Odebrecht scandal claims another scalp in Peru
A day after tendering his resignation, Pedro Pablo Kuczynski, the third Peruvian president to fall victim to Latin America’s rumbling corruption mega-scandal, appeared to be facing increasing legal jeopardy.
According to local reports, prosecutors have requested that Kuczynski be barred from leaving the country until they finalise their investigations into his dealings with the Brazilian construction company Odebrecht, which has admitted paying about US$800 million ($1.1 billion) in bribes to win public contracts in a dozen countries, mostly in Latin America.
The move marks yet another humiliation for the 79-year-old centreright economist, whose surprise election in July 2016 was widely hailed as an advance for Peruvian governance. Elected in part on his promises to tackle rampant corruption, the Oxford- and Princeton-educated former senior World Bank official was regarded as a distinguished technocrat a cut apart from most of Peru’s unpopular political class.
But his downfall, over allegations of using his government contacts to lobby for Odebrecht in past years — including indirectly receiving sixfigure payments for work reportedly carried out during a previous stint as Economy Minister — appears to have left Peru’s democracy in a more fragile state than ever. Kuczynski has insisted he is innocent, having placed a “Chinese wall” between his public work and his consulting firm, and said that the payments were for work done by business partners of which he was unaware. That explanation has failed to convince many Peruvians.
Kuczynski had been facing an impeachment vote on Thursday on allegations of “permanent moral incapacity”, which he was expected to lose. But lawmakers instead debated Kuczynski’s resignation. They appeared likely to accept his resignation letter overnight, rather than having an impeachment trial.
Meanwhile, the man due to become Peru's next President has scarce experience governing but is known as a consensus builder who might have a shot at bridging divides after one of the most-bitter political crises in the Andean nation's recent history.
Vice-President Martin Vizcarra is a 55-year-old engineer by training whose four years as Governor of a sparsely populated region in southern Peru counts as his most significant experience in political leadership before he is expected to be sworn into office overnight.
Odebrecht is at the centre of what has become Latin America’s biggest corruption scandal, with politicians across the region facing allegations of graft. Almost no major political figure in Peru has escaped the crisis.
In recent weeks, Odebrecht executives have testified about undeclared campaign funding to various presidential candidates, including US$1.2m for the 2011 presidential run of Keiko Fujimori, the leader of the opposition Popular Force.
Some analysts are now comparing Peru’s plight to that of Brazil, where the Odebrecht scandal has tarnished virtually the entire political class and left the country with an unelected and unpopular chief executive following the 2016 impeachment of former President Dilma Rousseff.
Vizcarra faces the urgent task of forming a new Cabinet just three weeks before Lima hosts the Summit of the Americas, to be attended by United States President Donald Trump and other heads of state in the Western Hemisphere.
The theme of the meeting, proposed by the Kuczynski Administration, is “democratic governance against corruption”. A mildmannered man who has been serving as Peru’s ambassador to Canada, Vizcarra was reported to have fallen out with the President in recent weeks after the lobbying revelations.
Despite leaving office with an 81 per cent disapproval rating, Kuczynski was just about as unpopular as the Congress that forced him out. Its disapproval rating is 82 per cent, according to a new survey by polling firm GFK, an indication of how generalised corruption, and the Odebrecht scandal in particular, have ravaged Peruvians’ faith in their elected leaders.
Nearly half the electorate wants an immediate general election, according to polls.
One previous President of Peru, Ollanta Humala, is in pretrial detention for allegedly receiving illegal campaign funding from Odebrecht, Latin America’s largest engineering firm, while another, Alejandro Toledo, a former visiting lecturer at Stanford University, is fighting extradition from the US on charges he took millions of dollars in bribes. They both deny wrongdoing.
In court in New York, Odebrecht and an affiliate agreed in 2016 to pay a US$3.5b fine, thought to be a global record in a graft case, for paying bribes in various countries to get contracts. The US claimed jurisdiction because some of the bribes flowed through its financial system.
In Peru, Kuczynski is hardly the only politician who has been seriously damaged in the last few days. Keiko Fujimori’s estranged younger brother, Kenji, is now facing expulsion from Congress after being caught on video apparently offering kickbacks to legislators in return for voting against impeachment.
He and nine other lawmakers had split from Popular Force in December after breaking with the party during a previous impeachment vote. Three days after they saved Kuczynski’s political career, the President pardoned Alberto Fujimori, the polarising 1990s strongman President serving a lengthy jail sentence for embezzlement and serious human rights violations.
That move is said to have infuriated Keiko, who has opposed her father’s liberation, which threatened to harm her own presidential ambitions.
The video of Kenji Fujimori was taped clandestinely by a lawmaker loyal to his sister.