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  • Mozambique's former finance minister Manuel Chang appears in court during an extradition hearing in Johannesburg, South Africa, January 8, 2019

    Mozambique's former finance minister Manuel Chang appears in court during an extradition hearing in Johannesburg, South Africa, January 8, 2019 | Photo: Reuters file

Published 9 January 2019

Minister Chang, who denied any wrongdoing in court, has been detained in South Africa on a fraud investigation.

Mozambique's former Finance Minister Manuel Chang’s legal team argued Tuesday that his detention in South Africa, related to a US$2 billion of fraudulent loans, is illegal and demanded his release.

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Chang, who denied any wrongdoing, in court, has been detained in South Africa since Dec. 29 as part of a United States case involving several arrests made in London and New York and eventually stretching to Mozambique.

Chang's defense argued that his detention was unlawful since at the time he has held an extradition request to the United States had not been received.

“The consequence of these facts, is to render the arrest and further detention of Mr. Chang illegal because his arrest was effectively in terms of an ineffective warrant,” Willi Vermuelen, the defense lawyer, said.

Chang was in charge of the finances for the African country when it failed to disclose government guarantees for US$2 billion in international borrowing by state-owned firms.

The scheme involved a series of financial transactions, between approximately 2013 and 2016, involving the reported creation of fraudulent maritime projects and use of state-owned companies (SOEs) as fronts to raise the funds.

Among the defrauded investors were U.S. nationals, according to the indictment.

These actions led the International Monetary Fund (IMF) and other foreign donors to cut off support, which triggered a currency collapse leading to Mozambique defaulting on its foreign debt.

On Monday, the authorities of Mozambique indicated that 18 people, Chang included, have been indicted for fraud.

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