no liabilities there is no need for disclosure. Since Dow has never own nor operated the plant site, we have no liabilities for the site. We are very confident of the adequacy of our SEC disclosures."
The company’s potential liabilities were brought to the attention of the shareholders on 15 May at Dow Chemical's annual general meeting (AGM) in ?xml:namespace>
“Activists have driven this case based on their interpretations of the internal note issued by the [Indian] Law Ministry. We have neither heard from the law ministry nor have we received any documents from them,” Wheeler said.
The document in question is an internal note understood to have been prepared by the Indian Department of Chemicals and Petrochemicals in consultation with the Ministry of Law dated 7 February 2008. The document was obtained through a public records request by activists and presented to Dow’s shareholders during its AGM, apparently indicating that the ministry would not support Dow in its pursuit for discharge of Union Carbide’s liabilities relating to the Bhopal tragedy.
“Irrespective of the manner in which Carbide has merged or has been acquired by Dow Chemicals, if there is any legal liability, it would have to be borne by Dow Chemicals,” the note stated.
It added: “It cannot also be said that the investment proposed to be made by Dow Chemicals will be immune from the orders of the court.”
The eight investors are now filing a complaint based on the possible impediment to Dow’s proposed $1 bn (€640m) investment in
“Up to $1bn in Dow Chemical investment in India may be impeded by pending liability cases facing Dow, yet the company has not disclosed this to its investors," the investors said in the complaint letter dated 14 May 2008 to Conrad Hewitt, chief accountant of the SEC and John W White, director of the corporation finance division. "We are asking you to investigate and take any appropriate enforcement actions.”
The shareholders added: “Most significantly, the company has never indicated in its shareholder reports that these remaining liability issues are an impediment to investing in
Nora. M Nash, director of corporate social responsibility for Sisters of St Francis of Philadelphia, one of the eight investors who filed the complaint against Dow Chemicals with the SEC, said:
“We are concerned that Dow Chemical’s Investment in
Sanford Lewis, an attorney with Strategic Counsel PLC representing the
Lewis added: "The lack of disclosure may lead to overvaluing the stock in light of this impediment to growth.”
Another religious organisation also voiced its concern about the Dow investment in India:
“We have a small number of shares in Dow Chemical, so the recent news regarding
SEC spokesman John Heine said that as a matter of routine policy the commission will not confirm nor deny existence of a complaint or discuss correspondence it may have received, when asked if whether the SEC would launch an official investigation into this matter.
Dow has always maintained its position that it has never owned nor operated the plant site involved with a fatal chemical release at
The Bhopal December 1984 incident involved a Union Carbide plant in Bhopal, India venting methyl isocyanate, killing nearly 4,000 area residents and intoxicating thousands more.
($1 = €0.64)
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