Corruption

In the Olympics of institutional corruption, Peru was a world class performer in the 1990s. As elsewhere in Latin America, Peruvian corruption falls into two broad categories: paying a person to do his job and paying a person not to. The risk of death was worth the chance of making the kind of money of which they have heretofore only dreamed. The Peruvian political system is institutionally weak. Peruvian society is fragile, bonded by few of those cultural and social barriers which at least slow the spread of narcotics corruption in other countries.

Over the six years 2010-2016, the Peruvian national system of control found 7,307 state officials guilty of corruption. Of these only 560 were punished – 33 received prison sentences and the remaining 527 were free after having their sentence suspended.

All but one of the nation's living elected former presidents are suspected of taking part in Latin America's largest graft probe, in which Brazilian construction giant Odebrecht has admitted to doling out nearly $800 million to politicians throughout the region in exchange for lucrative public works contracts.

Peru's former president Alan Garcia died in a Lima hospital 17 April 2019 after he shot himself in the head as police were about to arrest him in connection with a corruption case. García was under investigation for bribes allegedly paid during the construction of Lima's metro during his 2006-2011 government. He had denied ever receiving money from Odebrecht, which is at the center of Latin America's biggest corruption scandal after admitting in a 2016 plea agreement with the US Justice Department that it paid corrupt officials across Latin America nearly $800 million in exchange for major infrastructure contracts.

García, 69, was a populist firebrand whose erratic first presidency in the 1980s was marked by hyperinflation, rampant corruption and the rise of the Shining Path guerrilla movement. When he returned to power two decades later he ran a more conservative government, helping usher in a commodities-led investment boom in which Odebrecht played a major supporting role.

It is illegal in Peru for a public official or employee to accept any type of outside remuneration for the performance of his or her official duties. Peru has ratified both the UN Convention Against Corruption and the Organization of American States' Inter-American Convention Against Corruption. Peru is not a member of the Organization of Economic Cooperation and Development (OECD), and has not signed the OECD Convention on Combating Bribery.

Peru is one of four nations worldwide participating as a pilot country in the G8 anti-corruption and transparency initiative. The U.S., other G8 partners and NGOs helped the Peruvian government develop an action plan that includes activities in six areas: a) citizen information/internet connectivity; b) improving central government fiscal transparency; c) development of Peruvian Government procurement systems; d) improving regional/local government transparency and management; e) improvement of transparency of extractive industry revenues; and f) development of asset forfeiture systems and legislation.

The G8 initiative has already shown some positive results. A hemisphere-wide state procurement organization – the Inter-American Organization of Government Procurement Institutions – was created under the leadership of Peru's State Procurement Council OSCE (formerly CONSUCODE). Also, efforts are underway to provide Internet connections to approximately 90 municipal governments located in areas most affected by terrorism and poverty. The rural connectivity project will allow these governments access to national systems, part of the Peruvian Government's E-government initiatives, aimed at creating greater transparency and citizen access to public information.

U.S. firms have reported problems directly resulting from corruption, usually in government procurement processes and in the judicial sector. Transparency International ranked Peru number 78 (out of 178 countries) in its 2010 Corruption Perceptions Index, which marks worsening corruption from Peru’s rank of 75 in 2009. While anti-corruption efforts have been a stated priority of both the Toledo and Garcia Governments, in practice most resources are directed at investigating Fujimori-era corruption. In 2001, President Toledo appointed an anti-corruption "czar" to lead government efforts, but this official resigned in 2002.

Judge Carolina Lizarraga was appointed in October 2007 as the head of the newly created National Office for Anti-Corruption, but she resigned in July 2008—with no replacement. Private sector groups have increased efforts to combat corruption through an NGO called "ProEtica," which represents Transparency International in Peru. In October 2008, a kickback scandal involving a member of the ruling party and a foreign oil company led to the replacement of President Garcia’s Prime Minister and the changing of five other cabinet members, although investigators have not established that the Prime Minister was involved in the scandal. Other scandals in 2010 have emerged, leading other officials to resign.

Since 2008, Peru has been implementing an Anti-Corruption Program as part of its Millennium Challenge Corporation (MCC) Threshold Program. The effort helps Peru combat corruption by working with the judicial branch, law enforcement, the ombudsman and controller’s offices and civil society organizations to improve internal controls, as well as analyze and simplify administrative processes to reduce opportunities for corruption. While there have been important advances in strengthening these institutions, the majority of Peruvians remain highly skeptical of the GOP’s commitment to combating corruption, especially at high levels. A recent survey by Vanderbilt University (the America’s Barometer) ranked Peru third in the region (out of 24) in its citizens having been victims of corruption in the last year and in believing that most public officials are corrupt.

The Office of the Comptroller General implements and monitors anticorruption and disclosure processes required by law and informs congress of its findings. The office has independent authority to sanction public officials who commit corrupt acts; penalties include temporary suspension, termination of employment, and criminal prosecution. The executive branch’s Unit for Prosecution of Corruption Crimes reports to the Minister of Justice and has the lead role in prosecution of corruption crimes. The High Commission on Anti-Corruption within the Prime Minister’s Office coordinates efforts and proposes policies to combat corruption. All judicial districts review corruption cases in regular courts except Lima, which has a specialized anticorruption court in its Superior Court. The governmental Public Service Office, which reports directly to the cabinet, manages a registry of former government officials who are no longer eligible for public service due to corruption crimes.

