Jaime Bayly and Twobreakfasts

Noted South American novelist, talk show host and (for a while this year) candidate for President of Peru Jaime Bayly is intelligent, engaging and writes up a storm. He's also a total son of a bitch. This is a good combination for a snark-merchant site like IKN and here he is spilling the beans today on a private dinner he had this year with President Twobreakfasts. The basic takeaway is that Bayly may well be a SOB, but García beats him hands down in the corruption and anti-democracy stakes. Translated excerpt from Bayly's column linked here or here:

"Finally, I invited President Alan García to dinner at my house, the genetic accident who governs Peru. When García sank his oceanic girth into the sofa, I had an ominous thought and feared that the piece of furniture would break into pieces. Alan encouraged me to be a candidate (in the Presidential elections). I told him I didn't have enough money and my mother wouldn't back me. I asked him how much the President of Peru earned. He didn't seem to know nor care. "Something like U$3000 a month", he said. I told him that with that salary I couldn't maintain my family for five years and added that I'm not a thief and didn't have the urge to learn the trade. Alan let out a laugh and came out with the phrase of the evening, "Don't be an idiot man, money arrives all by itself."

"Later, García said something that to me seemed awful, that if Mr. Humala won the election he would lead a Coup D'Etat and stop, by breaking the law, that Ollanta Humala became President. "Even if they throw me in jail, Humala will not be President", boasted García.


"That night left me thinking that in fact this is how politics is in Peru: The absolute lack of scruples, passing the hat around and hoping that money arrives by itself, a subtle and false way of saying that money arrives from under the table, in suitcases, bribes and secret bank accounts."

Peru's narco-corruption stories just get better and better

Front page of Peru's 'La Republica' today

Y'know I thought I wouldn't be revisiting this subject after last week's post that pointed to not one but three cases of corruption between the drug barons of Peru and the judiciary in their sordid pockets, but here we are again. The reason is this story that's almost too brazen and bizarre to be believed.

Today Peru's national daily 'La Republica' broke a story about our old pal Luis Valdez, the narco capo of the Ucayali Amazon basin region of Peru, the very same Luis Valdez that has been featured on several occasions here at IKN because he's knee deep in the cocaine trade, he ordered the killing of an investigative journalist and then recently got let off the charges by a compliant judge in highly dubious circumstances.

Today's story tells of the judge that, back in late 2005, originally ruled that Valdez should be liberated from the charges murder and ordering the assassintion of the journalist Alberto Rivera. thus Valdez was set free and, quite literally, got away with murder. The now ex-judge's name is David Zevallos and he has now turned up in the public spotlight again because...wait for it...he's now the president of the electoral committee of the Ucayali political party "Todo por Ucayali", whose leader is none other than Luis Valdez!

In other words, not only has Valdez been let off the charges and let out of jail again, he's also going to run for public office in his region again, but to cap it all the compliant judge that absolved him of charges in 2005 is now his political campaign manager!

But of course the cocaine problem is all Hugo Chávez's fault, right?

So what's your favourite corrupt Peru narcostate story at the moment, Otto?

Good question. There are so many to choose from, you see.

It could be the one about Luis Valdez, the cocaine capo from the Ucayali region of Amazonian Peru who was shamefully found not guilty of murdering an investigative journalist earlier this year and today left prison to be held under house arrest at his luxurious Lima pad. He's still charged with several other crimes, but when a rich dude gets to leave prison before any trial takes place the writing in on the wall in any Banana Republic.

It could be the latest twist in the long-running story of the biggest narco family in Peru, the Sanchez-Paredes family. They've just won another round in the courts to stop them ever getting arrested or going to trial. This family is up to its eyeballs in the white powder, but thanks to their large bank balances and APRA party buddies they just keep rolling along. The best reaction to last week's ruling that froze the case against them in very dubious circumstances came from Peru's main anti-drugs prosecutor who said, "There are judges (in Peru) who are in cahoots with illegal activity and with organized crime", which gets a big "No Shit Sherlock" from IKN.

No, the winner of best cocaine corruption story goes to this one cos we even get a video included. Underneath find the moving pictures, but first comes a direct translation of the report. Enjoy.

Shameful: Judge Frees Narcotrafficker and then Goes to Drink Beer With Him

Both were filmed in a bar in the town of Chachapoyas together with two police officers and the head of prison security, where the sentence for illegal trafficking of drugs was dropped.

Judge Edgar Víctor Gómez Quispe and the man he had just freed from a sentence for illegal drug trafficking, Teófilo Portocarrero Fernández, were found at a bar in Chachapoyas at the same table and with four bottles of beer.

Last July 16th at midday, the judge of the court of Penal liquidation in the province of Rodríguez de Mendoza of the High Court of Justice in the Amazonas (region of Peru) freed the drug runner on conditional bail. But four hours later, both were spotted by personnel from the Office of Control of the Magistrature (OCMA) drinking beer in a bar.

