November 23, 2017 / 11:27 PM / a year ago

Peru's prime minister sceptical about bill to expand anti-graft rules

LIMA (Reuters) - The government of Peruvian President Pedro Pablo Kuczynski will likely object to a bill passed by Congress that aims to expand new anti-graft restrictions to Grana y Montero and other local partners of Brazilian builder Odebrecht [ODBES.UL], the prime minister said Thursday.

Peru's Prime Minister Mercedes Araoz attends a news conference in Lima, Peru, November 23, 2017. REUTERS/Guadalupe Pardo

Odebrecht has admitted to paying millions of dollars in bribes to officials in Peru over a decade-long period, and lawmakers want the financial constraints written to keep Odebrecht from evading payment of fines for bribery to apply to the companies it partnered with.

But Prime Minister Mercedes Araoz said a new bill that sailed through the opposition-ruled Congress two weeks ago threatens to paralyse construction projects and likely violates due process.

“I’m not a lawyer but I do think that you always have to respect the presumption of innocence,” Araoz told foreign media in the capital Lima. “There are parts of it that we would have to take issue with.”

Araoz said Congress has not yet sent the bill to the executive branch for passage and that the justice and economy ministries would study it thoroughly before taking any action.

The legislation would restrict international asset transfers and the right to seize “ill gotten gains” of Grana and other Odebrecht partners. However, none of Odebrecht’s local partners have been convicted of any crimes and deny taking part in Odebrecht’s bribes.

Grana, Peru’s biggest construction group and Odebrecht’s most important local partner, saw its shares drop nearly 23 percent to 2.4 soles (£0.5573) after passage of the legislation.

Grana did not immediately respond to requests for comment but has criticized the bill as unconstitutional and promised to take legal action if it becomes law.

Lawmakers who back the legislation have said Odebrecht’s partners likely had a hand in Odebrecht’s kickback schemes and that prosecutors were working too slowly in finding other guilty parties.

Grana is under investigation in the attorney general’s office but has not been charged with any crime and has repeatedly denied wrongdoing.

Araoz added that the government is planning to ask Congress for special legislative powers to make tax collection more efficient. However, she said the changes would be minor and ruled out any changes to tax rates.

Reporting By Mitra Taj and Marco Aquino

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