CS Credit Suisse Group

   By Thandi Ntobela and Gabriele Steinhauser 
 

JOHANNESBURG--U.S. authorities received no prior warning before South Africa publicly stated that a former Mozambican finance minister indicted in New York in connection with an alleged corruption scheme would be extradited to his home country, instead of to the U.S., South Africa's justice minister said Wednesday.

The U.S. Justice Department alleges that Manuel Chang received at least $12 million in bribes for helping arrange some $2 billion in fraudulent loans in 2013 and 2014 while he was finance minister of Mozambique, one of the world's poorest countries.

Mr. Chang was arrested at Johannesburg airport in late December on a U.S. warrant, but Mozambique's government said weeks later that it wants the former minister and current member of parliament to face the charges at home.

A South African court earlier this year ruled both extradition requests as valid, leaving it up to South African Justice Minister Michael Masutha to decide where Mr. Chang will be sent.

"The facts weighed more in favor of the Mozambique extradition request," Mr. Masutha said in an interview with The Wall Street Journal.

Among the points he considered were Mr. Chang's nationality and the former minister's own wish to be extradited to Mozambique, along with the fact that the African nation is bearing the brunt of his alleged crimes. The loans, which Mozambique defaulted on in 2017, plunged the country into a deep financial crisis from which it is still struggling to recover.

Neither the U.S. nor the Mozambican governments were informed ahead of the extradition announcement on Tuesday evening, Mr. Masutha said.

The decision is a setback for the Justice Department, which has been working to police corruption in developing countries when they involve financial institutions active in the U.S. or hurt American investors. In addition to Mr. Chang, the U.S. sought the extradition from the U.K. of three former Credit Suisse (CSGN.EB) bankers who helped arrange the Mozambican loans.

On Monday, one of the three bankers, Detelina Subeva, pleaded guilty to one count of conspiracy to launder funds in a federal court in Brooklyn, where she traveled to voluntarily. Her alleged co-conspirators are still fighting their extradition.

Civil society organizations and opposition politicians in Mozambique have said they don't believe Mr. Chang will actually face justice at home, but that charges brought against him and other former officials are an attempt to thwart more serious prosecution elsewhere.

Mr. Chang is a member of Mozambique's ruling Frelimo party, which is facing national elections in October. Frelimo and South Africa's African National Congress--both former liberation movements in their respective countries--have a close, longstanding relationship.

Mr. Masutha said he would be surprised if the government of Mozambique didn't prosecute Mr. Chang soon.

"The government of Mozambique's credibility is at stake here. The onus is on the government to demonstrate its resolve in fighting crime and corruption," he said.

Write to Thandi Ntobela simthandile.ntobela@wsj.com and Gabriele Steinhauser at gabriele.steinhauser@wsj.com

(END) Dow Jones Newswires

May 22, 2019 12:29 ET (16:29 GMT)

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