Also there were two police officers and the head of security at the prison where Portocarrero's sentence had been overturned, according to the news program "24 Hours".

"It's a great disappointment for us to be faced by a situation of this nature, with a magistrate that does not have the qualities of integrity required. It cannot be right for a judge to drink alcoholic beverages with a prisoner", said Enrique Mendoz, head of OCMA, who suspended judge Gómez and has begun an investigation into this grave error.

¡VIVA INVESTMENT GRADE!

Bolivia: Why doesn't this surprise me?

Let's just start with a plain fact: Police corruption is rife all over South America. That needs to be said out loud, no matter what country and no matter what denials or excuses are wheeled out by politicos, police chiefs and what-have-you. Part of the problem is the simple deal of paying a low salary to somebody who can legally walk round town with a gun strapped to their hip and wide-ranging powers to make other people's lives difficult, but another significant part is that many people join police forces in South America because they know they'll be able to get "two salaries" (as the phrase goes round this way), with the unofficial one much higher than the official one.

Despite that, I'm often impressed (for want of a better word) by the new and inventive ways cops find to add to their take-home pay. Here's a novel variant reported by AP, brought to light thanks to that good Bolivian resource, Boliviasol (my translation). Just another day in paradise, folks:

The Bolivian government has suspended the licenses of two private clinics that allegedly have illegal agreements with police officers so that police bring them road accident victims, according to government minister Sacha Llorenti.

The minister said during a press conference that 10 police officers are being investigated in La Pax and its neighbouring city, El Alto.

Llorenti mentioned three recent accidents in which the injured passengers were not taken to the nearest clinic as required by the law, but to other more distant clinics because it is suspected that they paid the police officers.

In one of the cases, one of the injured died before reaching the hosipital. The police that attended the injured person drove four kilometres in in an hour of high traffic density to take the person to a clinic when there was another medical centre close at hand.

"There are people profiting from the pain of others", said police commander Oscar Nina at the same press conference. The case has been sent ot the public prosecutor and the investigation may result in the definitive suspension of the clinics involved.

IBM (IBM): Big Blue, Big Bribe

It's taken 15 years, but finally executives of IBM have admitted to paying bribes to the government of Argentina in exchange for an oversized contract to supply its machines in the country.

The scandal started back in 1994, when Argentine journalist Santiago Pinetta reported that IBM had paid U$37m to government officials in bribes. In return, IBM was given the contract to supply 525 offices of state bank "Banco de la Nacion" under a contract that came to U$249m and is understood to have inflated prices by around 100% on the whole deal.

The legal inquiries have trundled on for what seems like forever since that time, but hot off the presses today the seven IBM executives under accusation copped a plea bargain, admitted guilt and will pay hefty fines in lieu of going to jail.

Another episode of The USA knows best in LatAm comes to an end.

UPDATE: A mail received from reader 'MP' follows. He's right bar one thing; should have written "South America" instead of "Argentina".

So that's how it works in Argentina. You bribe the officials to get the contract, and when you get caught, you bribe the officials so as not to go to jail!

Nice to know...

Chart of the day is....

.....Latin American Index of Budget Transparency, 2009.

Yesterday the 2009 edition annual survey done by the Mexican 'Fundar' organization, called the "Latin American Index of Budget Transparency" was published. The title is a bit of a mouthful, but what this survey does is check on the region's national governments to see how open they are at the time of budgeting and deploying state funds.

In other words, it's a way of telling the chances that the corrupt scum that milk their governments for their own back pockets have for ripping off the people. According the Fundar, any score below 60 is a fail.

In the words of José María Marín, head honcho of Fundar, this year's results were "very disheartening". Apart from Costa Rica, every single country surveyed failed the test. Well, count Otto as unsurprised, as you can argue the merits of "my country is run by scum, but less scum than your country" if you like (Venezuela bottom, natch) but the whole culture of graft and budget secrecy isn't one that is isolated to this-or-that-spot. In fact, thinking about it, it's pretty impressive that Costa Rica has managed to lift itself out of the trough.

Ecometals (EC.v): Bribery, corruption and criminal charges in Brazil

According to the Ecometals company website, "Mr. Lisboa (above) is a Geologist with a Masters degree in Mining Engineering and more than 25 years of experience in all phases of the minerals industry, from exploration, mining and processing. Mr. Lisboa is the country manager for Ecometals Mineração do Brazil, the wholly owned subsidiary of Ecometals concentrating on iron ore exploration and development of manganese resources. Mr. Lisboa was instrumental in establishing Ecometals in Brazil and acquiring the current portfolio of projects and negotiation of agreements."

