Conflicts derail key apartheid case

Conflicts of interest on the U.S. Supreme Court prevented four of nine justices from ruling on an important apartheid case yesterday, forcing more than 30 major corporations to defend themselves against lawsuits accusing them of supporting South Africa’s former racial policies.

Three of the judges hold shares in companies named in the lawsuits, and the son of Justice Anthony M. Kennedy is a banker for one of the companies.

They removed themselves from the case, leaving the bench one justice short of a quorum.

At least six of the Supreme Court’s nine justices are required by law to rule on an appealed case. So the Supreme Court let stand a federal appeals court decision that said companies that invested in South Africa between 1948 and 1994 could be sued if their investments promoted apartheid policies.

The companies argued that the lower court expanded the U.S. Alien Tort Statute beyond its original meaning, which was to allow U.S. courts to hear cases by aliens involving violations of international law. They said the ruling set a dangerous precedent that would invite lawsuits against international corporations.

The people suing the companies, who include South Africans who claim to have been tortured or have family members who were killed, are seeking more than $400 billion in compensation.

Both the U.S. and South African governments urged the Supreme Court to strike down the lawsuit, saying it would interfere with South African reconciliation and create foreign-policy entanglements.

Nevertheless, the Supreme Court said it affirmed the decision by the 2nd U.S. Circuit Court of Appeals in New York “because the court lacks a quorum.”

The case suggests more conflicts of interest could emerge on the Supreme Court, where seven of the justices are millionaires, according to annual financial disclosure reports.

The justices who removed themselves from the apartheid case because of their stock investments were Chief Justice John G. Roberts Jr. and Justices Stephen G. Breyer and Samuel A. Alito Jr.

The companies being sued include Hewlett-Packard Co., whose stock is owned by Chief Justice Roberts; Exxon Mobil Corp. and Bristol-Myers Squibb Co., whose stocks are owned by Justice Alito; and Bank of America Corp., International Business Machines Corp., Colgate-Palmolive Co. and Nestle SA, whose stocks are owned by Justice Breyer.

Those three justices could have stayed on the case if they had sold the affected investments. Chief Justice Roberts has done that on two occasions to return to cases from which he initially stepped aside.

On another occasion this term, Chief Justice Roberts sat out a case involving Pfizer Inc., resulting in a 4-4 tie that allowed a lawsuit against the drug company to proceed and left unresolved the issue the court had agreed to settle.

Only Justice Clarence Thomas and Justice Kennedy reported assets worth less than $1 million in 2007, not including their homes. They are scheduled to update their financial disclosures next month.

Justices David H. Souter and Ruth Bader Ginsburg were listed as the wealthiest in the disclosure statements. Each holds assets between $5 million and $25 million.

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