How One Taiwanese Conglomerate Turned ‘Formosa’ Into a Dirty Word

“Formosa” is frequently, and fittingly, used with pride by Taiwanese as an alternate moniker for their homeland. The name Ilha Formosa was bequeathed by Portuguese sailors on their maps, so future explorers would make no mistake which majestically mountainous, lushly forested land this was: the “Beautiful Island.”

One Taiwanese-owned conglomerate, however, is building quite a different reputation for the name: Formosa Plastics Group (FPG), which is becoming synonymous with pollution, industrial accidents and death.

The latest incident: A court ruling in Texas that labels Formosa a “serial offender” of violating state and federal environmental laws, with some 1,149 days of violations recorded and spilling thousands of pounds of plastic pellets and powders off the state’s Gulf Coast. After the firm was previously found liable and fined US$121,000 (NT$3.76 million) in January, the judge is now deliberating over potential penalties to be levied against the firm following the latest liability ruling on June 27. These penalties reportedly could reach as high as US$162.2 million (NT$5.04 billion). This is just the latest in a string of cases by this “serial offender.”

In many ways, the Formosa Plastics Group is a striking success story. It is one of the very top PVC resin producers in the world, and it has a whole range of subsidiaries in businesses ranging from petrochemicals to cosmetics to fibers. Overall, the firm was ranked as the world’s sixth largest producer of chemicals in 2017 by Chemical & Engineering News. With all its subsidiaries included, it had a pre-tax income of US$13 billion (NT$408.7 billion), US$132 billion (NT$4.15 trillion) in assets, and 112,996 employees in 2017. Its now-deceased founder, Y. C. Chang (王永慶), was a farmer’s son with only an elementary school education who built a multinational empire and personal wealth of billions from a loan from United States aid agencies. Formosa repaid that aid by investing heavily in the United States and providing jobs and business to communities in Delaware, Illinois, New Jersey, Louisiana and Texas. Indeed, their investments and factories around the globe provide useful products and employment on a mass scale.  

It is inevitable that any large conglomerate with factories around the world processing dangerous chemicals will have accidents and negative publicity. However, it is the frequency of both that sets the Formosa Plastics Group apart as a “serial offender.” In Texas, the court liability ruling is just the latest problem for the firm: 11 were injured in 2005 after a factory explosion, more than a dozen in 2013 in another fire, and, more recently, a worker filed a legal complaint after suffering both a workplace injury and being called a “lazy, fat Mexican” in front of a group of fellow employees by the firm’s human resources director.

Other American operations have fared even worse. In 2004, an explosion in an Illinois factory killed five, injured three and destroyed much of the facility. According to the Violations Tracker of the economic development watchdog Good Jobs First, Formosa has racked up US$20,790,268 (NT$647 million) in fines since 2000 for 68 environmental, health, workplace safety and railroad safety violations. A search of the United States Environmental Protection Agency website produces 1641 results for the search term “Formosa.” Having that many citations from an environmental enforcement agency is the equivalent of having a long police rap sheet.

It is not just in the United States that fatalities have happened as a result of the firm’s actions, Cambodia saw at least five people die in rioting during a panic flight of nearly 50,000 Sihanoukville residents in 1998 as residents realized they were being poisoned. Nearly 3,000 tons of toxic mercury-laced waste were discovered to have been dumped in local fields, and while never definitively proven to be related, there were both deaths and widespread health problems consistent with mercury poisoning in the area among the soldiers carrying the waste, dock workers and local residents who salvaged the waste and the bags used to carry it unaware it contained mercury.  

Vietnam also was the site of mass protests across the nation against the firm following mass fish deaths in 2016. Initially the firm, and the government, denied the early allegations, but the protests, which at one point grew to be 13,000 people strong, unnerved the authoritarian regime in Vietnam, forcing them to back down—but only to a point. Hundreds of tons of dead fish were collected by the government in what Prime Minister Nguyen Xuan Phuc called “the most serious environmental incident Vietnam has faced.”

However, the response by the government against Formosa was weak. Minister and Chairman of the Government Office Mai Tien Dung stated “Formosa admitted its wrongdoings before the Vietnamese people and made five commitments on compensation and assistance. One should not hit a man when he is down.” The firm paid US$500 million (NT$15.7 billion) in compensation. The government, meanwhile, jailed many activists and journalists involved in publicizing the pollution.  

The Vietnamese summarized social media and blog reports of the incident’s deadly impact:

“The disaster also cost human lives. At least a diver (Le Van Ngay) was killed after diving in the polluted sea water, a woman (Linh) died of poisonous fish, and a couple (Mr. Le Van Lam and Mrs. Nguyen Thi Huong) got cancer after working for FHS [Formosa subsidiary Hung Nghiep Formosa Ha Tinh, Ltd.] as keepers of their chemical stocks. At least 21 other divers, dozens of fishers and seafood-consumers reported they had got health problems due to their direct or indirect link with the disaster.”

The New York Times noted suspicions among some of heavy metals contamination. Given the opaque nature of authoritarian Vietnam, the exact extent of the damage caused to livelihoods, health and the environment is unlikely to ever be quantified or made public.

The firm has also raised considerable controversy in its home country. Using just one high-profile FPG complex and focusing on this last decade as an example, many cases come to light. The FPG Mailiao Complex in Yunlin County alone has seen 16 fires break out since 2010. Lawsuits filed after a university study released in 2012 showed nearby residents incidence of cancer had risen fourfold since a naphtha cracker launched in the complex in 1998, with a plaintiff claiming that, on average, 4.5 people die of cancer per day as a result of pollution from the complex. One town nearby recorded in 2016 that nearly 10% of its population had cancer. Different studies have shown that a town just across from the complex in Changhua had carcinogenic heavy-metal pollutants in their urine, and children in a nearby elementary school had elevated concentrations of carcinogenic thiodiglycolic acid (TdGA) in their urine, forcing them to relocate their school. Dead fish and agricultural losses are also a problem. Just this month, allegations of high PM2.5 pollution from the plant were rejected by the company, but locals have been protesting air pollution from the complex for years.

Though this is the highest profile and most problematic of the Formosa’s Taiwan-based industrial complexes, others have faced significant problems as well. For example, a power plant operated by a subsidiary at a complex located right in the heart of Changhua City has long brought complaints and protests over air pollution and has been found to be in violation of air quality rules. Another example is the Renwu incident, when the firm was caught polluting the Houjing River in Kaohsiung with volatile organic compounds (VOC) containing chlorine and other chemicals, also sparking protests.

The company has considerable experience dealing with negative publicity. Sometimes, the firm apologizes, makes amends and promises improvements, though usually only after considerable pressure has been applied by the authorities. Sometimes the firm uses “lawfare,” suing scientists and activists. In Vietnam and Cambodia, authoritarian governments both applied pressure, but also shut down protests against the firm and applied pressure to activists. The Taiwanese government has also applied pressure at times after overseas incidents caused significant damage to the reputation of Taiwanese businesses and investors.

Should the court fine FPG the full US$162.2 million, it is unlikely to produce a change in corporate culture. The amount is fairly small to a firm with a market cap of NT$643 billion (US$21.7 billion). Plastics, for now, are here to stay—and so is the Formosa Plastics Group.

(Cover photo by veeterzy on Unsplash)