I might have mentioned a couple of times that Ecometals (EC.v) is a company to be avoided like the veritable plague. Well, it seems its chickens are coming home to roost at last as the company's sordid history of dirty deals, shady practises and accusations of highly illegal activity have now come to light. The list of fun and games includes

• The admission of having bribed officials to do business in Brazil

• Receiving death threats from the people that are supposed to be the company's joint venutre partners

• Accusations of smuggling, racketeering etc
  

• Lying in front of a judicial inquiry

On September 27th , Brazil newspaper Jornais published this report of a meeting with Pedro Lisboa, EC.v's man in Brazil. In the report he talks of bribing officials in the local Amapá regional parliament (the Legislative Assembly or 'AL') so that EC.v could export its manganese ore. Apparently the going rate is between $2 and $5 for every metric tonne that leaves the state, paid as "a royalty" to the governing body. Calling this "a royalty" is like calling the second world war a border dispute between nations. This is bribery, plain and simple, and Ecometals' main man admitted to the world that they bribe people in order to do business in Brazil.

But then the fun really started, as in the same interview Lisboa also accused Jorge Augusto de Oliviera of Tocantins Mineração of making deaths threats against him and extorting Ecometals into joining a company to its JV that had some $6m in unaccounted-for debt. It seems, according to Lisboa at least, that EC.v would have to bail out the $6m held by A.N Other person in order to do further business. The funniest bit about this is that Tocantins Mineração is supposedly Ecometals' joint venture partner in its manganese business there in Brazil! Have a guess as to whether EC.v is going to prosper and flourish in this JV, folks...

Unsurprisingly Jorge Augusto, who is a lawyer as well as the head honcho of Tocantins Mineração, went apeshit. He filed criminal charges against Lisboa and Ecometals. Here's the list of charges that Ecometals and its people now now in Brazil:

• Racketeering
• Conspiracy
• Forgery of documents
  
• Influence Peddling
• Smuggling

He also asked for Lisboa and the others accused to be remanded in prison until trial, due to the severity of the charges. The document submitted with the criminal charges includes some pearls. too. Here's some extracts translated, and remember that the person making the accusation is the head of the company that's JVing with EC.v in Brazil. If he doesn't know how this company operates, who does?

"The biggest headline scam is the crime of mismanagement practiced by (Ecometals management, with nationality in brackets) Paulo Lisboa (Brazil), with Robin Slaughter (Australia) Fran Scola (U.S.), Nick Demare (Canada) and Joseph Lenzi (Brazil). Ecometals' main objective as a company is the acquisition of finances via the investment of innocent, unwary stock market investors."

"...... (Ecometals) is carrying out a major financial scam involving millions of dollars. Its companies have no assets and do not own mineral mining companies."

"Paulo Lisboa is the main coordinator of this mismanagement and reckless ness committed in collusion with others, to the detriment of unsuspecting businessmen mining Amapá. It is a real gang, very well articulated for enriching themselves with other people's money. Paul Lisboa enjoys a life of luxury, with private security guards, travel, accommodation in luxury hotels, employees, cars, trendy restaurants, designer clothes, receptions, high performing sponsorship in favor of third parties, and other forms of showmanship."

"There are suspicions that they are all involved in the crime of smuggling radioactive ore or other (materials)..."

"Samples of ore are shipped abroad by Paulo Lisboa in hermetically sealed boxes via Fedex without the knowledge of the IRS and other supervisory bodies. This is the crime of smuggling, tax evasion and money laundering."

There are plenty more accusations (including trafficking for favours, other types of tax evasion, etc). Paulo Lisboa is also accused of being a fraud when it comes to his professional qualifications. The document states that there is no record of Lisboa in the relevant professional body (the CREA/AP, or Regional Council of Engineering and Architecture) and as such is illegally practising his trade. That little list, dear reader, is no chopped liver. Put simply, jailtime awaits if any of those above charges result in a guilty verdict.

Meanwhile, the accusations of bribery by Ecometals to the state parliament caused an uproar in the area. An enquiry was called and last week they pulled Lisboa up in front of the assembly (crowded with locals in the gallery...it was big news) to see what he had to say. The thing is, although Lisboa talked about the death threats and everything, he refused to corroborate statements previously made on the record to Jornais about the bribery. He also refused to name names. This despite being recorded in his interview and even even having a DVD copy of the interview in his possession while testifying to the state parliament (that eventually wasn't even submitted as evidence by Lisboa). Due to this, and by definition landing the newspaper Jornais in the schtuk by refusing to confirm its already printed accusations, Jornais is now charging Lisboa/Ecometals with slander and false testimony.

Finally, there is now a full inquiry set up by the AL to try and get to the bottom of the whole affair. The current estimate is that it will take six months to reach a conclusion, so if I were you I wouldn't expect any income from Ecometals Brazil in that time!

Remember folks, these are the same people that are bullshitting you left, right and centre about the Zarza drill permits about-to-yes-but-not-quite-ready-yet-to-be-authorized. Frankly, you believe the word of a scam-laden company like Ecometals and you deserve to lose your money on the stock exchange. Do you want to be associated with liars that are up to their necks in bribery, corruption and criminal accusations? If you were Ecuador, would you let this kind of company operate in a politically sensitive area of your patch once you knew how they conducted their business?

