Peru unveils sweeping judicial reform amidst corruption scandal

Monday, July 30, 2018

Peru's President Martín Vizcarra unveiled plans for a major shake-up in the country's judiciary in the wake up of a far-reaching corruption scandal that has swept up judges, congressmen, magnates and a cabinet minister.

Vizcarra presented reforms of the legal and political systems suggested by a seven member commission after phone taps proved widespread influence-peddling amongst senior judges and members of congress, with proposals including a referendum on campaign financing and congressional reelection.

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Other measures include setting up regional anti-corruption commissions; a phone line for denunciations; tracking political candidates with criminal records; enforcing publication of government officials' tax returns and great access to public information; and banning crooked judges and lawyers from legal practice.

Vizcarra said his government will seek to defeat the "mafias that stalk our country," pointing out that without juridical stability, the country will have a hard time attracting investment.

Media outlets have leaked audio recordings of judges heard to be allegedly discussing bribes in exchange for beneficial legal rulings. Several judges have been ousted, others detained or banned from traveling abroad pending legal investigations, while the entire judiciary has been declared in a state of emergency.

"The recent episodes of vast corruption have unleashed an unprecedented political and institutional crisis. We're living in a situation of great uncertainty and severe deterioration of our institutions," Vizcarra said before congress in his first state of the nation speech. "This crisis has reached a breaking point. We will be relentless in the fight against corruption."

Vizcarra, who replaced Pedro Pablo Kuczynski in March, has vowed to stamp out corruption in his government as he battles to reactivate tens of billions of dollars in stalled infrastructure projects.

Business groups such as exporter association Adex backed Vizcarra's proposed reforms.

"The president's firmness in stating the urgency and need to fight corruption head-on is laying the foundations to build the confidence the country needs," Adex said in a statement. "We expect the legislative and the judiciary to act with the responsibility that this institutional debacle requires."


The government, which aims to spur 4% economic growth in 2018, increased public investment by 18.6% in the first half after poverty indicators worsened for the first time in decades, Vizcarra said.

Peru's exports, which rose 15% through H1, are expected to top US$50bn this year, he added. The country has also lined up US$15bn in mining investment so far this year, led by Anglo American's decision last week to build its US$5.3bn Quellaveco copper mine, while three solar power plants have been inaugurated this year, Vizcarra said.

"We started with a difficult situation, but in a short term we have laid the foundations to reboot the economy," Vizcarra said. "We're already seeing the first results. The country is beginning to recover from the economic crisis and delayed investments are being reactivated."

The government will also accelerate a 26bn-sol (US$8bn) flooding reconstruction program, Vizcarra said. Widespread floods, torrential rains and landslides in Q1 2017 left at least 163 dead and 291,000 homeless and caused billions in damage to infrastructure along the north coast, according to the central bank.

The government, which plans to invest 4bn soles in the program this year, has built 3,000 homes to date and aims to complete a total of 20,000 by the end of the year and ensure all 45,000 affected families have homes by end-2019, according to Vizcarra.

The government will also install 250 schools in the region by March 2019 in addition to starting construction on another 600 next year, he said. There are also plans for a 700mn-sol hospital program and the installation of 98 truss bridges.


In other infrastructure news, the government will also invest 754mn soles in the Calemar-Abra El Naranjillo (La Libertad), Checca-Mazocruz (Puno) and Oyón-Ambo I (Pasco) highways; call for bids for 2bn soles in road projects including Tauca-Pallasca (Ancash), Oyón-Ambo II (Pasco) and Huánuco-Conococha (Huánuco), Vizcarra said.

The government, which has transferred 2bn soles to regional governments for 5,477km in road projects, also aims this year to finish work on roads including Ciudad Constitución-Pto. Sungaro and Pto. Sungaro-San Alejandro (117km); Quechua-Chanka-Aymara (328km); Chinchaypujio-Chalhuahuacho (202km); Carlos Gutiérrez-Coasia (186 km); Cañete-Lunahuana; and La Cima-Conocancha, said Vizcarra.

Other transport initiatives, meanwhile, include the 7.420bn-sol Trujillo-Chiclayo railway; the 10.520bn-sol coastal railway; and a 600mn-sol upgrade of regional airports in Jauja, Huánuco, Ilo, Jaén, Rioja, Yurimaguas, Tingo María and Chimbote, he said.

The government, which has transferred 1.820bn soles to regional governments for 467 sewerage projects, is also working on another 1.373bn soles in potable water projects, Vizcarra said. At least 3.4mn of Peru's 30mn population do not have access to potable water and 8.3mn lack sewerage services, according to the government.

School infrastructure projects include a 1.3bn-sol transfer to regional governments to finish work on 2,000 schools; 1.1bn soles in public-private partnership projects to build and maintain schools; and 1.009bn soles in tax swap initiatives, said Vizcarra. The government also plans to finish building 30 hospitals and health posts around the country this year.