- Associated Press - Wednesday, January 9, 2019

JOHANNESBURG (AP) - A South African judge on Wednesday ruled that the arrest of a former Mozambican finance minister was valid, delivering a blow to the ex-official’s efforts to avoid extradition to the United States because of a $2 billion loan scandal.

The ruling against Manuel Chang, whose role in an alleged fraud scheme is outlined in a U.S. federal indictment, followed hours of arguments by his lawyer and a state prosecutor over the legality of the arrest at the main international airport in Johannesburg on Dec. 29. The defense now hopes to secure bail for Chang, and the case was adjourned until Thursday.

The indictment alleges that Chang and others violated U.S. anti-corruption laws in a scandal that plunged Mozambique into financial crisis. State companies in Mozambique were supposed to use international loans earmarked for projects including coastal surveillance and tuna fishing, but the projects were fronts allowing the defendants to pay out and benefit from at least $200 million in bribes and kickbacks, according to the indictment.

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The loans were concealed from the International Monetary Fund, which stopped providing aid to Mozambique after learning about the extent of the hidden dealing in 2016.

Interpol officials, Mozambican diplomats and police with automatic weapons were among those in the courthouse near the Johannesburg airport on Wednesday, the African News Agency reported.

“Mozambique has no extradition treaty with the U.S., so when Chang was in South Africa it became a matter of urgency to have him arrested,” state prosecutor Elivera Dreyer said, according to the news agency.

The extradition process can take up to 60 days and American officials are working on related documents, Dreyer said. Interpol is trying to track down two other suspects in the case, according to the prosecutor.

The U.S. Embassy in South Africa had no comment. Interpol said it does not comment on “specific cases or individuals except in special circumstances and with the approval of the member country concerned.”

A Lebanese businessman and three former Credit Suisse employees have also been arrested. The indictment alleges the three bankers conspired to get around their bank’s internal controls, though critics have questioned compliance procedures at Credit Suisse. The bank says no action has been taken against it and that it is cooperating with authorities.


Follow Christopher Torchia on Twitter at www.twitter.com/torchiachris

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