The cemetery is a scrap of land between Khayelitsha and Nyanga, two sprawls of township shacks and dust hidden 'behind the mountain', as they say, from Cape Town and the turquoise ocean.

This morning, mourners lay 27 young people, mostly women, into hurriedly dug graves. They died, says Melvyn Mbulawa - burying his 21-year-old daughter Joyful - 'of cancer'. Others describe the cause of death as 'That Thing'.

Newspaper advertisements say either 'short illness' or 'long illness'. But everyone knows this was no cancer. The dead were just another tiny crop in the savage harvest that will reap the lives of millions in South Africa, and tens of millions across the continent. The scourge of Aids.

Mbulawa winces, kicks a stone, wipes the sweat of sorrow from his brow. 'She was like a little doll at the end,' he says quietly, 'thin like sticks.'

In the wider world, the scale of the Aids crisis in Africa is well known. Up to 80 per cent of those in the world dying of Aids are in sub-Sarahan Africa.

There are 22 million HIV positive cases in Africa - 65 per cent of those across the planet. One in seven new cases is in South Africa, where the rate is rising fastest. There are townships where the death rate from Aids is higher than the birth rate, communities that will in time disappear. It is an apocalypse, the holocaust plague of the next century.

What has remained hidden until now, however, are the lengths to which pharmaceutical companies and their political allies seem prepared to go in refusing to confront and treat this pandemic, until their ability to ensure vast profits is guaranteed.

With a bundle of exclusively obtained documents, today The Observer lays bare a cabal in Washington DC, which on the face of it toyed cynically not just with a premium on profit, but with political campaign contributions and personal careers, putting at risk millions of lives among the poorest and most defenceless people on earth.

That cabal comprises some of the most powerful drugs companies in the US and Britain, whose purchasing power has bought up research funded by the US taxpayer to treat Aids. They are not only withholding their help but are engaged in legal action to stop South Africa from treating its millions of HIV sufferers.

It also embraces a cosy triangle of big-time Washington wheeler-dealers: Vice President (and would-be President) Al Gore, White House Chief of Staff John Podesta (likely to retain the office in a Gore administration) and his brother, Anthony Podesta - point-man in Washington for the most powerful lobby in town, that of the pharmaceutical barons.

Between them, these three men and their friends in the big drug companies' lobby have put South Africa's (and other nations') desperate attempts to combat Aids on hold, while millions stand to die.

For the people who live in the shanties of Khayelitsha and Nyanga, the big problem, apartheid, is gone. The shacks proudly bear the flag of Nelson Mandela's South Africa. Yet this is still a land of guns, liquor, despair and violence.

Violence against women is a way of life; the word 'rape' is barely used, rather 'initiation'. The victims are usually about 12 or 13.

Such depravity is one of the reasons why the African National Congress authorities have built a new Aids and TB clinic in the heart of Khayelitsha. Here, Eric Goemaere of Médecins Sans Frontières has set up shop.

Goemaere, embarking on the most daunting project of his career on misery's front lines, estimates that 60,000 children will be born HIV-positive each year in this area, and that most will die within five years.

Recent UN figures show that the number of women with Aids in Africa has now overtaken that of men. This is partly to do with social habits, explains Goemare: there's a belief afoot that sex with a virgin is a cure for Aids in men.

Then there's the fact that HIV transmits more easily from men to women than vice-versa, 'coupled with the number of vaginal lacerations suffered by women during ritual group sex and violent sex in the home'.

Once patients are HIV-positive, they become more susceptible to tuberculosis, which in turn complicates the treatment for HIV. Except that there is no treatment for HIV in South Africa - because of the pharmaceutical lobby and its friends in politics.

In 1997 the South African government passed a law setting up, among other things, a marketplace for medicines based on affordable prices. Clause 15c relied on two practices agreed under the World Trade Organisation's guidelines.

One, compulsory licensing, allows businesses in a country in a state of emergency to manufacture generic products paying only a royalty to the patent owner. The second, parallel importing, lets a nation import drugs made more cheaply in one country than in another.

Patent rights for the HIV cocktail would cost the South African health service an inconceivable $10,000 per Aids patient. Using the mechanisms under Clause 15c would reduce the costs by between 50 and 90 per cent.

But the legislation was labelled 'piracy' by Pharma - the Pharmaceutical Research and Manufacturers of America. This is a formidable alliance of the nation's 100 biggest drugs companies. They claimed the South African law would violate patents and undermine profits on which research depended.

For a battle against a government led by the world's most popular leader, Pharma needed political clout, and chose a consultancy called Podesta.Com.

It chose well. What was formerly Podesta Associates was founded by two brothers from Chicago, John and Anthony, and rated by Washingtonian magazine among the top 20 lobbying groups in the capital.

Both men were heavy-hitting Democrats, both had the President's ear and were especially close to Gore. Both were members of President Clinton's transition team when he took office in 1992. John remained at the White House, later becoming Chief of Staff, while Tony streamlined the company. 'We Help You Change Outcomes' was his slogan.

The Clinton administration, with John Podesta as Chief of Staff, went to war over South Africa's anti-Aids drive. Trade Representative Charlene Barshevsky denied South Africa tariff breaks on its exports to the US. Gore told Nelson Mandela to his face that the US would not tolerate the legislation.

South Africa refused to back down, and the pharmaceutical companies intervened directly. They sued: led by Pharma, the massive Bristol Myers Squibb from the US, Britain's SmithKline Beecham and Glaxo (through its South African subsiduary), Germany's Bayer, Roche of Switzerland, France's Rhne-Poulenc and a host of others.

The choice of 'First Respondent' and principal defendant, at the top of the list, was brazenly defiant: 'The President of South Africa, the Honorable Mr N. R. Mandela N.O.' It had been some years since Mandela was faced with a legal charge.

