Mozambique ex-finance minister should be extradited to U.S. - embassy

JOHANNESBURG, May 22 (Reuters) - Washington urged South Africa on Wednesday to extradite Mozambique's former finance minister Manuel Chang to the United States to face charges related to a $2 billion debt scandal, after it was decided he be sent to his home country.

Chang has been in custody in South Africa since December when he was arrested at the United States' request for his alleged involvement in $2 billion of borrowing that U.S. authorities say was fraudulent. He denies wrongdoing.

South African Justice Minister Michael Masutha, who had to decide where to have Chang extradited following a double request, said on Tuesday he will go to his homeland.

The U.S. Embassy in Pretoria said it had noted the decision "with great disappointment".

"Manuel Chang is accused of carrying out a $2 billion fraud and money laundering scheme that took advantage of the U.S. financial system and defrauded U.S. investors. It is because of Chang's alleged involvement in these financial crimes that the United States sought Mr. Chang's arrest and extradition," the embassy said in a statement.

"We urge the Government of South Africa to send Mr. Chang to the United States to stand trial for these alleged crimes, which victimized U.S. citizens and robbed the Government of Mozambique of over $700 million."

A spokesman for South Africa's Department of Justice said he could not immediately comment, as he had not seen the U.S. Embassy statement when contacted by Reuters.

During his time as finance minister, Chang signed off on the loans, which were guaranteed by the government although some of them were not disclosed.

Mozambique's subsequent acknowledgement of the undisclosed borrowing prompted donors to cut off support and triggered a currency collapse.

Darias Jonker, Africa director at the Eurasia Group consultancy, said Mozambique's ruling party Frelimo would prefer to see Chang returned to Mozambique, because if sent to the United States, he could implicate senior members of the party ahead of tightly contested elections in October.

While the United States could appeal the decision, Jonker said, this is likely to take months, meaning either way Chang is unlikely to face a U.S. court before the vote, allowing Frelimo to limit any political damage his arrest could have caused.

It is unclear whether Mozambique has already filed any charges against Chang. Mozambique's Public Prosecutor in March indicted 20 individuals for their alleged role in the scandal, but Chang was not among them.

(Reporting by Olivia Kumwenda-Mtambo and Emma Rumney; Editing by Andrew Cawthorne)

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