Avoid Ecometals like the plague.

Argentina never changes

Back at the time of the Malvinas/Falklands war, the military dictatorship in power in Argentina famously organized a "donate for the war effort" campaign. Old ladies innocently sent in their jewelry and cash by the bucketful and millions upon millions of dollars worth of items were collected under the whipped-up jingoistic fervour......and never seen again. They certainly never got as far as the undernourished, underequipped and innocent lambs sent to the slaughter by the scumbags in power and most believe it all ended up in the back pockets of the military generals and then whisked offshore before their time was up.

The memory of that story came back today. In this post on September 8th, we reported on the devastation wreaked by a tornado in the poverty stricken northern region of Misiones Argentina. The town of San Pedro was ripped apart (see photos in this post), eleven people died and there were hundreds of injuries, light to serious, among the population.

Sure enough, the Klishtina gov't organized an emergency fund. Sure enough, the generous spirit of solidarity that exists among the people of Argentina kicked in and some $600,000 was raised.
Here we are one month later and the governor of San Pedro reports that the sum total of 70 bundles of clothes and one television is all they've seen in the way of aid. So once again we have to ask the people that run Argentina, "Where has all the money gone you lying, thieving, corrupt, self-serving pieces of shit?".

Argentina is not a serious country.

Peru Mining, Taxes, Tomás Cenzano and the APRA Party's Contribution to Society

Remember back in March when the Winchumayo gold mine in the Ituata district of Puno, Peru suffered a landslide and multiple deaths ensued? Well, we wrote about it at IKN in this post right here if memory isn't serving so well.

So today this story is hitting the wires in Peru, all about how the government SUNAT tax office is launching a big campaign to get back taxes paid by those that have dragged their feet at the moment of paying their dues to society. Chief among debtors is a mining company called "Media Naranja" that owes the state a cool two hundred and twenty-three million, eight hundred and seventy-nine thousand, four hundred and fifty-four Nuevos Soles...and 40 cents. To give context, at today's exchange rate that's U$76.93m in greenbacks. A lot of cash.

So what's the connection between paragraph one and paragraph two? Well, Winchumayo is owned by three entities who then rent out its operation to the hundreds (even thousands) of artisanal miners who work the seams and get the gold. The typical system in the Andean Amazon basin region where Winchumayo is located is to get the miners to work five days for the owners, then on the 6th day anything they produce they keep (other areas use different ratios of days). Here are the three owners:

• APRA Congressman Alfredo Tomás Cenzano Sierralta (33%)

• The mayor of the Ituata district, Roger Saya Tapara (34%)

• Foreign private mining company Oro Vega S.A.C. (with offices in Lima) (33%)

In other words, a private miner and two politicians have been making their millions via the ethically dubious, clearly dangerous and almost totally unregulated world of the South American artisanal miner. But the interesting one is Alfredo Tomás Cenzano Sierralta, and for two reasons:

• Members of Congress are prohibited from being involved in this sort of business under the Peru parliament's ethical standards and, more importantly, it contravenes Peru's mining law. Thus Cenzano is violating the rules of Congress and the law of his land to make himself rich, not just getting rich on the backs of the artisan miners paid their pittances under extremely dangerous and unhealthy work conditions.

• Alfredo Tomás Cenzano Sierralta is the 45% owner of 'Media Naranja', the mining company mentioned above that owes the taxman nearly U$77m. Media Naranja is exactly the same kind of set up as Winchumayo, as it owns and mines gold concessions in the Andean amazon basin via the same abusive labour agreements with artisanal miners, the same bad practices, the same get-rich-at-all-costs attitude of the owners. Same, same , same.

And that's how the APRA party works in Peru, folks. You often see me mention the stinking corruption of the APRA party, but it's not so often that an open-and-shut case of its disgusting modus operandi comes to light. An APRA congressman abusing workforce and environment to get rich on unregulated gold production that doesn't pay his taxes to multimillion dollar levels.

Alfredo Tomás Cenzano Sierralta (for it is he)

These are the people running Peru in 2009. No wonder people think it's investor-friendly.

Viva investment grade. Viva, viva, viva.

Peru beats Chile in one thing only....

....Corruption.

Peru's esteemed Universidad Catolica's annual survey on opinions regarding corruption in Peru has just been published. Read the whole thing right here, but below are three charts built from the stats to give you an idea of the way things are. Click any of the charts to make them bigger and easier to read.

This one shows that corruption is seen as getting steadily worse in Twobreakfast's Peru.

This one sees Peruvians projecting its current opinion of Twobreakfasts on to his previous disasterous administration in the 1980s. Any President that even gets close to challenging that of 'El Chino' in the corruption stakes should be thoroughly ashamed.

