December 14, 2017 / 9:35 PM / a month ago

Peru's president Kuczynski defies impeachment threat over payments scandal

(Recasts, adds quote from Kuczynski, context)

By Mitra Taj and Teresa Cespedes

LIMA, Dec 14 (Reuters) - Peru’s center-right President Pedro Pablo Kuczynski said on Thursday he would not resign in the face of possible impeachment over payments to a firm he owned by a Brazilian company that has bribed politicians across Latin America.

In a defiant national address flanked by members of his cabinet and party lawmakers, Kuczynski said he owned Westfield Capital Ltd when it received deposits from Brazilian builder Odebrecht.

But he denied wrongdoing and said he did not manage it while he held senior government roles.

Before Kuczynski spoke, the leaders of several parties in Congress vowed to seek his impeachment if he did not step down. Opposition parties control enough seats in the single-chamber body to force him out.

He plotted strategy with advisors for hours on Thursday. Several senior officials wanted him to resign to avoid a drawn-out battle for survival, two government sources told Reuters.

“I‘m an honest man and have been my whole life. I‘m willing to defend the truth,” said Kuczynski, a 79-year-old former Wall Street banker. “I‘m not going to abdicate my honor, my values, or my responsibilities as president of all Peruvians.”

Kuczynski promised to give authorities unfettered access to his banking records and submit to questioning in Congress and the attorney general’s office.

Odebrecht has caused Latin America’s biggest corruption scandal since it said it bribed politicians in a dozen countries. It has not publicly named the partners in its crimes in Peru but has promised to cooperate with public prosecutors.

Kuczynski’s promise to fight back could inflame the worst crisis to grip Peru since former President Alberto Fujimori fled the country in 2000 because of a graft scandal.

The scandal on Thursday spooked markets in one of the region’s most stable economies and the world’s second biggest copper producer, weakening the sol currency and driving down the select stock index.

Fujimori is now serving a 25-year sentence for human rights crimes and graft. He shares a prison with ex-President Ollanta Humala, who was jailed in July pending a trial over allegations he took illegal funds from Odebrecht.

Prosecutors say another former president, Alejandro Toledo, took a $20 million bribe from Odebrecht in exchange for help securing lucrative public work contracts. Kuczynski once served as finance minister and prime minister in Toledo’s government.

Authorities in Peru are seeking Toledo’s extradition from the United States. Toledo and Humala deny the allegations.

IMMUNITY

As recently as last month, Kuczynski denied taking money from Odebrecht or having professional links to the company.

But this week Odebrecht sent Congress a requested report in which it detailed deposits totaling about $800,000 to Westfield Capital Ltd, Kuczynski’s company, and about $4 million to First Capital Inversiones y Asesorias, a firm controlled by a close friend of Kuczynski.

Peruvian news organizations say the jailed former head of Odebrecht recently told prosecutors the company once hired Kuczynski as an advisor to mend ties with him after a dispute over contracts it won in Toledo’s government.

A source in the attorney general’s office said prosecutors have summoned Kuczynski to explain the payments, which the source said may have violated laws against money laundering.

Kuczynski has presidential immunity from prosecution.

Kuczynski said only one of the deposits from Odebrecht had any connection to him: a payment for providing financial services on an Odebrecht project through First Capital when he was a private citizen.

The project, which involved building an irrigation tunnel through the Andes, was awarded to Odebrecht when Kuczynski was prime minister in Toledo’s government.

“I’ve never had the slightest intention of hiding anything,” Kuczynski said, stressing he correctly reported and paid taxes of the earnings.

Opposition lawmaker Rosa Maria Bartra said she was disappointed with Kuczynski’s explanation. (Additional Reporting by Marco Aquino; Editing by Matthew Mpoke Bigg)

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