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Business

Apartheid Lawsuit Extends to German Banks

An American lawyer is adding three German banks to a class action suit seeking reparations for victims of apartheid in South Africa. But some victims’ rights activists are criticizing the move.

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Deutsche Bank is a target of the lawsuit

US lawyer Ed Fagan, who pressed Swiss Banks into compensating relatives of Holocaust survivors, has set his bespectacled sights on pressuring Swiss, US and German banks into paying billions to victims of South Africa's apartheid regime.

The 51 billion Euro US-based class action lawsuit was originally announced last month and encompassed Swiss banks Credit Suisse and UBS along with the U.S.-based Citigroup. Now, Germany’s Deutsche Bank, Dresdner Bank and Commerzbank are being added – along with computer giant IBM.

The banks are accused of loaning billions to the apartheid regime at a time when international economic sanctions against South Africa were in place. Fagan included IBM because the company supplied technology and equipment to South Africa during white minority rule.

"Business was central to the economy that sustained the South African state during the apartheid years," Fagan said according to the Guardian newspaper.

Rights groups worried about confusion

The German banks have so far refused to comment on the details. The Swiss institutes have already dismissed the action as "preposterous". South African victims' groups have also raised concerns.

Thandi Shezi of the Khulumani victims’ rights group told Reuters news agency that Fagan's suit was inspiring false hope among apartheid victims.

A toll-free number Fagan's group set up for those willing to join the class-action lawsuit has confused victims into thinking restitution will come quick. Many don't understand that the suit faces tall hurdles and won't be decided on any time soon.

"Some people think if they call the number and wait one or two months, the money will come," said Shezi. "We have told them it could take five or six years."

In addition, Shezi said some people believed the suit was replacing state compensation recommended by South Africa’s own Truth and Reconciliation Commission (TRC). The commission decided in 1998 that some 300 Million euro should be given to more than 21,000 victims of the apartheid regime that was dismantled in the early 1990’s.

But the government has been slow in paying that money out until the commission finalizes its draft reparations policy this August. Shezi fears that some might turn to Fagan's class action suit, thinking it is a quicker fix.

Germans may see parallels

Im Germany, the case could remind some people of the U.S. class action taken against German companies by survivors of the Nazis’ forced labor policy during WWII.

In truth, however, the parallel requires a stretch of the imagination. The lawsuit waged by former foreign laborers targeted German firms exclusively and led to a deal with the Berlin government, granting the victims about 2.5 billion euro in reparation. That agreement is supported by German companies’ voluntary donations to a special fund.

The apartheid case, on the other hand, already involves companies from three countries – and Fagan has warned that other firms may be drawn in. With no single government to strike a deal with, it is unlikely that firms innocent of any links to the apartheid regime will be willing to put money into the reparations pot like they did in Germany.

In addition, a feeling of collective guilt still surrounds the Nazi past in Germany, but there’s little reason for companies to harbour the same sentiment about South Africa.

Reparations an urgent issue

The Khulumani group is holding community meetings in Soweto and other areas to explain the implications of Fagan’s suit, which is fueling impatience on the reparations issue.

Only last week, Standard Bank Chief Economist Iraj Abedian told journalists that payments were crucial to preserving social and economic stability.

Khulumani has filed a suit against President Thabo Mbeki seeking a copy of the government’s draft reparations policy in advance of the official release date.