It's the samo samo, folks.

So, kind and downright stupid foreign direct investor, just keep pouring your money into the black hole of a totally corrupt political system if you want. Viva investment grade. Viva, viva, viva.

Chart of the day is.....

....the development of the net worth of Los Kirchner, Neshtor and Klishtina, since they came to power in 2003 as Argentina's tag team presidency.

click to enlarge

Some numbers:

• Their net worth jumped 158% in the period 2007 to 2008
• Their net worth jumped 562% in the period 2003 to 2008
• Assets stand at P$65m, including P$32m in bank deposits (mostly in dollars) and P$17.5m in shareholdings.
• Debt stands at P$19m, including a brand new P$8.83m loan from Banco de Santa Cruz, the bank run by their pally pal Eskenazi who was recently handed the keys to a large slice of oil company YPF on easy payment terms.

It's just mouthdroppingly brazen and comes on the back of yesterday's QuoteOfTheDay from Klishtina herself who said "Few declarations are so transparent". As they say down Argentina way, ¡Que pais generoso!

Romulo Leon

Romulo (for it is he)

Does the name Romulo Leon ring a bell? It might do, and when I remind you that he was the dude that was taped talking about bribes obtained from foreign oil companies in Peru, you'll probably go "aaaahh yeah!...I gotcha, Otto." Here's how this humble corner of cyberspace reported the story way back on October 6th, 2008:

Last night Peru investigative reporting program "El Cuarto Poder" played audio tapes of APRA party insider Romulo Leon and PetroPeru bigwig Alberto Quimper as they discussed the best way to make themselves a nice slice of bribery and corruption money. Between them they arranged for a foreign oil company, Discover Petroleum of Norway, to land five concession blocks in Peru (continues)

In the immediate fallout, then PM Jorge Del Castillo and the rest of the Twobreakfasts cabinet resigned, as the trails of corruption were soon traced to the highest levels of the administration. Then, as you'll probably recall, Romulo went into hiding and police did a Where's Waldo? all over Peru until giving himself up a full 30 days later.

You've already guessed what I'm going to say, haven't you? Yup, the dude has been let out of jail. Peru's Poder Justicial (PJ) ('Justicial Power'...the law people) have offically let him do his arrest thing in the comfort of his own home, but as Juan Sheput points out, house arrest in Peru is simply the first step in quietly dropping any case of this type, especially for an APRA buddy during the time of an APRA government. And if all this isn't enough, check out one of the reasons the PJ said he's good to do his arrest on his sofa (Sheput dixit)

One of the considerations of the PJ fr the freeing (because house arrest with this government is being freed) of Rómulo León was that this individual has already been tried for corruption and demonstrated good personal conduct.

Wilkommen, Mondo Bizarro. Yes you read that right, in Peru it's considered a positive that because a dude has been tried for corruption previously and while the trial went on didn't try to skip the country or kill anybody or whatever. It's good reason to let him out.

Meanwhile, this week's 'No Shit Sherlock' award is won by outgoing (he's gone next week) Prime Minister Yehude Simon, who says that freeing Romulo today was "a bad signal for the country." Second prize in the NSS award goes to opposition congressman Isaac Meckler who said that a link seems to exist between the Courts and the APRA party. Ah wuz shocked, ah tellz ya....shocked ah wuz.

Hey, maybe.....just maybe, that link is something we've already mentioned here at IKN. It just so happens that Romulo Leon has a daughter who's a congress member for the APRA party in the current parliament. Luciana León also knew all about the 'petroaudios' corruption case because she was found with a whle bunch of e-mails from her father about it all. But León is also the protegé(e) of Mercedes Cabanillas, who is ....roll on the drums...the present Minister of the Interior (!) and as we mentioned before was closely involved with the (ahem) modernization of PeruPetro in the Twobreakfasts administration before getting a ministrial position.

Gotta love these APRA dudes. Viva investment grade, everyone.

Colombia: Uribe taught them all they know

Stallion, Distaff, Colts

How are those cries of "dictator-prez-for-life!" coming on about Alvaro Uribe in your media of choice up there? Would corrupt family business deals help tip the balance, perchance?

It would have been easy for you guys up there to miss this story, as the only English language report to be found IN THE WHOLE, WIDE WORLD is this one from the recommended Colombia Reports. Isn't it strange how the English-speaking media has completely ignored this big story getting wide coverage in Colombia? Nothing in the WaPo, the Miami Herald, CNN or Pajamas TV with Joe the Plumber. Not even in the "all that's fit to print" New York Times, though considering the NYT's representative down here is more interested in FruityRumPunch and PunchingRumFruities than actually doing any reporting, the lack of NYT coverage isn't that surprising. But I digress.

