Suing Corporations that did Busines in Apartheid South Africa

• Originally published in the Times Newspapers Limited on  September 28, 2004

Copyright 2004 Times Newspapers Limited  

By:  Jon Robins

Michael Hausfeld, a US lawyer, is bringing a case through the American courts against multinationals that did business in South Africa, Jon Robins reports

WHAT responsibility does IBM have for South Africans beaten and tortured under apartheid? A connection might not be apparent but Michael Hausfeld, an American lawyer, is arguing that there is one.

The computer giant is one of 20 multinationals (including British ones such as Barclays Bank) being sued via the US courts under an arcane 18th-century statute for their role in supporting a racist regime.

Last week Hausfeld, who was a leading lawyer in the legal action against the Swiss banks for Holocaust survivors, filed an amicus brief -or legal opinion -in a New York court on behalf of the Khulumani Support Group (the name means "speak out" in Zulu). "The decisions made by this court will shape the future of human rights litigation," he argues. "They will reverberate beyond the courthouse walls to the ears of officials and private (citizens) across the world."

Certainly, the document will be hard to ignore, as much as the South African Government would like to. Archbishop Desmond Tutu, other members of the South African Truth and Reconciliation Commission and dozens of international human rights groups are signatories. The reason for its timing is a ruling by the US Supreme Court (Sosa v Alvarez-Machain) on the Alien Tort Claims Act 1789. That controversial legislation allows companies to be sued in the American courts for human rights breaches committed anywhere in the world.

"The Supreme Court has determined that there are classes of permissible cases under the law, and Khulumani clearly sits within those traditional and historic classes," says Hausfeld, a partner in Cohen, Milstein, Hausfeld & Toll, a plaintiff class action firm. He estimates that there are "tens of thousands" of South Africans with potential claims on a database being compiled by Khulumani.

The lawyer argues that the only thing standing in the way of "an automatic acceptance" of the case is the strident opposition of the South African Government.

Penuell Maduna, the Justice Minister, called on the US courts in July last year to reject the case. "The Government accepts that corporate South Africa is already making a meaningful contribution to the broad national goal of rehabilitating the lives of those affected by apartheid," he wrote.

The Khulumani lawsuit is not the only apartheid action. Ed Fagan, another prominent lawyer who also made the headlines for his role in the Nazi reparation cases, is seeking $ 20 billion in compensation. Fagan also announced a class action against Lloyd's of London this year by US citizens who claim descent from slaves who are suing for compensation as a result of it allegedly underwriting the ships used in the slave trade.

On the face of it the Khulumani action is the most credible of the apartheid claims and also looks likely to be a crucial test for the 1789 Act. "One of the reasons that we have so strongly pursued this litigation is because the legislation really needs to be accepted in the international community," Hausfeld argues. "There is no reason why fundamental human rights are only litigated in the US. If the courts in the US seem to recognise that these rights are universal then every judicial system should have regard."

The lawyer has no time forFagan's Lloyd's action. "Not only does it not have legs, I don't think it has any other body parts either," he quips.

So what, if anything, has IBM got to do with apartheid? The allegation is that the company supplied computers that enabled the regime to create the notorious passbook system. "Under what circumstances is technology neutral," Hausfeld asks, "if IBM was given the problem of how the South African Government kept track of, controlled and dominated their black population? Then they come up with the passbook system as a technical solution and they created not just the hardware but the software. Do they have a responsibility?" IBM has declined to comment.

British human rights lawyers have been following the South African litigation.

Martyn Day regards the 1789 Act as "the most progressive and prohuman-rights law on the US statute books". Day, who met Hausfeld when he represented the British Poles in the Nazi reparation cases, recalls being "massively impressed" by the lawyer. "To the extent that the apartheid claims have a serious side, he's the guy who represents that," he says.

The US lawyers were accused of "hijacking" the Swiss bank dispute, ignoring diplomacy in favour of attention-grabbing litigation. Notoriously Fagan escorted his Holocaust survivor clients to the doorstep of the European financial institutions they were suing. "It was the lawsuits that brought about results that were unachieved and unachievable in the diplomatic process," Hausfeld says. That action was personal for Hausfeld, who acted for his clients pro bono. His own father fled Germany in 1940 when he came to New York but most of his family were killed by the Nazis.

Hausfeld has no direct connection with South Africa. How does he persuade South Africans that he, a US lawyer, is not co-opting their cause? "It has been hard work to go into South Africa and make people understand that it's their claim, and their leaders understand it's a legitimate effort," he says. "That's where our time has been focused, on giving people comfort that this is their case."

A WINNER

MiCHAEL HAUSFELD'S clients include native Alaskans hit by the 1989 Exxon Valdez oil spill, minorities in a $ 176 million racial-bias suit against Texaco and theHolocaust families that sued the Swiss banks.

Stuart Eizenstat, a fellow lawyer, said of that case: "Hausfeld could be sweetness and light one moment and anger and darkness the next. He was unpredictable and at times unreasonable...But he was central to any successful negotiation because he had a keen sense of where the bottom line was."