Diamond industry hit by £3bn suit

THE maverick lawyer who forced Swiss banks to pay out huge reparations to Holocaust victims yesterday took on the diamond industry, demanding billions of dollars be paid to South African workers "exploited" during the apartheid era.

In a move that sent shivers through the South African stock market, Ed Fagan filed suit in New York and Nevada demanding Anglo American and its immensely wealthy diamond business arm, De Beers, pay $6.1 billion (3.85 billion) to its former workers.

Mr Fagan said yesterday he was acting for people who had been wrongfully sacked for lawful labour strikes; who were subjected to forced labour under inhumane conditions; and for those who were wrongfully attacked, imprisoned and tortured during protests by working people.

"Those companies [Anglo and De Beers] were engaged in some of the most horrific crimes against humanity," the maverick lawyer said. "If they want to come to the table, tell them to bring $3.1-6.1 billion, and then there is something to talk about," he added.

He has said the $100 billion paid to German Second World War victims should serve as a guideline for apartheid claims.

South Africa’s Truth and Reconciliation Commission, which investigated human rights abuses under apartheid, said in its final report last month that a case could be made for reparations against South African mining firms, including Anglo American.

The commission singled out Anglo as a firm that benefited from cheap black labour guaranteed under the apartheid system.

At its height within South Africa, Anglo boasted holdings in about 600 companies. Its founders, Oppenheimers, became one of South Africa’s wealthiest firms.

But Anglo’s corporate affairs executive director in Johannesburg, Michael Spicer, said yesterday the company did not consider the payment of reparations to be appropriate.

"Anglo American strongly rejects the efforts made by US lawyers and others to use US courts to resolve important issues for South Africa's future," Mr Spicer said. "We firmly believe that our opposition helped to bring about an end to the apartheid system."

But shares in Anglo fell almost nearly 4 per cent on news of the action, pulling the wider South African stock market down. The gloom was not helped by the realisation that more companies are on Mr Fagan’s hit list.

Today he is scheduled to announce details of a class action against the South African oil-from-coal producer Sasol and the US construction firm Fluor International.

Mr Fagan is also reportedly seeking damages from Swiss and US banks, accusing them of propping up the sanctions-hit apartheid regime in the 1980s by providing billions of dollars in loans.

Mr Fagan, speaking in South Africa, said: "In 1948, in the wake of the Nazi Holocaust, a racially exclusive government, led by supporters of a Nazi victory in World War Two, took power in South Africa."

Deon Louw, head of resource finance at the Investec brokerage firm, said: "Anglo is the tallest poppy, the most obvious choice. It’s too early to tell, [but] if this action is successful then we’re going to expect some other similar class-action suits against South African companies."

Mr Fagan’s "class action suits" have been filed under a US law, the Alien Tort Statute, that permits non-US citizens to file claims of human rights abuses and torture in US courts - provided the big companies concerned have US operations.

Fagan, 50, has achieved a high degree of notoriety for the way he attracts massive media attention, thus increasing the pressure on his legal opponents. His method is to go for the biggest companies on the biggest issues.

He has lifted legal battles into the realm of public relations, for instance by becoming involved in Austria’s 2000 road tunnel fire that killed 155 people.

Mr Fagan knows, as do many famous lawyers, that the law often needs a big kick. For half a century Swiss banks fobbed off relatives of Holocaust victims who sought their families’ missing money and jewellery - until Mr Fagan came along and shamed them into settling.