"What story, Otto?" I hear you cry. Pretty simple really. Two young whippersnappers by the names of Tomás and Jerónimo bought a nice tract of rural land on the cheap in 2006. Then suddenly, the land got re-evaluated by Colombian gov't people and shot up in value because it was deemed the new spot for a tax-free industrial zone project. The original price was 33 million pesos, but after two high ranking gov't officials that needed clearance from the President himself to announce the deal had finished, the land was suddenly valued at 3 Billion Pesos (that's around U$1.3m), a near 100-fold rise in two years.

Nice work if you can get it, of course, but getting that kind of work needs connections. And it just so happens that Tomás and Jerónimo are the two sons of President Alvaro Uribe. Strange that, innit?

I kid you not, folks. There really is a magazine in Colombia called "Jet-Set".
Front cover from last year featuring Tomás and bride-to-be (thin, pretty)

In fact, as the original report linked here and from Semana magazine points out at the end of the article, these two Uribe boys have been mightily lucky in business since setting up their real estate vehicle company "Ecoeficiencia" in 2003. Back then the company net worth was 10m Pesos (U$4,400 at today's exchange rate). After doing 'a bit o dis an' a bit o dat' for six years, the company already boasts 1Bn Pesos (U$440,000) just in paid-up capital.

Well, corrupt land deals are better than being a politician named by US intelligence as a narco and close friend of Pablo Escobar, I suppose.......

Whatever makes you think Peru's APRA is a bunch of corrupt scum?

Asia, as well as being a continent, is the name of a coastal district of Peru that covers a 50km stretch of the most desirable and expensive coastline on the Pacific coast of South America. It's one of the places middle class Limeños have adopted as the place to hang in summer, with second homes mushrooming.....

.... and nocturnal boulevards doing good business.


It's also the district where the woman in this picture.......

.....a certain Yary Valencia, has recently managed to buy 50 hectares of real estate for the princely sum of two US cents per square metre, which adds up at a touch over U$10,000 for land worth millions.

How did she do it? Nobody is exactly sure right now, but the 800 residents of the area bought up are crying merry hell. They made it on to Peruvian investigative reporter Nicolás Lucór's TV show last night calling scam, foul, rip-off and plenty of other names.

But who's the guy in that photo with Yary? Dudettes and dudes, may I present to you Yary's husband César Zumaeta, APRA member of congress in the National Government and one of the rising stars in President Twobreakfasts' political machine. Sheer coincidence that an APRA congressman would be mixed up in a scam rip-off land deal though, for sure.

Hat tip Mate Pastor

Oh Noes! Canada isn't the centre of the world!

• Maybe it's because people don't like the loonie

• Maybe it's because people are fed up to the back teeth with Da Boyz

• Maybe it's because people are sick to death of wanting in to a small miner and are offered 24 on the bid and 29 on the ask by corrupt pigs in suits and ties.

• Maybe it's because of the regulatory body, the OSC, that has managed to bring just two people to rights this decade (not joking, that's the number of convictions since 2000) and obviously doesn't give a damn about the impunity under their very noses.

But whatever it is, people are voting with their feet. The junior mining companies wise enough to spread their traded stock around other markets are now feeling the benefit of this move. Case in point is one of IKN's favoured microdots, Vena Resources (VEM.to), that traded just 1,000 shares in Toronto yesterday, but 63,000 in Frankfurt this morning and over 126,000 shares on the Lima, Peru BVL exchange yesterday (with closing bell bid at 21 and the ask at 22...that's how you run an investor-friendly exchange). Another one is Candente Resources (DNT.to), doing nearly half a million shares in volume in Lima yesterday. Plenty more examples to choose from, too.

Wouldn't it be funny if one day they rang the bell on the TSE and nobody came to play?

Peru: The Twobreakfasts GDP growth obsession bears its bitter fruit

Twobreakfasts "inaugurates" a sham in Santa Anita

On February 6th, Alan Garcia inaugurated a new S/25m geriatrics hospital in Santa Anita, in the Lima conurbation. There for the cameras were plenty of beds with plenty of occupants and a President Twobreakfasts that assured the thronging throng that Peru would inaugurate "a hospital per month" over the next 16 months.

It was a total sham. As soon as the cameras had gone the hundred or so human props, aka pensioners that deserve respect and treatment and simply get ignored and ridiculed by their government were shipped out of the "newly opened" centre. Up to last Thursday when Peruvian TV's 'Canal N' produced a special report on the hospital, there were no patients in situ. As soon as the cameras showed up authorities found three pensioners to lie amongst the builder's rubble and unconnected electricity cables, but even then the cameras captured near farcical scenes of ambulances arriving with old age pensioners and failing to find an unlocked door to get the poor souls inside.

This is the world of Twobreakfasts in microcosm. Screw the people, just give them a media show and dazzle with statistics. Yes, that S/25m was invested and added to Peru's infamous GDP growth figure. But the amount of true benefit that this S/25m has brought to the people that matter (Peruvians, not foreign bondholders) is precisely zero soles.

