Multinational corporations facing multibillion-dollar apartheid reparations claims in United States courts have had enough. They’ve begun a behind-the-scenes campaign to fight the legal basis of the claims, which they view as an “unjust misuse of US law” for the benefit of “pirate” lawyers.
US corporate lobbyists have set up a Legal Support Group, which has been meeting regularly since November last year, to coordinate the campaign. The US-South Africa Business Council, based in Washington, is playing a leading role in the lobby effort.
The Mail & Guardian has also learnt that a legal firm has been hired to submit a counter-opinion to judges in the apartheid cases. Lobbying of US government officials and members of Congress is also planned. Free market “think tanks” and business groups have rallied to the cause, publishing a series of articles to raise awareness about the apartheid lawsuits and others like it.
“The US Congress and President [George W] Bush should act quickly to close this legal loophole that threatens to cripple the ability of US corporations to … invest profitably abroad,” argues Daniel Griswold of the Centre for Trade Policy Studies.
The US Chamber of Commerce has called for the law at the centre of the reparations case to be repealed. Michael Hausfeld, the US attorney who’s filed a reparations lawsuit on behalf of the Khulumani Support Group, said the lobby activities of big business show they now realise the apartheid claim is serious.
“Given the recent trend in the law, there is a real possibility that banks and corporations are going to be held legally accountable for their misconduct. We’ve already seen an increase in their efforts, for example, to lobby the US Congress to repeal the law that provides the claim against them. We’re now responding with our own efforts.”
The law causing all the fuss is the US Alien Tort Claims Act of 1789, which reads: “The district courts shall have original jurisdiction of any civil action by an alien for a tort only, committed in violation of the law of nations or a treaty of the United States.”
That single sentence forms the basis of the apartheid reparations action, just as it formed the basis of lawsuits in the 1990s against Swiss banks, and German and Austrian firms that used forced or slave labour during the Nazi era. More than 20 other human rights lawsuits have been based on this obscure 18th-century statute.
The revolt of the multinationals began with a behind-closed-doors meeting in November, exactly three days after Hausfeld and South African lawyer Charles Abrahams filed Khulumani’s claim for apartheid reparations in the Eastern District Court of New York.
On November 14 representatives of more than 50 multinational corporations — many of them facing apartheid claims — met at the Capitol Hilton hotel, in Washington DC. The meeting was organised by the group USA Engage, which represents more than 650 US exporters and business associations. The public was not invited. There was only one subject on the agenda: the Alien Tort Claims Act.
The introductory speech was given by Stuart Eizenstat, a man who many in the room had come to loathe because they felt he’d acted against their interests in the Nazi forced-labour claims. Eizenstat was deputy secretary of the Treasury in the Clinton administration, and was appointed special representative by president Bill Clinton to mediate — successfully — between claimants and defendants in Nazi-era lawsuits. Now Eizenstat is a partner in the law firm Covington & Burling, and he’s switched sides.
The M&G has obtained a copy of Eizenstat’s “talking points” for the November 14 meeting. They show that he now warns corporations about the threat posed by the Alien Tort lawsuits. He argues, in general, that claimants are “seeking to use corporations as proxies for lawsuits against repressive foreign governments — often long out of power — because corporations are more easily subject to jurisdiction, more able to fulfil judgements and are generally not entitled to immunity”.
He says the apartheid reparations claims are based on “shaky legal grounds” and “will ultimately be decided in the court of public opinion more than the court of law”.
He goes on: “If the lawyers [in the apartheid cases] can galvanise public opinion and generate political support … they may ultimately achieve some success despite legal infirmities.” At the end of the meeting, which included other speakers, participants agreed to set up a Legal Support Group to lobby against the threat posed by the Alien Tort provision.
Also present at the meeting at the Capitol Hilton was Dan O’Flaherty, executive director of the US-South Africa Business Council. O’Flaherty is also vice-president of the influential National Foreign Trade Council.
O’Flaherty said various “remedies” were being considered, including lobbying to amend the law and asking the Supreme Court to review the Alien Tort law. He said the South African lawsuits “make no sense” because US firms followed US government codes of conduct during apartheid and broke South African law.
“They violated South African law in order to protect the human rights of their workers and did make a substantial contribution to undermining the apartheid regime. So we don’t feel that we’ve got anything to apologise for.”
An apology is the least of the demands of Thandiwe Shezi, project officer with the Khulumani Support Group, and one of 91 individuals who, with Khulumani, is suing 21 US and European banks and corporations as part of the Hausfeld reparations claim.
“Fourteen percent of South Africa, the white population, could not have maintained apartheid for so long if they were not aided and abetted by international business,” said Shezi at a meeting in Frankfurt, Germany, last week. “We are saying those companies should acknowledge the violation of human rights, redress the wrong, and help redevelop our country.”
Shezi was in Frankfurt to represent Khulumani at a four-day strategy meeting of the International Campaign on Apartheid Debt and Reparations, a coalition of activists from South Africa, Europe and the US that backs the Hausfeld lawsuit. Lawyers Hausfeld and Abrahams were also present to brief activists on the status of the legal claim and the efforts to block it in the US.
Said Abrahams: “There’s one thing the defendant corporations and the banks won’t dispute now, and that is the fact that apartheid was a ‘crime against humanity’. What for them becomes difficult is their participation in that crime, and that is precisely what is at stake. Hence the reason they are trying to lobby the US Congress, secretly, to have the law repealed.”
Hausfeld rejected Eizenstat’s claim that the apartheid lawsuits were on “shaky ground”.
“Publicly, Eizenstat has got to say that sort of thing. But if there was no concern, why would there be such an effort to undo the Alien Tort law? If the companies felt the claim was ridiculous, why spend great amounts of time and money to undo the law?”
Hausfeld and Abrahams said they believed a repeal of the law was unlikely, and that, in any case, it would come too late to affect the apartheid claims.
But an amendment to the law might frustrate Hausfeld’s grander plans — as an international “heavyweight” in civil rights law — to establish what he’s termed a “globalisation of human rights” with the apartheid case.
“The interesting aspect of the apartheid litigation is its currency … given there’s a debate about the validity and viability of United Nations resolutions,” said Hausfeld.
“[With regard to] South Africa during apartheid, there were so many UN resolutions addressing the abuses of apartheid, and warning and urging that certain conduct not be engaged in. If this lawsuit is successful in establishing the accountability of companies that had the foreknowledge that the international community did not condone their aiding and abetting of apartheid, then to some extent you do strengthen the foundation of UN resolutions.”
Hausfeld said in this respect the apartheid case could set a world precedent for human rights standards. “In recognition of the fact that there is a global economy, there should be a corollary global rule of law which can hold companies accountable for excesses.”