South African energy group, Sasol, scheduled to debut on the New York Stock Exchange on Wednesday (9 April), is the next in line to face apartheid reparation claims which have already slapped Anglo American with a potential $6. 1 billion guilt bill. Sasol will be joined by a number of other industrial companies including Fluor Corporation which had business with Sasol during the apartheid era.
The claims against Anglo American are being brought by US lawyer, Ed Fagan, who made his name famous with a successful claim against Swiss banks that held onto the deposits on Jews killed in the Nazi holocaust.
According to IOL, the Independent Group's website, the claim against Sasol is on behalf of thousands of former workers for "assault, intimidation, setting of dogs, arrest and forcibly returning striking workers against their will" by management.
The claims, which first raised their head in the US in November, could also include a number of other companies operating in South Africa during the apartheid era including IBM, General Motors, Exxon Mobil, JP Morgan Chase, Citigroup, Caltex Petroleum Corporation and Ford Motor Company.
South African analysts said the claims would cast a pall over affected stocks for some time to come: "This is not going away tomorrow. The $6 billion is over R50 billion so it's enormous. It's going to hang over their heads," said Graeme Korner, an analyst with independent stockbroker, Barnard Jacobs Mellet.
Anglo American shed 3.34 percent on the London Stock Exchange where it is principally listed. Korner said this decline was relatively light suggesting that the market was prepared to digest the news before over-reacting.
However, he could not discount the danger of the apartheid reparation claims spilling into other sectors of the Johannesburg Stock Exchange, including the jumpy gold sector.
Patrice Rassou, mining analyst for Old Mutual Asset Management, said the equity market would price in the threat of the law suit relatively quickly.
"Obviously, we've seen this type of class action already, as was mentioned as to the tobacco shares. It's something which takes a lot longer to come to fruition than one might think and, with the market reacting already, I wouldn't think that this is something which is going away in the short term," Rassou said.
"But usually you find that the equities market price these things in very quickly, and then the news just drags on forever and ever, and it doesn't come to an easy conclusion," Rassou said.
On Friday, Anglo swept aside pressure from a US lawyer that it must provide between $3 and $6 billion in reparations for apartheid-related damages. The group claims that questions of reparations to individuals is a matter for South Africa and its courts, if necessary. In a strongly worded statement, the UK-listed mining group said it had already made "extensive contributions" to reconciliation and reconstruction in South Africa.
However, this development comes at a bad time for Anglo American already having to compile a rebuttle to the South African government on mining royalty proposals levied on the group's gross revenue. This is in terms of the Money Bill which has attached a royalty of between three and eight percent on all of the country's miners, most critically gold, platinum and diamond producers.
Investment analysts have said the Money Bill will impact on the group's future earnings and even negatively affect the viability of future black economic empowerment deals.
The group may also be faced with legal suits on health related diseases contracted by miners working on the company's gold mines. This follows success in extracting reparations from former South African mining house, Gencor, for health problems developed by miners while working on the company's asbestos mines. The lawyers in that particular case, Ntuli, Spoor and Noble, said that a similar case could be made for diseases contracted by miners and specific to the gold mining industry. The attorney said this claim could total billions of rands for South Africa's gold mining industry.