So when will this hospital eventually open properly? Nobody seems to know. The head of the EsSalud health service yesterday said that they planned to have a third of the 178 beds filled "in March", but there must be doubts that the building will be ever be equipped and staffed properly, something true for the other 15 hospitals on this "one a month" program. The government recently showed just how empty the coffers really are when it admitted that it didn't have the U$25m needed to finish the much delayed Fawcatt bypass that should have connected Callao to Lima many months back. There's always money for Alan's friends in the homebuilding business (his connections are deep, long-lasting and have been very profitable over the years), but when it comes to wasting money on social care and throwing it down the black hole of public services, things suddenly grind to a halt

The new hospitals program totals U$320m (over a billions Soles) in investments that, please note, is already added to the artificially created growth calculations for 2009 and beyond. It matters not to this charlatan of a President and his corrupt-to-the-core government lackeys that no benefit comes from his obsession with GDP growth. It's clear to those that watch Peru that Twobreakfasts doesn't care about anything but the money. Alan Garcia is Latin America's least popular President and this is not some statistical fluke. Ask Peruvians about him, not the English-language media.

Lime Slime's Brazil: Corruption and slush money in the Lula government? Surely not!

I've actually had a couple of mails since the weekend saying "Hey dude, where's Lime Slime got to?" or words to that effect. Never fear, dudettes and dudes! Here we have a new dispatch from the whacked out world of the Caipirinha. All yours, Lime Slime:

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Robert Mangabeira Unger (for it is he)

Serious journalism is alive and well in Brazil, especially at O Estado De S. Paulo, known as Estadao by its fans. I've long thought of it is the best paper in Latin America. Excellent writing, rigorous and independent. It's editorial page is too far right for me on social issues, with a conservative Catholic slant that sounds outdated in contemporary Brazil, but the rest of the paper is top notch. And today, they have one of those great articles explaining more or less how political parties finance themselves here.

Lula's party, the PT, controls 6 of the biggest 10 pension funds of the so-called estatais, the state-run companies. These are BIG, and historically have been one of the few sources of long-term financing in a country that, before the latest commodities boom, had a very low domestic savings rate. The funds include Previ, the fund of Banco do Brasil, Petros of Petrobras, you get the picture.

The execs at the funds are named by political parties, and most of them were put in place by Lula's former right-hand man, Jose Dirceu, who quit the cabinet during Lula's first term during a corruption scandal that almost cost Lula re-election. In that scandal, the PT was buying votes in Congress to get bills approved. The other guy who appointed PT allies to the funds was Luis Gushiken, an old union hack who formerly had a job as chief propagandist and whose office had an obscenely large budget, before the corruption scandal got him.

Why do they want to control the funds? Moolah. Parties have two basic ways of raising cash. They can either take kickbacks on concessions for things like bus routes, or they can dip their hands into the pension funds. Accounting at the funds has historically been opaque, even though some of them make smart investments and build important stuff. But it's time for Brazil to clean up these conflicts of interest.

Many of Lula's buddies from the union movement are now managing billions of dollars in cash. Why? What do they know about investments? One of the opposition parties is pushing for a Congressional investigation of the funds, which would damage Lula. Robert Mangabeira Unger, the Brazilian dude on leave from Harvard Law school who speaks Portuguese with a gringo accent, once called the pension funds the most sordid, nefarious area of Brazilian politics. But that was before Lula hired him as his "Secretary of Long-Term Planning", a ministerial level post where he runs his own one-man think tank. Why don't you tell us what your plans are, Mangabeira?


Read all five Lime Slime guestblogs right here

Musical chairs, twobreakfasts style

As his President enters the room, Luis Valdivieso
shields his eyes from the glare of his smile

Remember about a month ago when Peru's FinMin Luis Miguel Valdiveso suddenly and unexpectedly resigned? Remember how his predecessor Luis "luckiest economist in LatAm" Carranza stepped up to take his place? Remember how, in the hasty and brief press conference Valdivieso said he'd been offered an alternative job by President Twobreakfasts?

Well yesterday the episode cleared itself up and Valdivieso was named as Peru's new ambassador of the United States of America, no less. It's all pretty logical on the superficial level, of course. Luismi was an IMF flunkey for years and knows the protocol side of the US backwards. He's also replacing the current Peruvian ambassador, Felipe Ortiz de Zevallos, who strangely and coincidentally handed in his resignation on January 21st, the day after Valdivieso resigned.

But it does shed a little light on the way Twobreakfasts is thinking (if the term is apt) on the Peruvian economy. He clearly wanted Carranza back, as the guy has a higher profile than Valdivieso and is (due to his incredibly lucky timing) credited as being a good hands-on economy manager. In fact he just continued the autopilot that came from the real architect of the Peruvian economy reforms, PPK, and did nothing much....the 'ain't broke don't fix it' rule. But style is far more important than substance in The World According To Twobreakfasts and Carranza's arrival has been an APRA spindoctors dream.

