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American Morning

Interview with Ed Fagan, Jacob Sullum

Aired August 09, 2002 - 07:32   ET

THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.

PAULA ZAHN, CNN ANCHOR: On to the issue of apartheid now. The American company Citigroup and two other banks are now being named in a $50 billion class action lawsuit brought by South Africans charging the companies that did business with the South African government during apartheid.
Critics say the lawsuit, to be heard in a U.S. federal court today, isn't about making better corporate citizens, it's about making some people rich.

Ed Fagan, the lead attorney in the case, joins me now from New York this morning. And in Washington, Jacob Sullum, the senior editor of "Reason" magazine. He also joins us for the discussion.

Good morning, gentlemen. Welcome to both of you.

ED FAGAN, APARTHEID VICTIMS' ATTORNEY: Good morning.

JACOB SULLUM, "REASON" MAGAZINE: Good morning.

ZAHN: Mr. Fagan, I think many people understand the amount of suffering that went on during apartheid. But why hold these corporations responsible?

FAGAN: Because these corporations are the same corporations or similar corporates to the ones that profited from other human rights violations, atrocities. You're talking about simply sending the same message to corporate America and the corporate world that we sent when we gave reparations to Holocaust victims. And if we don't do that, then the companies will continue supporting systems like that.

ZAHN: Mr. Sullum, your reaction to that?

SULLUM: Well, I think it's important to note that this lawsuit is worded broadly enough that it could apply to any company that did business in South Africa between 1948 and 1993. Now, at the time there was a very lively debate about what the proper course of action was for businesses in South Africa, should they stay in or should they get out? And a lot of people said they were, that foreign businesses were actually a force for good, that they provided jobs, they provided better working conditions, in some cases even pointing the way to an integrated workplace.

Now, it seems unreasonable to me to say in retrospect not only were they wrong, but they committed a tort by staying there and that we're going to take money from them or, more accurately, from their shareholders, in order to -- and by the way, this money is not actually going to compensate the plaintiffs, according to one of the lawyers working on this case. This money is not going to go to victims of the South African government. It's going to be used for various kinds of collective projects such as building houses, building schools.

Of course, the lawyers will get very rich off of it, but if it's, this is really about compensating victims, you would think some of the money would go to them.

FAGAN: You know, Paula, I just listened to Mr. Sullum and I must tell you that I don't know whether you actually read the lawsuit, Mr. Sullum, but I drafted it...

SULLUM: Yes, I did.

FAGAN: ... and I know exactly what it says. What it says is that there are two categories of victims that have to be compensated. One are people who are direct victims, people who suffered direct physical violence. They should get some form of meaningful compensation. Then the issue is how do you deal with the broader issue of reparations for all of South Africa that suffered. And that's why you create humanitarian funds just like we did in the Holocaust cases.

Another point you mentioned about lawyers getting rich, I'm proud to say that our team are the lawyers that did all of the prior Holocaust cases, all of the prior human rights violations cases, and in the history of class actions, in the history of litigation, our fees are the lowest fees ever, less than two percent.

So, and when you talk about companies...

SULLUM: All right, but you're talking about...

FAGAN: Wait. Let me just finish. You made three points. The third point about companies doing business from 1948 to 1993, we talk about companies that did business during that period of time that enriched themselves, that profited and failed to give an accounting. It's not any business that did business in South Africa.

SULLUM: All right, well, it's not...

FAGAN: It's companies that promoted apartheid.

SULLUM: I think it's not at all clear what you mean by promoted apartheid. If you look at the lawsuit, not only do you have the names of things...

FAGAN: Then you're the only guy on the planet that doesn't get it, Mr. Sullum.

SULLUM: Excuse me, let me finish. Not only do you have the names, the companies you've named so far, but you have a hundred or so companies that are going to be named in the future. And you talk about companies being culpable not only for dealing directly with the South African government, but for what you call profiteering from apartheid, for supporting the apartheid system, which could be interpreted as any investment in the economy there...

FAGAN: No, sir.

SULLUM: And you talk about companies...

ZAHN: Mr. Sullum, let me ask you this.

SULLUM: ... benefiting from cheap labor...

(CROSSTALK)

ZAHN: Hang on. Hang on, gentlemen.

Mr. Sullum, let me ask you this. Do you think that any corporation, even a narrow band of corporation, is responsible for paying out any money and bearing any responsibility for furthering the practices of apartheid? Or do you think everybody should be off the hook?

SULLUM: Well, I think you can certainly criticize certain companies on moral grounds for some of their dealings with the South African government. There's no question about that. But I don't think you can make the case they violated anyone's rights simply by doing things like selling computers to the South African government or providing loans to them.

They themselves were not involved in persecuting anyone, arresting anyone, torturing anyone. It's the South African government officials who are responsible for that. They are the ones who should be sued because they're the ones who are actually responsible for these actions.

ZAHN: Mr. Fagan, I want to close with one question from you. You've said this is not about being a cash grab. I'm just going to quickly put up on the screen something the "Atlanta Journal- Constitution" wrote saying, "Fagan's shameful attempted cash grab, he would get 30 percent of any take, is a counterproductive move in a fledgling democracy struggling to unite its population and set aside the trauma and tragedy of apartheid."

Aren't you just opening up new wounds here?

FAGAN: No ma'am. As a practical matter, Paula, what's problematic about all of this is that when it comes to people of color, whether they're enslaved, descendants of African-Americans or they're South Africans, when they raise the issue of reparations, the answer to people of color is you don't say that. We have to get on with the past. But when it comes to Philippines, Japanese, Koreans, Native Americans, Czech, Hungarians, Russians, Poles, Eskimos, it's OK for them to ask for reparations for the human rights violations that were committed against them.

But people of color, sorry, we have to move on. That's not justice.

ZAHN: Unfortunately I need to move on here, as well. Jacob Sullum, Ed Fagan, thanks for your time. It should be a pretty heated session there in U.S. federal court later today.

Thank you both for joining us this morning.

FAGAN: Thank you.

SULLUM: You're welcome.

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