The South African Bill, claimed the writ, 'deprives owners of intellectual property in respect of pharmaceutical products'. The man who helped draw up the law, special health adviser Ian Robert, retorts: 'We never intend or intended, and never will abrogate patent rights'.

Gore was now embarking on his campaign to become President. His impartiality in espousing Pharma's cause over the South African legislation was thrown into doubt by the millions of dollars received in campaign contributions brokered by his own chief of staff's brother - from Pharma and the companies suing Mandela and South Africa.

Meanwhile, the US-South African binational commission continued to meet regularly, to handle trade-related business between the two countries.

Leading the talks were the Deputy President of South Africa, Thabo Mbeki (now President), and his opposite number, Gore. For 18 months, Mbeki urged and pleaded with Gore to intervene on behalf of his government and its struggle against HIV.

Gore not only refused to help - he appears, as one insider puts it, to have repeatedly 'put intense pressure on Mbeki to drop the legislation and comply with the drug companies'. Sources have told The Observer that in these talks Gore's team aimed straight for South Africa's raw nerve - the high wire along which the ANC government has to walk - saying that its stance on Aids drugs would 'jeopardise foreign investment'.

On 30 April, 1998, the US placed South Africa on the '301 Watch List', usually a preparation for economic sanctions. Congressman Rodney Frelinghuysen of New Jersey [where Bristol Myers is based] introduced a provision into the Foreign Operations [Aid] Bill to cut off all aid to South Africa until Mandela's proposals were dropped.

That Pharma was prodding Frelinghuysen is evident from internal documents obtained by The Observer , which capture the flavour of the campaign to defy Mandela.

At the end of last year, officials in the US embassy in Pretoria reacted against Frelinghuysen's legislation. The Observer has learnt that Millard Arnold, minister councillor for commercial affairs at the embassy, protested to his superiors and told the South Africans that the Foreign Operations law and the drug companies were 'not a reflection of America's position'.

According to one US government source, staff were embarrassed. 'We felt we could not do this to these people', said the source.

This is how Pharma's director, Tara Lichtenfels, reacted, in a letter of 10 November to Frelinghuysen, obtained by The Observer : 'We are disappointed to learn of recent comments made by US embassy personnel in Pretoria with regard to your legislation. It... indicates an impertinent disregard for the democratic process Americans hold dear and so vigorously champion around the world.'

On that same day, Frelinghuysen fired off an angry letter to US Secretary of State Madeleine Albright, also obtained by The Observer , saying he was 'seriously concerned about Mr Arnold's remarks' and demanding a reiteration of US policy to the South Africans.

Three days later, Barbara Larkin, Albright's assistant secretary for legislative affairs, wrote to House Speaker Bob Livingston, promising that 'the administration will pursue this issue vigorously'.

On 5 February this year, Larkin assured Frelinghuysen that 'we are making use of the full panoply of leverage in our arsenal to persuade the South African government to change its law'.

An attached report by the State Department confirms that it is acting 'with the full support of pharmaceutical industry representatives'. The report, obtained by The Observer , goes on to describe how the US embassy in Pretoria courted the Swiss and EU member embassies to interest them in a 'joint effort' against South Africa.

The effort bore immediate fruit. The report reveals that French President Jaques Chirac 'raised France's concerns' during a state visit, 'and that the Swiss and German presidents also raised the issue privately with Deputy President Mbeki'.

Britain, meanwhile, cut a clueless figure. Although Glaxo Wellcome was to the fore in suing Mandela, a letter from Andy Pearce, First Secretary at the British embassy in Pretoria, to the Department of Trade and Industry in London and his counterpart at the US embassy reports that [the then] Health Minister Frank Dobson 'did not have a very detailed discussion with his South African counterpart', and that 'the whole issue remains thoroughly confused'. Pearce is, however, 'conscious that Sir Richard Sykes of Glaxo Wellcome is due to visit South Africa shortly'.

The EU was forthright in joining the Americans. Commission Vice-President Leon Brittan write directly to Mbeki to express his 'concern that the new law might conflict with the objectives of the Trade and Co-operation Agreement'. Gore hit the campaign trail, beset by a carefully co-ordinated campaign of demonstrations by Aids activists.

On 17 September, Gore responded to the pressure. He about-turned, saying that he accepted the principle of compulsory licensing and parallel importing. His patron, master of the volte-face President Bill Clinton, followed suit at the World Trade Organisation meeting in Seattle.

The pharmaceutical companies quickly found another Democrat to back: major industry figures suddenly appeared prominently on the list of donors to Gore's challenger Bill Bradley. 'I am not afraid', retorted an indignant Al Gore, 'to stand up to the pharmaceutical industry.'

But the lawsuit remains on hold. A Pharma spokesman said: 'We still regard the legislation as an abrogation of intellectual property, and in that sense the case is suspended, but still there.' Strengthened by its Nobel Prize, Médecins Sans Frontières now counters the drug companies with its timely Access to Essential Medicines Campaign for worldwide access to life-saving drugs.

Former Manhattan advertising man Daniel Berman leads its drive. From Geneva, he said last week that the drug companies and consultancies divided the market into the lucrative territories of America, Europe and Japan and what is known as 'Rest-of-World'.

He said: 'The responsibility is to the shareholders and no one else. If you were to try and raise the question of Aids in Africa, or similar, they'd look at you like you were from another planet.'

Berman's calculations are that, of 1,300 new medicines marketed between 1975 and 1995, only 13 cover diseases that afflict the Third World.

In the shanty, Goemaere has persuaded 85 per cent of pregnant women in his district to come forward for HIV testing.

But he asked: 'What is the point of pleading with thousands of women to come and find out that they and their children are going to die, if I then have to say that I have no drugs to do anything about it?'