Preliminary Investigation Opened in Connection to Peru VP Corruption Allegations

Attorney General Jose Pelaez said Tuesday that the state attorney’s office has opened a preliminary investigation into President Ollanta Humala’s second vice president, Omar Chehade, over allegations that he was trying to use his influence to support a private firm, daily El Comercio reported.

Pelaez declined to say exactly what the charges would be. “For the moment, we can’t say that we are looking at such or such a crime,” he said.

Chehade, also a congressman, is a lawyer who was the head of Peru’s extradition unit when the country successfully brought ex-President Alberto Fujimori to Peru to face human rights charges.

The allegations against Chehade arose in a report by IDL-Reporteros that said he and his brother held a meeting with Guillermo Arteta, a former police general who was among numerous high ranking officers fired earlier this month.

According to the report, which Arteta confirmed, Chehade and his brother met with Arteta, and two other police generals, in a well-known restaurant in Miraflores. The report said Chehade’s brother asked Arteta to help evict workers from the Andahuasi sugar farm who are blocking entry to the administration of the farm by the Wong Group.  Arteta is said to have insisted on a proper court order for the eviction, and that he subsequently was among the generals who were fired. One of the other officers at the meeting was allegedly general Raul Salazar, who is now director general of the police force.

Chehade has denied the allegations. “There has been no peddling of influences and I tell the nation with absolute security, with a clear conscience,” he said, adding that they didn’t discuss the issue of Andahuasi.  IDL-Reporteros said that Chehade left the restaurant before his brother and cousin broached the subject with Arteta.

The Andahuasi sugar estate has been facing political and commercial troubles for several years. On the coast north of Lima near the port of Huacho, the estate became a cooperative in 1971 when it was expropriated during the Agrarian Reform.

In 1996 it became a limited liability company registered on the Lima stock exchange, and in 2005 the state investment agency ProInversion sold the government’s share in the company. In 2008, faced with low sugar prices and increasing competition, Andahuasi’s board  —formed by workers— voted to sell as much of the company as possible.   

The Wong family, who founded the E.Wong and Metro supermarket chains —which they sold in 2007 — acquired a majority shareholding in Andahuasi  in 2009, with a subsequent acquisition in 2010 that gave them a total of 54%.  In 2009 the Bustamante Group, holders of 22% of the stock, sought support from the workers to block the Wong Group from entering the farm, and Wong has been fighting in court ever since. That same year, a court-appointed board of directors was recognized by the Public Registry as the legitimate authority of the company. The board of directors included several of the Bustamante Group, including Hernan Garrido-Lecca, a prominent member of the then-ruling Apra party. 

The ensuing battles, with police intervention and workers taking different sides, resulted in the death of two workers.  

Now, a group of workers refuses to recognize the share sales to either the Wong or Bustamante groups, despite the fact that in 2009 the share sale was approved by the Andahuasi board of directors.  Part of the reason is most probably due to higher prices — in 2008, when they actively sought investors, the wholesale price for the 50kg sack of sugar was S/.58, well below the standard of S/.80.  Over the past 18 months, however, the court-appointed administration of Andahuasi has sold 700,000 sacks of sugar, at S/.100 per sack. 

The trouble has again reached fever pitch as the Wong Group has been authorized by the Securities and Exchange Commission, Conasev, to make an offer to acquire the remaining shares of the company.  Andahuasi workers earlier this week said they would begin a march to Lima to defend their rights.  

The Wong Group are also majority shareholders of the Paramonga sugar estate and agroindustrial complex just north of Andahuasi.

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