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Peru's President Kuczynski avoids impeachment

Peruvian President Pedro Pablo Kuczynski will remain in office after Congress fell short of the votes needed for his impeachment Thursday.

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Patrick Gillespie (CNN)
(CNN) — Peruvian President Pedro Pablo Kuczynski will remain in office after Congress fell short of the votes needed for his impeachment Thursday.

Kuczynski is the latest Latin American leader to be engulfed in a wave of corruption investigations stemming from the largest bribery scandal in modern history.

The debate over whether he should stay in office followed allegations that he accepted bribes when he served as the country's finance minister and later its prime minister.

Lawmakers debated for hours and then held a motion Thursday night on whether to impeach Kuczynski.

For impeachment to pass, 87 of the 130 congressional leaders -- two-thirds -- needed to vote in favor but only 79 voted in favor of Kuczynski's removal.

Hours before the vote, Kuczynski defended himself before Congress, making a forceful case for his innocence. In a radio interview the 79-year-old insisted he wouldn't be removed from office.

"Congress isn't going to remove me, they don't have the 87 votes," required for impeachment, Kuczynski told Colombia's Blu Radio on Thursday morning.

And in a defiant televised address last week he said, "I am here to show my face. I do not run, nor do I hide or have any motive to do so."

Company at center of Brazil corruption scandal

Peruvian lawmakers decided to move forward with proceedings to impeach Kuczynski last week.

Opposition lawmakers revealed $782,000 in previously undisclosed payments from Brazilian construction giant Odebrecht to Kuczynski's two consulting firms between 2004 and 2006 when he was Peru's finance minister and prime minister.

Odebrecht continued paying advisory fees to the firms, Westfield Capital and First Capital, until 2012, well after Kuczynski left public office and before his presidential campaign in 2016. In total, Odebrecht paid Kuczynski's firms $4.8 million in advisory fees from 2004 and 2012.

Kuczynski has acknowledged his firms accepted the payments but says he did nothing illegal.

Odebrecht also says its payments to Kuczynski weren't illegal. It says its contracts with the firms were exclusively managed by Chilean businessman Gerardo Sepulveda, Kuczynski's partner at the firms.

But that may be a tough argument for lawmakers to buy. Odebrecht was at the center of Brazil's unprecedented corruption scandal, which partly triggered the longest recession in the country's history. The recession ended this year but unemployment remains very high at about 12.4%.

In December 2016, the US Justice Department hit Odebrecht with $3.5 billion record fine for dolling out bribes to officials across Latin America and beyond.

Several Latin American prosecutors have opened investigations into Odebrecht in their respective countries. In a plea agreement, Odebrecht admitted giving nearly $800 million in bribes to leaders and individuals in order to get contracts for construction projects.

Leaders accused

Several former presidents and lawmakers in Peru along were accused of taking part in the scandal prior to Kuczynski.

Peru's former President Ollanta Humala and his wife are in prison while authorities investigate their involvement in the Odebrecht bribe.

Police in Peru raided the home of former President Alejandro Toledo in February for allegedly accepting a Odebrecht bribe. Toledo denied the charges via Twitter but has gone missing, is thought to be in the US, and could face jail time.

Kuczynski served as finance and prime minister during Toledo's presidency.

Latin America's star faces corruption scandal

Peru's corruption crisis could mark a turn of fortunes for one of the region's star economies. Peru has led Latin America in growth the last two years, and in 2015 the International Monetary Fund put Peru on the world stage by hosting its annual meeting in the country's capital, Lima. It was the first time in 50 years the IMF hosted its meeting anywhere in Latin America.

Economists didn't expect Peru to go off the rails if Kuczynski was impeached like Brazil's economy did while former President Dilma Rousseff went through her impeachment process for allegedly messing with Brazil's budget to hide gaps.

But like Brazil, experts say, Peru faces one major variable: How deep does the corruption run in Peru's leadership ranks? Brazil's infamous "car wash" investigation sent dozens of high-ranking lawmakers to jail.

"It's unclear at this stage how big this becomes," said Neil Shearing, emerging markets economist at Capital Economics, a research firm.

"It's much more difficult for the government to get its agenda through congress," amid a corruption scandal.

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