As of July 2014 the list included 2,016 persons ineligible for public service. As of October, nine of 25 regional presidents were under investigation for corruption, malfeasance, or drug trafficking charges. As of October, three regional presidents were in pretrial detention, and one was a fugitive on corruption allegations. All agencies actively worked with civil society groups and operated freely and independently. Sector experts reported that government agencies were not sufficiently resourced.

There were allegations of widespread corruption in the judicial system. The new criminal procedural code, while not yet implemented in Lima and Callao, was applied to corruption cases in these judicial districts. Judge Guhtember Pacherres Perez was caught receiving a bribe of 11,200 new soles ($4,000) in Cajamarca during a judicial anticorruption operation. As of September 2014 Pacherres was in jail awaiting trial. As of September the Office of Judicial Control had imposed 1,950 sanctions, 63 of which were permanent removals from public service and 37 were one-year suspensions.

During their time in office, members of congress enjoy congressional immunity and cannot be prosecuted for any acts during their time in the legislature. In the case of flagrant crimes, the judicial branch can request that congress lift immunity and allow the arrest of a member. By law congressional immunity does not apply to crimes committed before the member was sworn in, but it impeded most prosecutions. It also does not officially protect members of congress from civil crimes, such as failure to fulfill contracts or pay child support.

As of September 2014 the Congressional Ethics Committee had investigated and suspended two members of congress for conflicts of interest and was investigating five members of congress for questionable activities ranging from falsifying their resumes (by including false degrees and omitting prior convictions) to involvement in illegal mining, money laundering, prostitution, trafficking in persons, and narcotics trafficking.

On 04 September 2014, a congressional committee accused former president Alejandro Toledo, Toledo’s wife, and Toledo’s mother-in-law of money laundering and fraud connected to real estate purchases totaling several million dollars. As of November the Public Prosecutor’s Office was reviewing the case. On November 10, the Attorney General removed the prosecutor in charge of the case; appointment of a new prosecutor was pending.

Corruption in prisons was a serious problem, and in some cases guards cooperated with criminal bosses who oversaw the smuggling of guns and drugs into prisons. There were several reports of military corruption, impunity, and resistance in providing information on military personnel under investigation for human rights abuses committed during the country’s internal armed conflict. Security forces sought to strengthen accountability with training in human rights and the revision of disciplinary procedures but were doing so slowly.

On 02 September 2014, Constitutional Court Judge Hugo Velasquez rejected the congressional committee’s investigation and recommendation to accuse former president Alan Garcia of corruption and links to narcotics trafficking related to presidential pardons he authorized as president. Velasquez ruled that the investigation did not follow due process.

In September 2014 local media reported 200 police officers were suspended and put under investigation by the Ministry of Interior for their alleged involvement in a criminal network that included members of the PNP antinarcotics, antimoney-laundering, criminal investigation, and anticorruption units. The criminal network was alleged to have been involved in human trafficking, prostitution, money laundering, and the manipulation of land titles.

At the end of 2014, three former regional presidents – roughly equivalent to US state governors – were in jail awaiting trial on corruption charges while a fourth was a fugitive from justice. At the end of 2015, 11 of the 25 regional governors were under investigation for corruption-related charges, with three awaiting trial. Three newly elected regional presidents – sworn into office January 1, 2015 – were facing legal problems: two had been sentenced to jail for crimes they committed prior to assuming office but remained at their posts while they appealed; the third was barred from assuming office for failure to pay a USD 333,000 fine associated with a prior bribery conviction. A study published in May of 2014 by the office of the anti-corruption solicitor reported that 92 percent of the over 1,800 district-level mayors in office between 2011 and 2014 had been investigated for criminal activity. Ten percent of sitting members of congress had been suspended for ethical violations since taking office in 2011.

The Peruvian armed forces and national police continue to prefer to execute government-to-government procurements (i.e., purchases by a GOP agency from a foreign government agency or government-owned company). This practice has impeded the participation of U.S. companies in GOP procurement, mainly with the Ministries of Defense and Interior. The Embassy is currently trying to reach an agreement with the Ministry of Interior that could be acceptable for both parties.

In July 2012, the Government Procurement Supervisory Agency ruled that government-to-government procurements do not fall under the government procurement law (DL 1017). An article in the 2013 Budget Law also specified that procurements by the GOP from another state are not under the scope of DL 1017. Since then, there have been a number of local media reports of overvalued prices in several government-to-government purchases, of goods or services for the police or the armed forces. Cases include purchases of a satellite, planes, helicopters, and technical assistance training.

Overvaluation has apparently occurred even in the case of open tenders, as in the notorious recent case of the purchase of 591 binoculars by the Interior Ministry for the National Police in December 2013. El Comercio, Peru’s paper-of-record, published a report in January 2014 alleging the Interior Ministry bought 591 binoculars at a price more than ten times the market rate. In early-March 2014, local media reported that the Public Prosecutor’s Office would investigate a technical assistance-training procurement made in 2009 by the Armed Forces Joint Command. This probe comes after the Comptroller General found irregularities and circumstantial evidence of collusion, embezzlement and other crimes. During 2014, the press published articles alleging that Peruvian Air Force officers had accepted kickbacks for illegally selling fuel on the open market.