US investors seek pay for pre-WWII German bonds

By ASSOCIATED PRESS
September 7, 2010 02:46




MIAMI – More than 80 years ago, Germany sold tens of thousands of bonds to American investors in an effort to recover financially from World War I. Later, Adolf Hitler used some of the money raised by those bonds to build the powerful Nazi war machine that would ravage Europe during World War II.

Now, a half-dozen US bondholders are turning to federal courts in an effort to force Germany to make good on its promise to repay the debts, which today could be worth hundreds of millions, if not billions, of dollars. Action has been heating up in lawsuits filed in Miami, New York and Chicago, including a victory for investors last month when an appeals court rejected Germany's attempt to dismiss their case.

If the bondholders ultimately win, their lawyers could ask judges to seize German assets in the US to repay them, a tactic that has worked in other legal disputes over money owed by foreign governments.

But if Germany prevails, the bondholders argue, it could undermine the global system through which governments raise money by issuing bonds.


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