A multi-billion dollar suit against Swiss and US banks on behalf of victims of apartheid faces daunting legal hurdles and has fuelled debate over who should pay for the sins of white-ruled South Africa.

More than 500 South Africans called a telephone hotline on its first day on Tuesday to join a $50 billion class action suit to be filed soon in a New York court by Edward Fagan, a US lawyer known for his controversial tactics.

The suit alleges the banks - UBS and Credit Suisse as well as US-based Citibank - provided funds to the apartheid government between 1985 and 1993, when the regime was running short of cash because of United Nations sanctions.

The banks have dismissed the claims as unjustified. In South Africa, the case was viewed sceptically by some experts on the emotive issue of apartheid reparations.

"The whole thing is a bit far-fetched," said Cheryl Loots, a professor at the University of Witwatersrand law school.

Loots said a key hurdle was the lack of similarity in claims made by the thousands of South Africans expected by Fagan's group to sign up for the class action.

"All these claims have a different basis. How do you define the class? Will it be all people who suffered under apartheid?" she asked.

Patrick Bracher, a constitutional lawyer with law firm Deneys Reitz, agreed that the class action would be complex.

"The main difficulty is that you have an endless list of claimants - probably two-thirds or three-quarters of the population - and an endless list of defendants," he said.

"I would be surprised if such a random selection of claimants and defendants could produce a result," Bracher added.

Fagan's group said the claims were being made under US laws that permit non-US citizens to file human rights or torture claims against companies that do business in the US.

Lawyer Lizo Mbambisa said the group was casting a wide net. "We are looking at people who had a relative killed, people who have been victims of torture, people who have been victims of political incarceration. So it is very broad," he said.

But if they win, the victims may not get a cheque. Fagan associate Diane Sammons said: "The suit is not necessarily about individual cheques to people and to victims. What we envision is more of a collective fund that's created from which we can address some of the harms of apartheid."

The conservative Citizen newspaper lashed out at "pie-in-the-sky litigators", and rejected Fagan's linking of the apartheid case to his successful Holocaust litigation which forced Swiss banks into a $1.25 billion settlement for Nazi victims.

"It is difficult to see how this could be replicated in cases where concepts as vague as 'support' have to be proved to exist and then proved to be illegal, not simply morally wrong".

Reparations are a sensitive issue in South Africa, where the scars of more than 40 years of white-minority rule are still raw and the "Rainbow Nation" is divided in many aspects of life.

Thousands of people are still waiting for compensation recommended by the Truth and Reconciliation Commission (TRC), set up by former President Nelson Mandela to heal the wounds of the country's apartheid past.

"There is a general feeling that the truth commission has not delivered," said Tlhoki Mofokeng, a reparations expert at the Centre for the Study of Violence and Reconciliation.

The TRC's 1998 interim report recommended compensation for more than 20,000 people totalling more than three billion rand ($282 million), Mofokeng said.

But only a handful have received interim payments, he said. The TRC gave amnesty to those who committed apartheid-era crimes in exchange for telling the truth, but it did not control the purse strings for reparations.

The government has said it will act after the TRC's final report expected in a few months.

The anger and resentment fuelled by the slow compensation process has led some analysts to warn of future lawsuits against the state and local companies which benefited from apartheid policies which ensured cheap black labour.

In 1998, the TRC said business was central to the economy that sustained the apartheid state and it proposed a special wealth tax to address apartheid's legacy of poverty.

But four years later there is little talk within business or government circles of a special apartheid tax.

"There is no doubt that foreign companies made huge profits in South Africa, but local companies benefited much more from apartheid measures put in law at their request," said University of Stellenbosch emeritus professor Sampie Terreblanche.

"To expect them to do anything is a pipe dream and if the government does not call for a special restitution tax, then we can expect more court cases in South Africa," he added.