- The Washington Times - Wednesday, August 7, 2002

Major corporations fear they are facing a wave of lawsuits seeking to hold them accountable for political oppression in the countries where they operate.
In particular, they are eyeing a federal court case that opens Friday in New York involving a multibillion-dollar lawsuit filed by torture victims and their relatives against more than 100 corporate investors in South Africa under apartheid.
Ed Fagan, a New Jersey-based class-action lawyer, filed the case in June on behalf of four South Africans who were tortured or forced to flee their country until apartheid ended in the early 1990s. Mr. Fagan, who two years ago won $1.25 billion for Holocaust victims from Swiss banks, is seeking $50 billion in damages under a 200-year-old American law designed to combat piracy.
"The truth is, we just opened a gaping wound," Mr. Fagan said after filing the case. "This is a real claim."
The lawsuit has rattled the business community because Mr. Fagan has a history of forcing companies to settle through the threat of bad publicity.
The lawsuit also represents a new phase in efforts by human rights activists to remedy overseas injustices by targeting deep-pocketed companies instead of foreign governments.
"We suddenly have a critical mass of cases," said Dan O'Flaherty, vice president of the National Foreign Trade Council, adding that the lawsuits are becoming a "cottage industry" for lawyers.
Critics see the lawsuits as attempts by trial lawyers to open fresh territory for expensive legal action. They also worry that the cases, which have involved countries such as Burma, Indonesia and South Africa, will interfere with American anti-terrorism diplomacy.
"Private plaintiffs will have very different interests than the U.S. State Department," said Curtis Bradley, a law professor at the University of Virginia.
Advocates see the lawsuits as an innovative way to address injustice.
The International Labor Rights Fund, a Washington-based group, brought a similar case last year accusing Exxon Mobil Corp.'s security forces in Indonesia of committing atrocities to protect the company's investment. That case could open the door to additional lawsuits.
"There are really no other channels to get at human rights abuses by corporations," said Bama Athreya, the group's deputy director. "The idea is to see if we can set a precedent."
About a dozen cases have been filed in the past few years against companies under a 1789 law known as the Alien Tort Claims Act, the trade council says. Its original intent was to allow foreign citizens to bring suit in U.S. courts against pirates from their own countries who were using American ports as safe havens.
"Congress never had these sorts of modern lawsuits in mind when it passed the law," Mr. Bradley said.
Nevertheless, by 1980, various human rights groups began filing cases against foreign government officials seeking mostly symbolic judgments, Mr. Bradley said. Now, plaintiffs have teamed up with well-known trial lawyers to take aim at corporations that theoretically could pay claims.
The South Africa lawsuit, against Citigroup, Swiss financial giants UBS and Credit Suisse, and dozens of others, was filed in June on behalf of four South Africans who faced persecution under apartheid. The complaint said private companies helped support the racist regime.
Legal scholars say the plaintiffs have little chance of winning a favorable verdict because companies can argue lack of intent to cause human rights violations, and therefore cannot be held liable.
But an industry source, who asked not to be named, said that if the case reaches the "discovery" phase, many companies will face embarrassing public questions about their activities in South Africa under apartheid.
With the hammer of public opinion on his side, Mr. Fagan then might be able to force settlements and create a major legal precedent. His office did not return repeated phone calls.
The Bush administration has not weighed in on the South Africa case, but it did hint at its stance when it issued a formal legal opinion on the lawsuit against Exxon Mobil. State Department legal adviser William H. Taft wrote the judge in the case on July 29 that the lawsuit "could potentially disrupt the ongoing and extensive United States efforts to secure Indonesia's cooperation in the fight against international terrorist activity."
The lawsuit also has put the South African government in a difficult position.
Though it wants to appear sensitive to the suffering under apartheid, the government of President Thabo Mbeki has tried to promote economic development through foreign investment. The country's ambassador to Switzerland, Nozipho January-Bardill, told the Swiss newspaper Neue Zuericher Zeitung in June that the government has "never supported" this type of lawsuit.

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