Three German Banks Face Possible Apartheid Lawsuit

A New York court met Friday to hear a class-action lawsuit against several companies, including three German banks, accused of supporting the apartheid regime in South Africa in the 1980s.

After two hours of hearings, the presiding judge Richard Chasey moved to postpone a final decision until August 23. Friday's initial hearing concentrated primarily on defining the content of the lawsuit.

Compensation for apartheid victims

Germany's Dresdner Bank, Deutsche Bank and Commerzbank are among several companies targeted by the U.S. lawyer Ed Fagan, who won promimence by pressing Swiss banks into compensating the relatives of Holocaust victims.

Fagan accused the banks, which also include several Swiss and American banks, for loaning billions of dollars to South Africa at a time when international sanctions against white minority rule were in place. The computer company IBM has also been drawn into the case, and Fagan has warned that other firms may be included as well.

Fagan said, if successful, the lawsuit could win reparations up to 104 billio euro ($100 billion) for the South African victims.

None of the banks made official comments prior to Friday's proceedings, but Commerzbank sources had told financial papers ealier that loans to South Africa had only been granted in accordance with existing regulations and solely for infrastructure projects. Without these, the majority of the population would have been even worse off, the sources added.

Threatening letters

According to the Financial Times, Fagan has sent letters to the companies in question, indirectly threatening a boycott campaign unless they opt for out-of-court settlements - and pay up quickly.

Critics say that the lawyer's action is raising false hopes in South Africa, where over 21,000 victims of apartheid are still waiting for state compensation as recommended by the country's Truth and Reconciliation Commission (TRC) back in 1998.

In July, Thandi Shezi of the Khulumani victims' group said that people dialing a toll-free number set up by Fagan's helpers were often under the false impression that joining the class-action lawsuit was a guarantee for quick payment.

Rivals in action

Another US lawyer, Michael Hausfeld, is also planning class-action against some 50 international companies he accuses of collaborating with the apartheid regime.

"What is probably one of the grossest violations of human rights was imposed by apartheid,” Hausfeld recently told Reuters. “It left a wake of victims that has never been accounted for by those who assisted and furthered the commission of the crime."

However, Hausfeld – who cooperates with the TRC – flatly refuses to join forces with Fagan on the issue. The German edition of the Financial Times recently quoted him as ridiculing Fagan's letters to companies. He commented that one might as well "send picture postcards."