Martin Vizcarra's government changed the law in favor of Chinese companies Untouchables of corruption | principle

“[…] Under Martin Vizcarra's government, the provisions of the Contracts Act were modified so that only a group of companies could obtain a letter of economic credit from a bank, which was required as a requirement to accept the bidder's proposal. , this is not possible. With national banks, but also with foreign companies, Chinese companies benefit from it,” he announced on June 2, 2023, while responding to the launch of tenders for private companies.

Later, in his testimony on August 18, he noted the change: “[Alcides Villafuerte, exgerente de Obras de PVD] “He opined that the provisions of the procurement law have been modified and have been able to include requiring a letter of financial settlement to participate in the process.”

According to this version, Villafuerte, who has received efficient cooperation in the investigation of the case, noted that the change was caused by the Vizcarra government's management of Chinese companies, leaving local companies “away from efficiency”.

After the change in contract law in PVD the number of works won by Chinese companies or their consortia increased (see attached).

Collaborator 08-2023 also said that Villafuerte told him about the entry into the PVT of Los Mokuguanos, a group close to Vizcarra that is part of the criminal network being investigated by Eficop. and 3.5% for national corporations that agree to pay bribes.

Samegua, the PVD project Eficcop is investigating, was awarded in 2020 to the Samegua Road Consortium, which was part of the Peruvian branch of Chinese construction company Gezhouba and had Xia Zhang as the legal representative. Effective collaborator Hugo Menezes wrote in his report on February 5 that Zhang had told him that “China [en referencia a la central de China Gezhouba] I had authorized him to pay only 2.5% of the total value of the work,” he says, referring to bribes for the project.

In September 2020, Vizcarra signed a contract for work in his home region of Mogua. He stood next to Xia Zhang.

Economic solution

The legal change described by Collaborator 08-2023 occurred in Supreme Decree 344-2018-EF, which established as an eligibility requirement “the economic solution applicable to public tenders invited to contract for the execution of works”.

The provision was signed in late December 2018 by then Economy Minister Carlos Oliva and President Martin Vizcarra.

The informant's statement is consistent with the report of a congressional commission investigating tenders received by Chinese companies for Pedro Castillo's administration since the Vizcarra era. In its initial report, the committee said, from his standpoint, Vizcarra promoted “legislation that favors Chinese construction companies in selection processes.”

When the commission subpoenaed the former president in October 2023, he declared that he was unaware of the change referring to the economic settlement: “I want to be categorical: I did not know the opportunity when that change was made.” However, he signed the decree.

Jorge Zapata, president of the Peruvian Chamber of Construction (CAPCO), said with the change, the doors were opened to a group of companies that had “all the facilities” to win tenders.

Zapata considers it an economic solution in the case of MTC works to claim a tax credit from bidders in the selection process. “[…] It is not mandatory, [pero los concursos del MTC] “They put a credit line requirement so it's a requirement that only Chinese companies can meet,” he told El Comercio.

“To call corruption by decree seems too much to me. […] “The High Command has nothing to do with what is done or not done.”

Carlos Oliva Former Economy Minister

When consulted by this newspaper, Oliva, a former minister who signed DS 344-2018-EF, denied any interest in favoring the group of companies: “I think they do not understand the rule, […] I naturally reject any conversation or anything like that.

He emphasized that for works worth more than S/20 million, until 2018, economic settlement is a mandatory requirement. During his administration, he noted, the criterion was proposed on an optional basis for all programs: “It is no longer mandatory, it depends on each implementing unit, each ministry, subnational government, if they decide, if they want to request that requirement. Or not. […]. And if you read that article […] It says 'they can', that is, it is made optional.” He also denied that Vizcarra had interfered in the development of the standard.

Bank of China

In January 2017, Legislative Decree 1321 was issued, which “promotes the investment of banking institutions in the Peruvian financial system.”

According to the Congressional Intelligence Committee, the law was approved with the intention of encouraging Chinese banks in Peru to support construction companies in their country.

ICBC, another banking institution in the Asian country, has already been operating in Peru since 2013, but in 2020 the national watchdog for banking and insurance issued a statement approving the bank's operation.

Until the decree, Peruvian law restricted a foreign bank shareholder from owning more than one banking company in the country. ICBC and Bank of China are owned by the Chinese government.

A few months before the decree was approved, Vizcarra mentioned the Bank of China: “We talked to the officers and directors of the Bank of China. Bank of China wants to have a branch in Peru, it's nothing, it's just the prevailing regulations and doesn't really make any sense. […]. It was seen that facilities should be made for them to get the branch of their choice. He said this in an interview with TV Perú in September 2016, during a trip to the Asian country by a Peruvian delegation led by then-President Pedro Pablo Kuczynski.

For the head of Capco, the existence of this bank creates suspicion: “There is something very curious. What is the other share of that Chinese bank, what is the other banking business in Peru. Are you availing mortgage loans, corporate loans, savings or mutual funds?”.

A congressional inquiry found that between 2018 and 2022, the MTC and various local governments awarded 93 projects to Chinese companies. Of these, construction companies provided 41 letters of guarantee from ICBC Peru worth S/319 million. Another six were provided by the Bank of China over S/96 million.

“I never got a Chinese company in my office and I never went to China […]”I have no interest in benefiting any organization.”

Alfredo Thorne Former Economy Minister

TL 1321 was signed by the then Minister of Economy, Alfredo Thorne. “The order had one purpose: to provide more financing to companies that have contracts with the state in the context that we faced Lava Jato and practically all banks have decided not to lend to companies. […]”, he told this newspaper.

Thorne insisted that Bank of China's entry was in the Vizcarra government (2020) and not in his administration as a minister, and denied he had a vested interest in favoring any entity. However, he acknowledged that national construction companies competed under unequal conditions: “It seems absurd to me not to impose restrictions on Chinese contracting companies.” […]. “They are non-private entities, they are public entities and they have the full support of their government.”

Based on recent corruption cases involving Chinese companies, Richard Wang, general manager of the Association of Chinese Companies in Peru (AECP), responded to El Comercio by email: “Since the AECP started, we have been demanding all Chinese companies. Respect and compliance with laws and regulations in Peru [de este país] in the course of their day-to-day business activities.

They also tried to collect the version of former President Vizcarra, but there was no response.