New administration reverses expropriation of property founded by ex-Nazi Paul Schäfer, leaving victims in limbo

With its Germanic crosses and colourful toy-town facades, the village square of the tiny Chilean settlement of Villa Baviera gives little indication of the horrors of its past.

Until 1991, this cattle town of a few hundred people was a compound known as Colonia Dignidad. Its leader, Paul Schäfer, a former Nazi and weapons smuggler, bought a swathe of land in the valley in 1961, eventually holding as many as 300 people in a fenced enclave with minimal contact with the outside world. He sexually abused and even tortured the children in the camp.