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A judge overturned the South African government’s decision to send the minister back to Mozambique, where civil society groups say his political clout will protect him.
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JOHANNESBURG — Mozambique’s former finance minister will be extradited to the United States to face corruption charges, a South African court ruled Wednesday, in a bribery scandal that prosectors say defrauded American investors and Mozambique.
The former finance minister, Manuel Chang, has been in a South African prison since his arrest in December 2018 following an indictment in a New York district court. Mr. Chang was arrested while he was in transit to the United Arab Emirates, according to court documents.
Mr. Chang, along with members of the Mozambican political elite, and an Abu Dhabi-based shipping company are accused of orchestrating a multinational scheme with bankers at Credit Suisse and Russia’s VTB Capital between 2013 and 2015.
Under the scheme, bond offerings and loans amounting to $2 billion were sold to investors as funding to develop Mozambique’s tuna fishing industry and improve maritime security along its southeast African coastline. Investigators said more than $200 million of the money was diverted to pay bribes and kickbacks to foreign officials and former bankers, in a scandal that became informally known as the “tuna bond” affair and in Mozambique as “the hidden debt scandal.”
The debt was hidden from Mozambican citizens and revealed only after civil society and media investigations.
The hidden debt amounted to 12 percent of Mozambique’s gross domestic product. Mozambique is one of the poorest countries in the world, but large offshore gas deposits discovered in 2013 and 2014 promised to change its economic fate. This promise of prosperity was used to mislead some investors, who were sold on the development projects, while international bankers and Mozambican officials hid the misuse of funds and the true extent of the country’s debt.
In Mozambique, a trial is underway for 19 defendants accused in the case. The trial is so big that it’s being held on the grounds of a jail, instead of in a courtroom. Among the accused is the son of a former president, Armando Guebuza.
Until now, the authorities in the U.S. and Mozambique have tussled over Mr. Chang’s extradition. In their indictment, U.S. prosecutors said that Mr. Chang was part of a group that “orchestrated an immense fraud and bribery scheme that took advantage of the U.S. financial system, defrauded its investors and adversely impacted the economy of Mozambique, in order to line their own pockets with hundreds of millions of dollars.”
Mozambican courts issued a warrant of arrest for Mr. Chang, just weeks after his arrest on a U.S. warrant. Civil society groups questioned the strength of the warrant, describing it as a political ploy.
In recent court documents, Mozambican officials pointed to the trial currently underway as evidence that Mr. Chang will face the law in Maputo, the capital. In August this year, South Africa’s justice minister, Ronald Lamola, agreed to extradite Mr. Chang, partly on this argument to Mozambique.
An umbrella formation of civil society groups, the Fórum de Monitoria do Orçamento, was not persuaded. Believing that Mr. Chang’s political clout would shield him from the law in Mozambique, the organization approached the South African High Court to halt the decision to send Mr. Chang back to his country.
In her ruling on Wednesday, Judge Margaret Victor said the Mozambican government had failed to assure the courts that Mr. Chang’s immunity as a former cabinet minister had indeed fallen away.
“There are material considerations about the warrant, the question over immunity, that leave uncertainty,” said the judge, overturning the South African minister’s decision to extradite Mr. Chang and ordering instead that he be extradited to the U.S. to stand trial.
South Africa has struggled to weigh its legal obligations to the United States, with which it has an extradition treaty, and its close political ties with its neighbor Mozambique. The two countries’ governing parties, South Africa’s African National Congress and Mozambique’s Frelimo, have a fraternal bond that stretches to the struggle against apartheid and colonial rule.
Last month, a Brooklyn federal prosecutors reached a deal with Credit Suisse to pay up to $475 million in fines to authorities in the U.S. and the United Kingdom to resolve criminal and civil charges stemming from the scandal. Credit Suisse, as part of the deal, pleaded guilty to a conspiracy charge in a deferred prosecution agreement. Three former Credit Suisse bankers pleaded guilty in connection with the investigation.
The Russian bank, VTB Capital, also reached a settlement with the U.S. Securities and Exchange Commission. The bank maintained in a statement that it had “no knowledge of or involvement in the corrupt kickback scheme hatched by Mozambican officials and others.”
In 2019, a U.S. jury acquitted the executive of the shipping company implicated in orchestrating the loans, Privinvest.
Matthew Goldstein contributed reporting from New York.