Peru President García and new Cabinet chief, Yehude Simon, to choose ministers after oil kickback scandal

October 12, 2008 1:32 pmComments OffViews: 12

President Alan García met for nearly three hours Sunday morning with his new Cabinet chief, Yehude Simon, to chart a course to rebuild an administration that in a few days was decimated by an oil concession kickback scandal that forced all of his government ministers to turn in their resignations.

García tapped Simon, 61, to replace his right-hand man, Jorge del Castillo, under pressure from both Peru’s right- and left-wing opposition to pick a political independent rather than another stalwart from the president’s ruling Aprista party.

Simon was a congressman in the 1980s for the now defunct Izquierda Unida, and later a founder of Patria Libre. He was accused in 1992 during President Alberto Fujimori’s authoritian government of justifying terrorism and was convicted to 20 years in prison. Amnesty International and local human rights groups worked in his defense and he was released after 8 ½ years with a pardon granted by transitional President Valentín Paniagua.

Although not ideal, the pardon was the legal instrument used by the transitional government to obtain a speedy release for more than 300 prisoners who had been unjustly charged and sentenced by draconian military courts between 1990 and 2000. Later, then-President Alejandro Toledo offered a public apology to Simon for the grave injustice. In 2002, Simon was elected regional president of Peru’s northern Lambayeque Department, once an Aprista party  stronghold, and he was reelected in 2006.

Simon said Sunday that he would push for multiparty representation in the new Cabinet and expressed a willingness to reach out to Peru’s entire ideological spectrum in an attempt to bridge the usually bare-knuckled and vicious political divide.

He said he planned to talk to the congressional blocs of Fujimori’s conservative party and the loose coalition of leftist nationalists whose 2006 presidential candidate, Ollanta Humala, trounced right-wing  front-runner Lourdes Flores in the 2006 general election before being defeated by Garcia in a runoff vote.

“We want to sit down with the people from Mr. Fujimori’s party,” Simon told reporters as he headed to the Government Palace to meet with García. “Hopefully Ollanta will listen to us to sit down and talk because he is a valuable person and has interesting proposals. God willing, Lourdes Flores and her group will also sit  for dialogue to see how she can help us, because we need her.”

García’s entire 16-member Cabinet offered to quit Thursday after a frustrated attempt to explain alleged bribe-taking in an oil kickback scandal that had widened to include del Castillo. Garcia accepted the resignations on Friday.

Simon was widely quoted in newspaper Sunday saying that he planned to push for the reappointment of three of those ministers: Economy Minister Luis Valdivieso, Foreign Commerce and Tourism Minister Mercedes Aráoz, and Foreign Relations Minister José Antonio García Belaunde, and possibly keep Defense Minister Ántero Flores Aráoz, as well.

One week ago, the Sunday night  investigative TV news program Cuarto Poder broadcast audio recordings purportedly of Perupetro Vice President Alberto Quimper and Romulo Leon Alegría, a prominent member of Garcia’s ruling Aprista party, discussing under-the-table payments conditioned on Norwegian Discover Petroleum obtaining oil concessions.

According to the recordings, Quimper, Leon and Ernesto Arias-Schreiber, the legal representative of Discover in Peru, were to receive $10,000 monthly in exchange for steering lucrative oil contracts to explore the offshore oil blocks and gas field.

The scandal led the government to suspend five joint exploration and development contracts recently awarded to state-owned oil company Petroperu and Discover Petroleum of Norway, and forced the immediate ouster of Peru’s Energy and Mines Minister Juan Valdivia, fugitive Leon and Quimper, who was taken into custody Tuesday after he hid out in a private medical clinic.

Then, on Tuesday, Discover added fuel to the scandal by releasing a statement denying involvement in the oil bribes but acknowledging that it made direct payments to Leon and indirect payments to Quimper.

New tapes surfaced on Tuesday and Wednesday in which Leon allegedly told Discover representative, Dominican businessman and lobbyist Fortunato Canaán that del Castillo would provide favors in a plan to rig the oil block auction. Del castillo was mentionned in 2 of 9 audiotapes and acknowledged  meeting with Canaán three times. The first time was in 2007, when a delegation of Dominican businessmen came to Peru. Del Castillo later sat down with Canáan in the Council of Ministers’ office and then, in San Isidro’s Hotel Country Club for breakfast. During the latter meeting, he was asked by Leon to arrange a meeting with García, but contended that he refused because of León’s bad reputation.

