Home > Finance, Law and governance, Politics > Lessons from Bhopal: Financial Responsibility

Lessons from Bhopal: Financial Responsibility

Another thought I had regarding Bhopal, and in general corporate responsibility regarding damage to life and property is: The government should, for companies owned in part or whole by foreign entities, block all repatriation of money whenever there are lawsuits for compensation due to death or injury above a certain amount. Such companies will not be able to buy foreign exchange under any guise until the court allows them to do so.

Of course the companies will not like such a law, and there will be many protestations regarding possible abuse of such a law. But such a law is needed as a sensible alternative for arrest, when it comes to companies. Individuals can be arrested, thus temporarily suspending their freedom of movement (and many other freedoms). Companies cannot be `arrested’ as such, but their CEOs and other decision-making individuals can be. For companies which are wholly owned by Indians, arrests are sufficient to ensure that the accused in cases of death or injury remain within the reach of courts. For companies which have foreign owners or shareholders, the law does not find it easy to reach those individuals, nor to get a hold of their assets in case compensation is granted. If these companies are stopped from converting their assets into foreign currency, those assets will remain within the reach of the courts till a decision has been reached on compensation etc.

Such a law would be much more useful than a law prescribing higher punishments to people who remain out of reach.

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