South Africa said Saturday that it had halted plans to extradite former Mozambican finance minister Manuel Chang to his home country in a tussle over where he could stand trial for alleged fraud.
Chang has been held in South Africa since December at the request of US authorities over alleged involvement in $2 billion of fraudulent loans to Mozambique state firms.
South Africa in May said that it had decided to send Chang back to Mozambique, rather than comply with a competing US extradition claim.
But South Africa's new justice minister Ronald Lamola said in a statement that Chang's proposed move to Mozambique had been stopped as "the previous decision may not be legally permissible."
Lamola said that it would be wrong to extradite Chang as he had immunity status in Mozambique and he had not been charged with any crimes there.
In court papers, the department of justice described the earlier decision as "irrational, and inconsistent with the constitution."
The department added that extraditing Chang to Mozambique was against international treaties signed by South Africa.
The US, which says the loan scheme defrauded US investors, in May expressed its anger over South Africa's decision to send Chang back to Mozambique.
The charges against Chang relate to loans taken out by the Mozambique government when he was finance minister between 2005 and 2015.
When the hidden debt was revealed, Mozambique -- which relies on donor aid and is one of the world's poorest countries -- was plunged into the worst financial crisis in its history.
The US alleges that at least $200 million was spent on bribes and kickbacks in a vast fraud and money laundering scheme, including $12 million for former minister Chang.
In the US, Chang faces charges of conspiracy to commit electronic fraud, financial security violations and money laundering.
Mozambique has also accused Chang of taking kickbacks, but critics say he would never face justice in the country.
In May, a former Credit Suisse banker pleaded guilty in the US to conspiracy to launder funds over the case.
Two others have been arrested in Britain, along with a third person arrested in New York.
Lamola said South Africa would not oppose an application from a Mozambican non-profit group to review Chang's extradition.
Mozambique itself has arrested several other suspects linked to the scandal, including the son of ex-president Armando Guebuza, and senior intelligence officials.
The secret loans -- which totalled around $2 billion -- were taken out by the government between 2013 and 2015 and were supposed to finance a tuna-fishing fleet and a maritime surveillance project.
Civil society groups say the loans from international banks were illegal and that impoverished Mozambicans must not be burdened with years of hefty repayments.
Chang, who was arrested at Johannesburg airport, has denied any wrongdoing.