But once again, IKN wonders why Carranza came back and how Twobreakfasts got him to agree. When Carranza first resigned his post, the reason was that he wasn't making enough money as FinMin and wanted to get a nice cushy, highly paid gig in some private consultancy. Yeah, truly, it was said out loud right here by then PM Del Castillo and reported by your diligent IKN. It's kind of intriguing to think about all the recent corruption scandals in this awful Peruvian APRA government and then think that Carranza suddenly finds the FinMin job attractive once again, is it not?

Corrupt Peruvian police caught red-handed

Illegal logging in South America is a trade that catches plenty of attention in ecology and environmental protection circles. Much of the deserved flak is aimed at Brazil but on a per hectare basis, people such as the WWF recognize that Peru is an even bigger problem.

The Peruvian government, via its well-meaning Environment Minister Antonio Brack Egg (just the greatest name ever) has at least recognized that it has a problem on its hands. For example last year they voted a new law that raised the penalty for illegal logging from almost nothing to a mediocre deterrent. However, there's not much point in getting all legal on the gangs of illegals when the police force themselves are party to this lucrative, corrupt and extremely enviro-damaging business.

Yesterday, a plane was stopped at Pucallpa airport (East Peru jungle city) on its way to Lima. The local customs officials had previously got an anonymous tip-off that the plane was carrying contraband from the jungle, and thus it proved: the plane was carrying 9,000 m3 of virgin mahogany, lumber that is totally banned from logging, no doubts, no flim-flam, no second-guessing. But the cutest thing about it all was the plane is a Peru National Police Force (PNP) Aircraft, with PNP pilots, livery and the whole caboodle. Here's a photo of the plane itself on the tarmac at Pucallpa yesterday afternoon.

Hey boss! It's da plane!

A guy in Lima named 'Erick Arroyo' is the client for said lumber, owner of a company called Mi Sueño' (My Dream). We know the names of the aircraft crew, too (Rafael Fernando Ríos Zavala, José Bardales Rengifo, Oscar Bazalar Román, all police officers). The Commander and the General that command these officers are also now under investigation. It remains to be seen whether Peru will actually bother to prosecute its own corrupt functionaries for once, colour me sceptical and all that. As for the jungle and trees, with the law-enforcers up to their necks in this crime is it any wonder that nobody is ever punished in Peru for this environmental rape?

Peru: as corrupt as ever

"Just the one breakfast this morning, Mr. García? Or would you like two"

Another immersion in the putrid world of Peruvian politics.

Remember the scandal back in October when this Romulo Leon guy was recorded in conversation with Alberto Quimper of state-run PetroPeru talking about the bribes they were about to pick up for favours offered to foreign oil companies? Yeah, course you do cos I blogged about 9 times on the thing (here's one). It's also the corruption scandal that led to the resignation of the then Prime Minister Jorge Del Castillo and all the cabinet and the start of the woefully disappointing Yehude Simon's term.

So anyway, since then plenty has happened in the case, but things came to a head this week with two happenings.

The parliamentary commission charged in investigating as to how deep all this corruption malarkey went (and it went deep into the APRA party, no doubts) was expected to slap at least four ex ministers with formal corruption charges. But when it came to the vote, one committee member decided to vote against the charges and due to the nature of the committee this meant that the charges disappeared into puff of smoke. Carlos Raffo is the name of the committee dude that saved the bacon of Jorge del Castillo along with ex-Health Minister Hernan Garrido, ex-Health Minister Carlos Vallejos and ex-Mining Minister Juan Valdivia

Of course Raffo will deny it (in fact he already has), but people who don't live in the fantasy world of PeruPolitik need about 10% of their brainpower to work out that he was bribed by the APRA party to change his vote. This Raffo guy is one of those long-standing "controversial ministers"; a member of Fujimori's party, a vocal supporter of his ex-boss..and most importantly a corrupt piece of shit who would sell his mother to a platoon of Slavic soldiers given the chance.

Meanwhile, in true Peru style, while the guilty corrupt bigwigs get off scot-free the people who managed to eavesdrop the conversation between Leon and Quimper in the first place are now behind bars. Eight people from the Peruvian Spooks'Я'Us company "Business Track" (website here) were arrested yesterday, including the bossman who was.........roll on the drums.....the ex chief of intelligence in the 1990's Fujimori government.

And thus the sordid world of Peru, APRA and Twobreakfasts continues:

• The sacrificial lamb is chosen (Romulo Leon)
• The bigboy corruptos cross palms with silver, get away with it and lived to be bribed again (Del Castillo and his merry men)
• The whistleblowers are thrown in jail (as a lesson to the next people who dare to try for a bit of justice)

And President Twobreakfasts, leader of the most corrupt political party in South America, member since he was old enough to walk, stalwart party capo-de-tutti-capi for decades..... knows absolutely nothing at all.