Why has chemicals firm been given 2012 deal, MPs ask Coe

Lord Coe faced tough questions from senior MPs yesterday regarding a lucrative Olympic contract awarded to a controversial American chemicals company that campaigners say will taint London 2012.

The shadow Olympics minister, Tessa Jowell, and the chair of the Home Affairs Select Committee, Keith Vaz, yesterday held private talks with Lord Coe, who was asked to justify the £7m deal with the Dow Chemical Company (Dow), which has been accused of failing to address one of last century's worst corporate human-rights disasters. Dow officials will be invited to attend further talks next week after Lord Coe failed to satisfy MPs that Dow does meet London 2012's ethical code.

Dow is the 100 per cent owner of Union Carbide Corporation (UCC), which at the time was the majority shareholder of Union Carbide India Limited [UCIL] the company responsible for the 1984 gas disaster in Bhopal, India, which survivor groups say killed 25,000 people.

Dow's contract gives it "exclusive marketing rights" to the main stadium in east London. Its name will be adorned on the "wrap" around the stadium, guaranteeing the company a prominent profile next year.

Dow bought UCC in 2001 and denies any responsibility for UCC liabilities in Bhopal – which Locog accepts. Dow claims the $470m paid by UCC in 1991 for the disaster victims (currently contested in the Supreme Court) was final. Yet Dow and UCC are defendants in an Indian Public Interest Litigation case for clean-up the factory site. Last year, India's government blacklisted Dow AgroSciences India for five years for bribing government officials to expedite registration of three pesticides. Dow AgroSciences is a wholly owned Dow subsidiary.

Mr Vaz said: "The best course of action is for Dow to withdraw until the issues in Bhopal have been resolved, but I am happy to hear what they have to say. This is not the right kind of sponsorship for the world's greenest Olympics." Ms Jowell said discussions about Dow's involvement would continue.

Tim Edwards, a trustee of the Bhopal Medical Appeal, said MPs must beware of Dow's well-oiled PR machine. "Dow's public-relations work on Bhopal exemplifies the slippery art of evasion. But in rarely seen regulatory filings, Dow rather frankly describes Union Carbide as part of its global business... Dow seems to think it is above the law, and Locog appears to agree."

The meeting came amid growing pressure from a cross-party campaign to make Locog reverse its decision. Barry Gardiner MP, chair of Labour Friends of India, said: "I urge Locog to think again in order to protect the reputation of the Olympic legacy for Britain. Its failure to take the victims of Bhopal and ongoing contamination into account is particularly ironic given the UK Government had to spend £12.7m cleaning up the Olympic site, which was 'grossly contaminated' by toxic waste."

A Locog spokesman said Dow had won the contract after an open and competitive process. “All of our suppliers must work within our own sustainable sourcing code and reflect our values and sustainability requirements in the work they do for us.”

A Dow spokesman said: “Dow is perfectly matched to the vision of the Olympic Movement. The fabric stadium wrap will be produced under conditions that comply with LOCOG’s Sustainable Sourcing code and are consistent with high standards of environmental responsibility.”

Eyewitness: The toxic legacy remains, 27 years on

Almost 27 years after the world's worst industrial disaster struck Bhopal, the abandoned gas factory and its toxic waste are part of daily life for tens of thousands of poor families.

Around the streets behind the factory, adults were either filling up pots and urns with clean water – through taps installed three months earlier – or else bathing their children. Campaigners won a hard-fought battle in 2004 when the Supreme Court ordered the state government to provide Bhopalis with clean water. And slowly water pipes are being fitted into the homes of all affected communities. But water is scarce, so the taps stop flowing after 30 minutes and families have to make stores last for 48 hours. This means most still rely on dirty ground water from hand pumps when the urns run dry. "We know the ground water is dirty, it smells funny, but what can we do?" said Habib Khan, 46.

Soon after the Union Carbide factory opened in the 1970s, waste was dumped in three solar evaporation ponds. Documents show the ponds were "almost emptied" through leaky lining by 1982. These have seeped into water sources over the past three decades; monsoon rains spread the toxins further.

Campaigners believe this is the cause of high rates of congenital deformities, cancers, respiratory and endocrine problems among communities to poor to move.

Dow, which bought Union Carbide in 2001, rejects claims that it inherited the company's liabilities, yet in the US it settled, through UCC which it wholly owns, asbestos-related claims dating back to the early 1970's.

A Locog spokesman said Dow had won the contract after an open and competitive process. “All of our suppliers must work within our own sustainable sourcing code and reflect our values and sustainability requirements in the work they do for us.”

A Dow spokesman said: “Dow is perfectly matched to the vision of the Olympic Movement. The fabric stadium wrap will be produced under conditions that comply with LOCOG’s Sustainable Sourcing code and are consistent with high standards of environmental responsibility.”

Nina Lakhani