South African judge backs ex-Mozambican finance minister’s arrest

A South African judge on Wednesday ruled in favor of the arrest of Mozambique's former finance minister Manuel Chang over alleged secret loans to Mozambican state companies totaling $2 billion.

Chang’s lawyers argued that his detention by South Africa on a US extradition request was illegal.

Chang was in charge of Mozambique’s finances when it failed to disclose government guarantees for $2 billion in international borrowing by state-owned firms.

Between 2013 and 2014, Mozambique state-owned security companies borrowed about $2 billion (1.75 billion euros) from foreign lenders, but the government only disclosed most of the debt to the International Monetary Fund in 2016.

Judge Sagra Subrayen said in a Johannesburg court on Wednesday that Chang’s detention had followed the procedure set out in the extradition treaty between South Africa and the United States, and that she was not persuaded by the defense’s argument.

“The application is therefore dismissed,” she said.

The United States is also seeking the extradition of three former Credit Suisse bankers and the lead salesman of Abu Dhabi-based holding company Privinvest, who it says are implicated in the fraud.

US prosecutors allege that Chang received $12 million to agree to sign the loan agreements to supposedly finance a tuna-fishing fleet and maritime surveillance project.

About $200 million was spent on bribes and kickbacks, according to the US indictment.

Mozambique’s attorney general said Monday there were 18 defendants in their own investigations into the case, but no convictions have been made since the scandal was unearthed in 2015.

In addition to Chang, two other unnamed Mozambican citizens are accused by US prosecutors of being involved in fraud related to the $2 billion debt.

Lebanese businessman Jean Boustani, accused of helping coordinate the alleged fraud, was arrested at a New York airport on January 2.

The arrest of Chang, who is still a lawmaker for the ruling Frelimo party, has fuelled anger in Mozambique over the scandal ahead of elections expected in October.

His lawyers applied for bail on Wednesday.