Peruvian President Kuczynski denies Odebrecht corruption allegations as Congress launches impeachment process

It is the latest fallout from the wide-reaching scandal that has ensnared some of Latin America’s most powerful political leaders

PUBLISHED : Saturday, 16 December, 2017, 11:25am
UPDATED : Saturday, 16 December, 2017, 9:01pm

Lawmakers in Peru initiated proceedings on Friday to impeach President Pedro Pablo Kuczynski, who refuses to resign after being accused of failing to disclose decade-old payments from a Brazilian company embroiled in Latin America’s biggest corruption scandal.

In a brief session, 27 of 130 members of congress put forward a request to consider removing the former Wall Street banker for “permanent moral incapacity”. Lawmakers could summon Kuczynski to defend himself before congress as early as next week.

The political turmoil rocking Peru is the latest fallout from the wide-reaching Odebrecht corruption scandal that has ensnared some of Latin America’s most powerful political leaders. The Brazilian construction giant admitted in a 2016 US Justice Department plea agreement to paying nearly US$800 million in bribes to obtain lucrative public works contracts. Investigations continue as prosecutors throughout the region try to determine who in the halls of power met and accepted payments from Odebrecht.

Kuczynski has denied wrongdoing. He delivered an impassioned speech surrounded by cabinet members late on Thursday saying he had no involvement in payments made by Odebrecht-led consortiums to his Westfield Capital consulting firm.

“I’m not running and I’m not hiding because I have no reason to,” Kuczynski said, vowing to produce his personal bank records for public scrutiny. “I’m not going to abdicate my honour, my values or my responsibilities as president of all Peruvians.”

Opposition lawmakers presented documents provided by Odebrecht on Wednesday showing US$782,000 in payments to Westfield between 2004 and 2007. Between those years, Peru awarded Odebrecht a major highway contract and Kuczynski was a high-ranking government official. The president said he had no management duties at his consulting firm during that period. He added that all the payments were made to his business partner. That partner also owns First Capital, which the Odebrecht documents show received US$4 million.

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Kuczynski said all his earnings from Westfield were duly reported to Peru’s tax authority. Of the US$4 million in payments to First Capital, he said only one transaction, for which he held up an invoice, was for financial consulting services he provided the firm in 2012 as part of its work on an Odebrecht-owned irrigation project. Kuczynski did not hold a public office in 2012.

“I’m an honest man and have been all my life,” Kuczynski said.

The 79-year-old president was elected in 2016 after a lucrative business career. He campaigned on a pledge to clean up corruption and provide much-needed stability in one of South America’s most politically volatile nations.

The Odebrecht scandal continues to ripple across Latin America, with Ecuadorean Vice-President Jorge Glas sentenced to six years in jail earlier this week after a court found him guilty of orchestrating a plot to accept bribes from the company. Odebrecht has acknowledged paying US$29 million in Peru during the 2001-2006 administration of President Alejandro Toledo and two of his successors. Kuczynski served as Toledo’s finance chief and prime minister.

As recently as last month, Kuczynski denied having any professional or political ties to Odebrecht and wagged his finger at three predecessors accused of taking bribes from the company.

His detractors now accuse him of misleading the nation. Peru’s two biggest parties, which have enough seats in congress to remove Kuczynski, have demanded that the president step down.

“The country right now can’t afford the luxury of having a president that is so questioned,” said Daniel Salaverry, a spokesman for the opposition Popular Force party, which holds a majority in congress.

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He swore over and over again that he had no ties to Odebrecht, and that was proven to be nakedly false
Steve Levitsky

As lawmakers debated his removal, Kuczynski was holed up in the presidential palace with top cabinet members. First Vice-President Martin Vizcarra, who could take office if Kuczynski is booted, acknowledged the nation’s difficult moment on Twitter, reiterating Peru’s commitment to the constitution and to democratic institutions.

“Peru is bigger than its problems,” Vizcarra wrote.

Peruvians are unlikely to be convinced by Kuczynski’s reassurances that he did nothing wrong, analysts said.

Steve Levitsky, a Harvard University political scientist who has spent years studying Peru, said Kuczynski was already a weak president with little legislative or popular support before the corruption allegations, which had been quietly dogging him for some time.

“He definitely seems to be dead in the water,” said Levitsky. “It’s not that what he did was necessarily illegal, but the fact that he swore over and over again that he had no ties to Odebrecht, and that was proven to be nakedly false.”

Kuczynski would not be the first president in Peru removed on moral grounds if lawmakers succeed. In 2000, President Alberto Fuijmori was ousted a week after flying to Japan amid a mounting corruption scandal. Fujimori is the father of Keiko Fujimori, who narrowly lost to Kuczynski in last year’s election and is the leader of the Popular Force party.

Alberto Fujimori is in jail for human rights violations.