US firms must face apartheid past, says court
October 15, 2007
By David Glovin
New York - Citigroup, IBM and other companies must face a $400 billion (R2.69 trillion) lawsuit accusing them of aiding South Africa's former apartheid regime, an appeals court said in a ruling that might make it more costly for US firms to do business overseas.
The US court of appeals in New York on Friday reversed a lower court ruling and said companies might be liable for ''aiding and abetting'' a government's violations of international law.
Among the more than 50 defendants in the case are JPMorgan, General Motors (GM), Exxon Mobil and Credit Suisse.
The ruling might also put pressure on foreign companies that did not do business in the US, to ensure their operations did not aid regimes that violated human rights, a lawyer said.
''They're going to have to be very careful about the relationships they have with repressive regimes,'' said Paul Hoffman, who represents the South Africans who sued the companies. ''It's a hugely significant ruling."
Those who sued, including people who were tortured and relatives of those killed, invoked the US Alien Tort Claims Act, a 200-year-old law that lets federal courts hear suits by non-citizens claiming violations of international law.
Through three separate lawsuits, the plaintiffs sought billions of dollars in compensatory and punitive damages, saying the firms knowingly helped the former regime by selling it weapons, providing financing and otherwise doing business in South Africa.
The plaintiffs said the firms benefited from South African government policies that provided them with cheap labour, cheap power and high levels of government service.
Michael Hanretta, Citigroup's spokesperson, said the company disagreed with the ruling.
He said the firm was considering ''alternatives for further judicial proceedings''. The decision might be appealed to a larger panel of the US court of appeals or the US supreme court.
Francis Barron, a lawyer for the companies, declined to comment, as did corporate spokespersons Geri Lama for GM, Victoria Harmon for Credit Suisse and Darlene Taylor for JPMorgan.
US President George Bush's administration urged dismissal of the lawsuit, saying it would hamper the policy of encouraging change in developing countries through economic development.
President Thabo Mbeki's government filed an affidavit in the US opposing the cases, saying the litigation would hurt international investment in the country.
Though other US federal judges have ruled that the ''aiding and abetting'' liability applies to firms doing business in the US, the New York court had played a ''historically important role'' in interpreting the act, said Hoffman.
The statute was rarely used before 1980, said Jack Greenberg, a professor of Columbia Law School and an expert on human rights law. - Bloomberg
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