Should IBM and others pay apartheid bill?

A second lawsuit was filed by black South Africans earlier this month against 20 international companies.

Lungisile Ntsebeza remembers well the day the police came for him. It was a cold June night in 1976, and he was just 21. He had recently graduated from South Africa's most prestigious black university.

Mr. Ntsebeza was hauled off and spent 5-1/2 years in prison, followed by six years in exile in a tiny town in the desolate Eastern Cape. His crime: Participating in a study group examining alternatives to South Africa's racially segregated society, apartheid.

A quarter of a century later, Ntsebeza now wants someone to pay for his lost youth. Promised reparations from South Africa's current government that have never materialized, Ntsebeza and others are turning to sources with deeper pockets: the international banks and corporations that did business with the white apartheid government.

Lawyers for apartheid victims have filed two multibillion-dollar class-action lawsuits in United States courts, one last June and one earlier this month.

"It's simple. This is a lawsuit against institutions that collaborated with a system that had been declared a crime against humanity," says Ntsebeza, who is party to one of the lawsuits. "One could say I'm vindictive, but I don't think so. If you profit out of an immoral system, them you must be prepared to pay."

Among the 20 targeted banks and corporations are IBM, Ford, General Motors, ExxonMobil, Citigroup, and JP Morgan Chase in the US, and British Petroleum, Royal Dutch Shell, and DaimlerChrysler in Europe. These companies say they violated no international law and should not be held accountable for the actions of others. Some have pledged to vigorously fight the suits.

What the fallout could be

If successful, activists say, the lawsuits could change the rules for international lending, forcing private banks to be more accountable for the uses of the money they lend. Some academics also warn it could make banks warier of lending to governments that truly need it.

"These lawsuits could be very destabilizing," says Seema Jayachandran, an economics researcher at Harvard University who has written extensively about the lawsuits. "If banks make a loan and worry that after the fact they may get hit with a lawsuit ... they may be wary of loaning. That might hurt governments that want to make legitimate loans that are beneficial to the people."

At the root of the two lawsuits is both a frustration with how the current South African government (which took over from the apartheid regime in 1994) has handled reconciliation and an acknowledgement of the economic challenges it faces.

South Africa is saddled with billions of dollars in debt and is struggling to educate, feed, and house its people. The much lauded truth and reconciliation process gave amnesty to most of the killers and torturers of the apartheid era, but little has been done for the survivors.

Some 16,000 people have been given small 1,000 to 2,000 Rand payments, worth today between $100 and $200. The Truth and Reconciliation Commission has recommended that larger reparation payments of $10,000 to $14,000, but the government has yet to take action on that recommendation. The government says it is waiting for the final report of the Truth Commission, but privately, many officials say the money would be better used on general social projects than giving it directly to individuals.

But activists say they have already waited too long. Eight years after the end of apartheid, many are struggling to survive. Some, like Charles Hlatshwayo, who was tortured until he was unable to walk or speak, were permanently disabled and are unable to work. Others, like the family of attorney Bheki Mlangeni - who was killed by a bomb planted into the earphones of a tape player - were stripped of their main breadwinner.

Both Mr. Hlatshwayo and the family of Mr. Mlangeni are among the 85 plaintiffs in the most recent suit, which was filed by the Khulumani Support Group, an apartheid victim's organization representing nearly 33,000 survivors.

While many survivors are frustrated with how the government has handled reparations, they have chosen to put most of the blame at the doorstep of the international financial community. Ultimately, they say, reparations should not be paid by South Africa's new government but by those who helped keep the old one alive.

Long after the International Monetary Fund, the World Bank, and individual countries stopped lending to pariah South Africa, Swiss, German, and American banks kept the money coming. In the mid-1980s, these banks even bailed the country out from financial crisis.

The $37 billion tab

These loans have left South Africa today with a heavy debt burden that siphons money from much needed social programs. In 2000, South Africa paid $5 billion in debt payments and only $3 billion on healthcare, $2.2 billion on welfare, and $450,000 on housing. South Africa currently owes some $37 billion in debt, mostly to private banks.

South Africa's new government says it is paying these apartheid-era debts, despite the economic burden they impose, because not paying them could hinder its ability to acquire new loans. Officially, the South African government has also opposed the lawsuits, saying they could harm investor confidence in the country.

Lawyers have not targeted specific amounts in either lawsuit but say that damages could be well into the billions. Some of that money would go directly to apartheid victims and their families, but the bulk would be put into community development projects. Observers say that even if the lawsuits are successful, it could be years before victims receive the money.

Some experts say that even if the lawsuits are unsuccessful, they will have served a purpose. "Companies need to be held accountable," says Piers Pigou, a researcher at the South African Center for the Study of Violence and Reconciliation in Johannesburg. "Even at the end of the day, if no money changes hands, if it makes companies think twice, that's progress."

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