More fallout from Odebrecht

Peru’s presidential hostage

Pedro Pablo Kuczynski’s pardon of a jailed former president has weakened him



IT WAS a strange video announcing a rash decision. In a taped message President Pedro Pablo Kuczynski, in a dimly lit room and with the harrowed look of a kidnap victim, told Peruvians that the pardon he had issued to Alberto Fujimori, a jailed former president, was “perhaps the most difficult decision of my life”. He had taken it because Mr Fujimori should not be allowed to “die in prison—justice is not revenge”. He called on Peruvians to move on from “negative emotions inherited from the past”. His unspoken hope was that, having barely survived an attempt by congress to impeach him, the pardon would steady his shaky presidency. But to many, it looks as if his presidency has been taken hostage.

The pardon on December 24th was the culmination of a turbulent fortnight that began when a congressional committee received documents from Odebrecht, a Brazilian construction company at the heart of a vast corruption scandal across Latin America, showing that it had awarded consultancy contracts to companies linked to Mr Kuczynski. This contradicted the president’s written testimony in October that he had no links, either direct or indirect, to Odebrecht, which received many padded public contracts in Peru and has admitted paying $29m in bribes in the country.

Westfield Capital, a boutique investment bank wholly owned by Mr Kuczynski, received $782,000 from Odebrecht for providing consultancy starting in 2004, when he was economy minister. Another firm, First Capital, owned by Gerardo Sepúlveda, a manager at Westfield, received $4m from Odebrecht between 2010 and 2013. The contracts were legal and above-board, Odebrecht stated. In successive, stumbling explanations Mr Kuczynski insisted that Mr Sepúlveda was in sole charge of Westfield when he was in government, though he admitted he received “some money” in “dividends” from the Odebrecht contract. His only link to First Capital was a fee it paid him for a consultancy job when he was not in government.

This was enough for Mr Kuczynski’s foes to pounce. Chief among them is Keiko Fujimori, Alberto’s daughter, who lost the election in 2016 by just 41,000 votes and has seemingly never got over it. Her Popular Force party has 71 of the 130 seats in congress, whereas the president’s party won only 18. Having forced out several of his ministers, Popular Force backed a motion for impeachment on the grounds of “permanent moral incapacity” (an inheritance from 19th-century constitutions intended to deal with dementia in a president).

Many neutral observers saw impeachment, without thorough investigation, as disproportionate. In defending himself, Mr Kuczynski admitted he had been “insufficiently forthcoming” but denied he was corrupt. He accused Popular Force of mounting a parliamentary coup. Defeat seemed inevitable, prompting several ministers to urge the president to resign. Yet the opposition fell short of the two-thirds majority required, because Kenji Fujimori, Keiko’s estranged brother, led ten Popular Force deputies in abstaining.

Three days later Mr Kuczynski announced the pardon for Alberto Fujimori, Peru’s president from 1990 to 2000 and its most divisive figure. While many Peruvians credit Mr Fujimori with saving Peru’s economy from hyperinflationary chaos and eliminating the threat from Shining Path, a Maoist terrorist group, he governed as an autocrat and presided over systematic bribery and corruption. After being extradited from Chile, he was convicted on four charges of corruption and one of complicity in a death squad. He was sentenced to 25 years in prison. Peru’s past two presidential elections have been contests between Keiko Fujimori and anti-fujimorismo—the country’s strongest political current.

Not always divine

On December 24th Mr Kuczynski summoned his ministers and congressmen “to inform, not consult” them on the pardon, according to one who was there. Few believe official claims that it was because of fears for Mr Fujimori’s health, and not a political deal struck with Kenji. Mr Kuczynski’s pardon extends to a pending case of complicity in murder.

He had trailed the possibility of the pardon for months, but in a non-committal way. A poll by Ipsos found that 56% favoured the pardon. But 40% did not, and many of them voted for Mr Kuczynski. Three ministers and three of his congressmen resigned in protest, as did a number of mid-level officials. Tens of thousands of Peruvians demonstrated on December 28th and more protests are planned. While Mr Fujimori admitted that he had “let down [some] compatriots” after his pardon and asked for their forgiveness, that was less than the full-blown apology for his crimes many would like.

Starting with a reshuffle of his cabinet, the president hopes to relaunch his government and seek a national consensus. Ipsos found a slight bump in his approval rating since mid-December, from 19% to 25%. But his situation now looks perilous, for three reasons.

Having forfeited much of his original support, he has thrown himself on the uncertain mercies of the fujimoristas. Popular Force is an extension of the Fujimori family saga. Seemingly fearful of being overshadowed by her father, Keiko did nothing to speed his release. That task fell to Kenji, who Ipsos finds is now slightly more popular than his sister. Whether the Fujimoris unite or continue to fight among themselves is an open question. Alberto Fujimori expressed gratitude to Mr Kuczynski, but even the slightest attempt on his part to return to political life would hurt the government. Keiko faces two judicial investigations into Popular Force’s finances which, unless halted, could see her jailed. One concerns a text message on Marcelo Odebrecht’s phone in which the construction tycoon, now under house arrest, appeared to order an illegal $500,000 donation to her election campaign in 2011.

Then there is Mr Kuczynski’s own relationship with Odebrecht. In a new revelation, Mr Odebrecht is said to have told Peruvian prosecutors in November that Mr Kuczynski gave talks to the company’s board. The president, who answered questions from an anti-corruption prosecutor for four hours on December 28th, may also be required to give evidence to a congressional committee looking into Odebrecht, one of whose managers is due to give further testimony.

In the eyes of many former supporters, the president has forfeited the benefit of the doubt. “Before, many people thought...he was an upright figure,” El Comercio, Peru’s establishment newspaper, wrote after the impeachment vote (which it opposed) but before the pardon. Now “few people don’t believe he has lied many times to the country about his past with Odebrecht.” It added that he should “reflect on how little he has achieved”.

That is his third weakness. Mr Kuczynski is 79, and has far more experience in banking and business than in politics. His government has been largely aimless. Its only tangible achievements are a welcome but minor reduction in paperwork for public services and an active foreign policy. It has largely failed to get big public projects going, as it promised. It commissioned a report on creating a universal health, pensions and social-protection system only to shelve it. “I made many criticisms of Kuczynski but I never thought he would have no idea of what to do when he got to the presidency,” says Alfredo Barnechea, a defeated rival in the election in 2016.

There are few disagreements between Mr Kuczynski and Keiko Fujimori on macroeconomic policy. But Peru needs much more than a stable economy. Some of those who voted for the president did so because they thought he believed in the need for independent institutions and more professional public agencies. These are things that Alberto Fujimori destroyed.

The president is right that Peru needs to move on from its disagreements about Mr Fujimori.

But Mr Kuczynski’s chance of doing anything useful by the end of his term in 2021 now looks vanishingly small.

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