Early Bhopal Charge Put at $17 Million : Suits Not Included in Union Carbide’s Initial Cost Estimate

In the first tally of its losses from the leak of toxic gas at its Bhopal, India, plant, Union Carbide Corp. said Monday that it took a charge of $17.8 million in the fourth quarter of 1984 for “operating, distribution and administrative costs” related to the accident.

The company said the charge includes “incurred and anticipated” expenses but does not cover legal liabilities that may arise from the accident, which killed more than 2,000 people and injured more than 200,000.

The Danbury, Conn.-based chemical maker disclosed the charge in announcing that its 1984 earnings rose to $323 million on revenue of $9.5 billion, compared to year-earlier earnings of $79 million on revenue of $9 billion. The extraordinary charge reduced Union Carbide’s fourth-quarter net income to $13 million, compared to a year-earlier loss of $111 million.

The loss for the fourth quarter of 1983 included a $139.3-million charge to cover the closing of facilities.

Initial Expenses

Spokesman Stephen Galpin Jr. said the Bhopal expenses included the trips of Chairman Warren M. Anderson and other company officials to Bhopal, and the costs of closing down methyl isocyanate plants in France, Brazil, Woodbine, Ga., and Institute, W. Va. Also included was $1.84 million in corporate “gifts” to the Bhopal relief fund, and the cost of shipping quantities of toxic chemicals from the decommissioned French and Brazilian plants to be destroyed in Georgia.

The fourth-quarter charge will probably be dwarfed by what Union Carbide eventually pays the accident victims, although many analysts now believe that the costs may be far less than some have predicted. The company faces lawsuits in the United States and India that claim damages of tens of billions of dollars.

Many analysts now believe that the liability may come to several hundred million dollars, and they add that insurance coverage should pay for about $200 million.

Union Carbide officials contend that the liabilities should be completely covered by the company’s insurance policies. They have also declared that they intend to reach a settlement of all cases within months.

On the New York Stock Exchange on Monday, Union Carbide shares climbed 50 cents to close at $37.875 as 393,700 shares were traded.