Are your hands clean?

In the wake of the Bhopal verdict, the BP oil spill and India’s new nuclear damage bill, fears over corporate liability – and in some cases the lack of it – have resurfaced

Vandana Chatlani reports

Companies in India have been accused of everything from corrupt practices and fraud to causing environmental damage and loss of lives. The story of Satyam and its overnight fall from a company lauded for its corporate social responsibility – including an award from UK Trade & Investment in 2008 – to a failed, fraudulent entity is one that continues to play itself out.

But questions remain about who is responsible and to what extent companies and their staff should be held liable for misdeeds.

Arguing that “criminal liability cannot be equated with civil liability,” Sumeet Kachwaha, the managing partner of Kachwaha & Partners, is worried about the emerging trend for senior managers to be held criminally liable for corporate misconduct. “If a chairman or a managing director of a large company can be deemed to be criminally liable for all that may go wrong in the company, without the need to establish recklessness, negligence or a causal link, it would become impossible to find a person of standing or calibre willing to hold such a position,” he says.

Who is accountable?

The complexity of corporate liability in India is underscored by the tragedy of Bhopal. Liability for thousands of deaths, damage to the environment and inter-generational health concerns was settled with a payment by Union Carbide of just US$470 million in 1989. This is a far cry from the US$20 billion provided recently by BP to compensate victims of the Gulf of Mexico oil spill following pressure from the US government.