Romulo Leon was minister of Fisheries and a congressman during García’s corruption-riddled first term in 1985-1990.  Following accusations of corruption at the time, Leon was expelled from the Aprista party in 1991, but was reinstated in 1998.

“That was one of the reasons why I didn’t arrange an apointment, and the proof is that there never was a meeting,” said del Castillo.

“Is there any justice in that two or three rats come, because that is what they are,” said del Castillo, “and stain the honor of the State’s ministers who work honestly for Peru?”

León was just “showing off strength” by naming me, he added. “I had a distant relationship with him.”

But Peru’s media turned up audio and photos that appeared to show the connection was closer than del Castillo wanted to admit.

Several TV stations and newspapers published photos of an audience in which León and García sit together, as well as photos of del Castillo and León attending a children’s park inauguration event.

The event, promoted by Leon’s niece, María Isabel León Klenke, was discussed in the February 11 audio: “I was with Jorge during the inauguration event of a niece of mine,” Leon told Canaán.

Shortly after that audio was released, del Castillo “remembered” that in July he also “ran into” Discover president, Jostein Kjerstad, León and Químper at Lima’s Club Nacional.

Peru’s Congress voted to investigate all oil and gas concessions granted since 2006, and particularly contracts signed with foreign companies, such as Discover.

“All these corrupt individuals, there traitors must be sanctionned because corruption is now a treason to the country,” said García in an attempt to apply a tournequate to his hemhoraging administration. “I ask all the (political) parties and the Parliament for help to rid this country of the putridness that makes people doubt us.”

Audio tapped on February 11: “Jorge called to thank me.”

Romulo León Alegría tells Fortunato Canaán about a conversation he had with Jorge del castillo concerning pending issues concerning all three individuals.

RLA: …And the girl managed very well during the inauguration ceremony, with such ease that Jorge told me ‘Romulo, this girl is very valuable.’ And Jorge was the godfather and his name is on the plaque and he spoke very nicely. So, he called me that night to thank me because I had arranged, well, that he be the godfather, no?

FC: You insisted that he be.

RLA: Of course. I insisted that he be and that same day I called him in the morning and he said ‘Listen Romulo, but, are you sure that this is important? Because I have things to do.’ I told him: ‘Brother, I don’t know if this important or not. I can’t deceive you because I haven’t checked it out but I have already got you involved, its my niece and I’m asking you to go.’ And he went. It was at four-thirty, as we said, and it was better than we expected, for me, and for Jorge. The thing is, at night, when he called me to thank me, I told him: ‘Jorge, I have to talk to you because Fortunato, who really cares about you and who is with you one hundred percent, isn’t completely satisfied in spite of your efforts and all that is being supported because there are still things that aren’t right and when someone brings you an offer like the one he has brought you, one hopes for a different kind of treatment. ‘Valdivia is an asshole, Valdivia is an idiot, but you explained it to him,’ and I told him that, fortunately, before arriving to the ministerial office, we were with Gutiérrez, telling him that old Valdivia, dull and all that, but, in any case, the least that could be said was that as it was demanded by the President, this was dealt with in the Council of Ministers, so, Fortunato is hoping that when Saba comes, work can be done with Saba to obtain a better response so that the Norwegian people come to sign and all that. So he told me: ‘We’ll talk about it. What are you going to do this weekend?’ ‘I’ll be here.’ ‘So, we’ll talk about it tomorrow, Saturday.’ ‘Ok, we’ll talk about it Saturday.’ So, on Saturday we went to his office for coffee and there we talked a little more. So, he told me: ‘Fortunato is a little taken aback.’ ‘It’s the least he can be, I would say he’s a little more than taken aback, a little mortified because he doesn’t have, well, the answer that one hopes for in face of the management that one is carrying out.’ And I told him: ‘Jorge, I want you to know, about everything else, if the hospitals can help with the campaign, it doesn’t support the campaign, it solves the campaign!

FC: Obviously.

RLA: ‘It solves the campaign’ I told him because the other thing is a support. Ok, look, here you have what you need to help you with everything possible, the other thing, no, Jorge, the other solves it.

FC: You told him the absolute truth.

RLA: ‘The other puts you in the Government Palace because it’s about 100 is 100, if it’s about 1,000 its 1000, if it’s about one hundred thousand times more, then that works.’ So, he stopped to think and told me: ‘What is there to do?’ ‘What I told you on the phone yesterday, you have to talk to Saba first, he has to write up a firm response offering and asking that he come and, in that (time) lapse, during those days, he has to find a formula that, for everything else, Quimper is already thinking about it.

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