Household names face apartheid profiteering charges

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Scores of multinational corporations, including Barclays and NatWest banks of Britain, will be accused of "aiding and abetting" South Africa's former apartheid regime and turning a blind eye to human rights atrocities in a controversial reparations case that opened in New York yesterday.

A total of 34 household-name companies, including banks, car-makers, pharmaceutical and energy giants, are targeted in a multibillion-dollar lawsuit brought by a legal team headed by Edward Fagan, a civil damages lawyer who last year won a $1.25bn (£764m) settlement from Swiss banks for Holocaust victims.

The start of the case in New York's Southern District Court threatens to reopen many of the wounds left from the four decades up to 1994 when South Africa was ruled under a system of rigid segregation. Barring a settlement, the trial is expected to last months or even years.

But lawyers for the plaintiffs may be looking for an early out-of-court settlement. "The defendants know it is not going to be as easy as they originally thought," said John Ngcebetsha, a South African lawyer working with Mr Fagan. "They know they cannot afford to attract all this negative publicity for the next five or seven years."

The case is being brought under an obscure 18th-century act - the US Alien Civil Torts Act - that allows citizens of foreign countries to sue any companies that do business in the United States in an American court. Mr Fagan successfully used the same act in pursuit of the Holocaust reparations.

For the defendants, the reparations suit could bring both unwelcome public embarrassment and possibly severe financial implications. Mr Fagan, who is representing tens of thousands of victims of repression under apartheid, is suing the defendants collectively for more than $100bn (£60bn).

The companies, none of which were willing to comment yesterday, include some of the biggest names in commerce, such as Deutsche Bank, Dresdner Bank , UBS, Credit Suisse, Credit Lyonnais, Banque Indo-Suez, IBM, Ford, Isuzu, Daimler-Chrysler and Citigroup.

The financial institutions are accused of extending generous high-interest loans to the regime to keep it afloat in contravention of international sanctions. The court filings allege that car-makers made armoured vehicles for the government to help it repress the black population. Mining giants De Beers and Anglo-American are accused of exploiting the low-wage workforce that the system provided.

Most of the defendants are said to be privately angered by the allegations and will argue that their presence in South Africa at the time helped guarantee employment and wages for black South Africans. "During the long apartheid years, my company was a force for good. It did not exploit or profit from apartheid," De Beers managing director, Gary Ralfe, said before the start of the hearing.

Earlier this month, the South African government firmly dissociated itself from the court action, suggesting it would cast a pall over the country's business climate and damage foreign investment and the country's pension funds.

President Thabo Mbeki said: "The South African government is not, and will not be, a party to such litigation. We consider it completely unacceptable that matters that are central to the future of our country should be [judged] in foreign courts which bear no responsibility for the well-being of our country."

But for many former victims of apartheid, the case may represent the last real chance of financial compensation. The country's Truth and Reconciliation Commission recently awarded 22,000 people deemed to have suffered the worst losses under the former regime a sum of just £2,500 each. The Commission stressed, however, that a much greater compensation pay-out would be appropriate.

Among those counting on success in the New York court is Dorothy Molefi, whose son Hector Pietersen was killed by the South African security forces in the 1976 Soweto uprising. "We want reparations from those international companies that profited from the blood and misery of our fathers, mothers, brothers and sisters," she said this month.

But even those in favour of the litigation warn that it could become tied up for years. "It's unfortunate because businesses seem to believe they don't owe anything. These lawsuits will get tied up in the courts for years, most victims will not see any money and the lawyers will benefit," said Nahli Valji, a reparations expert at the Centre for the Study of Violence and Reconciliation, adding that it was on account of the South African government's "failure to live up to its obligations" that people were being pushed to the courts.

Mr Fagan said the defendants were "central to the economy that sustained the South African state during apartheid," adding that, "an innocent population was being victimised as the countries of the world looked on."