Apartheid’s bankrollers — those who profited from the suffering of people in South Africa — may soon have to cough up for their sins. Ed Fagan, the American lawyer who won US$5.5-billion for World War II victims of the Nazi Holocaust, is launching class action legal suits on behalf of apartheid victims.
The first claims are against Swiss banks and the US-based Citicorp, which allegedly provided loans to the apartheid government at a time when other banking groups had started withdrawing in line with United Nations sanctions. German and British banks, and also one of the largest US-based computer companies are later to be targeted, according to lawyers involved in the cases.
Fagan, currently representing 80 South African plaintiffs, earlier made himself unpopular in Switzerland when he sued Swiss banks on behalf of Nazi victims, winning a class action suit worth $1,25-billion. His popularity in Switzerland is unlikely to be enhanced by the latest class actions on behalf of apartheid victims, which are aimed at two giant Swiss Banks, Credit Suisse and UBS.
Citicorp, in the US, also features among the first financial institutions to be targeted by Fagan, according to representatives of his practice in South Africa. A second round of actions, they say, will be aimed at German Banks and American computer companies. Fagan then plans to target companies in the oil and vehicle industry.
The lawyers argue that big business was central to the economy that sustained the South African state during the apartheid years. Business, they say, is therefore liable to pay reparations to the victims, for having actively propped up a system deemed by the United Nations to be a crime against humanity.
The lawyers emphasize that, as a result of the Nuremberg trials after World War II, “companies were put on notice”. They were warned they could be held accountable “just as were the financial institutions and corporations that fueled the nazi regime” for acts that supported crimes against humanity.
“Financial institutions and corporations or their agents, including many that had conspired with and made possible the Nazi regime’s reign of terror, were willing, even anxious, to engage in the same type of business with apartheid South Africa,” the lawyers claim.
One recent German-Swiss study has concluded that 90 percent of all long-term loans to the South African government in the 1980s came from just four countries: Germany, Switzerland, the US and the United Kingdom. But during the period of international sanctions after 1985, German capital became the most important direct financier of apartheid.
By the end of 1993, according to the study, South Africa was indebted to German business to the tune of about US$1,6-billion. Most of that debt was public sector debt — money that had been lent to the apartheid government.
A coalition of South African non-governmental organisations claims that part of the money was used to fund covert operation, and the debt was “consciously structured” by the outgoing regime to impede the democratic process. The new democratic government has none the less continued to honor repayments.
Total government debt currently stands at about US$30-billion, and debt servicing sucks up a large chunk of national income. This makes interest payment on the debt the largest budget item after education. Priorities such as land, housing, jobs, health and welfare are adversely affected as a result.
Clearly, the South African government and the South African Reserve Bank would not be happy about asking for debts to be cancelled. This would only create problems later, in securing new loans.
In terms of international law, however, companies and financial institutions that dealt with the apartheid regime were in flagrant violation of United Nations resolutions on apartheid. They were dealing with a state that was not only declared illegitimate, but a criminal state.
If a state is guilty of criminal conduct, all other states are under an obligation not to conduct business or perpetuate any act which might further the criminality of that state. States like Germany, Switzerland and the United States were thus obliged to ensure that their companies did not enter into agreements with a criminal state.
At the same time, the international doctrine of “odious debt” spells out that lenders who finance totalitarian regimes have no guarantees of protection from international law. It declares that when a government incurs debts to subjugate its population, such debts are odious to the indigenous population. Hence the new, democratic government of South Africa has no moral obligation to honor the debts of the previous regime.
However, it is unlikely that the current government — with its emphasis on international diplomacy and the luring of foreign investment — will pursue any question of foreign liability, or demand from multinationals compensation for past sins, or the repudiation of debt.
At the same time, leading perpetrators of human rights abuses who were granted amnesty by the Truth and Reconciliation Commission, are indemnified against civil actions by their victims. And the government itself lacks sufficient funds to rehabilitate or compensate adequately the 17 000 victims identified by the Truth and Reconciliation Commission.
Hence this latest development in the long-running reparations saga. It might be the only practical way left for victims to obtain long overdue compensation. The actions enlarge the concept of perpetrators by making companies that bankrolled and profited enormously from apartheid responsible for prolonging the oppression.
The apartheid civil service bureaucracy that administered the oppressive, fascist regime allegedly used computers supplied to South Africa by a leading US-based company, which will later be targeted by Fagan for litigation.
Lawyers, announcing the launch of the class actions, say the initial claimants include a father of twin 12-year-old boys who died of multiple gunshot wounds when their home was attacked by an apartheid era state-sponsored death squad.
The actions highlight dramatically the shortcomings of South Africa’s Truth and Reconciliation Commission, which barely scratched the surface of the impact of foreign business on South African apartheid. The truth body was evidently too preoccupied with granting amnesties for the murder and mayhem that characterised apartheid rule.