BERLIN -- In what it called a moral rather than a legal duty, Volkswagen approved a $12 million fund Friday to compensate former slave laborers forced to work for the company by the Nazis during World War II.
The automaker, one of several German businesses facing lawsuits in the United States and threats of more at home from former slave laborers, is the first to agree to direct payments.
Volkswagen said it felt "morally called upon" to "provide humanitarian relief" to former forced laborers, while stressing it believed it was under no legal obligation to do so.
The first payments, to be administered by the accounting firm KPMG, will be made before the end of the year, the company said in a statement.
Spokesman Klaus Kocks told reporters former Israeli Prime Minister Shimon Peres and former Austrian Chancellor Franz Vranitzky have indicated they are willing to help oversee the fund.
But the fund, first announced in July, is unlikely to resolve Volkswagen's legal problems.
Lawyer Ed Fagan, who filed a lawsuit against Volkswagen last month in New York City, called the fund's size "insulting" and said his case would continue.
Volkswagen estimates 17,000 forced laborers worked in its factories between 1941 and the end of the war. But Fagan, who together with a German partner represents about 30,000 Holocaust survivors, says the number is much higher.
He demanded Volkswagen provide a list of slave laborers who worked for it and acknowledge a legal debt to them.
"What they keep doing is trying to confuse charity with a legal obligation," said Fagan. "These companies have a legal obligation to pay the slaves they abused and killed."
"They are not going to buy these people off," he said.
Like many other German firms, Volkswagen says it has no legal obligation to compensate the workers, arguing it was forced to employ them by the Nazis.
But VW broke ranks with the bulk of German industry in July, announcing it would set up a fund to give "humanitarian aid" directly to survivors. The company's supervisory board approved the details Friday.
It said Volkswagen would set up a council to determine the amount of individual payments, and fund administrators would announce shortly where former forced laborers can apply.
The threat of lawsuits has raised the pressure on German firms to address the claims of concentration camp inmates, mostly Jews, forced to work in their factories.
Some commentators have worried about the effect lawsuits and the attendant bad publicity would have on Germany's heavily export-dependent economy, and point to sanctions imposed by some U.S. cities and states against Swiss banks before they agreed to a $1.25 billion settlement with Holocaust survivors last month.
Recently some of Germany's biggest firms suggested they'd be willing to contribute to a publicly administered fund, but Chancellor Helmut Kohl has rejected any government involvement.