LIMA (BLOOMBERG) - Peruvian President Pedro Pablo Kuczynski resigned in the face of a second impeachment vote, brought down by the continent-wide Carwash bribery scandal and ending the career of a technocrat who promised his nation a fresh beginning.
Speaking in a national address on Wednesday (March 21), Kuczynski said that resigning was best for the country and would end uncertainty in the South American nation.
He didn't announce who will replace him as president though the constitution states that one of his two vice-presidents will take over.
"There will be an orderly constitutional transition," he said on state television flanked by his Cabinet. "I don't want to be an obstacle for the nation finding the path of union and harmony that it so badly needs and which was denied to me."
Kuczynski, a 79-year-old Wall Street veteran and former finance minister, had beaten a first attempt at impeachment in December after the revelation that a firm he owned took money from Brazilian builder Odebrecht, which doled out hundreds of millions in bribes across the region.
His escape was narrow enough to embolden opponents to make a second attempt, and on Wednesday, some lawmakers who previously supported him called for his resignation after allegations he sought to reward politicians in exchange for retaining power.
Peru's currency gained on the reports of Kuczynski's resignation, rallying as much as 0.4 per cent to 3.2516 per dollar, the strongest in two weeks.
First Vice-President Martin Vizcarra, who is serving as ambassador to Canada, is next in line to lead the Andean nation of 31 million people, which is rich in minerals such as silver and copper.
He is entitled to hold office until 2021, when the government's mandate expires.
If he declines, the responsibility would pass to the second vice-president, Mercedes Araoz. If she also declines, the speaker of congress would call a general election and lead the government on a temporary basis.
"The outcomes of political crises in Peru aren't predictable, but Vizcarra taking over as president is the most probable scenario for now," said Carlos Melendez, from Lima-based political analysis group 50+1.
Political turmoil is nothing new to Peru. Its previous four presidents are all under investigation for money laundering, corruption or human rights abuses. One is currently in jail, one has just been released and Peru is seeking the extradition of another from the US.
Since late on Tuesday, Jorge del Castillo, a legislator with the opposition Apra party, and three lawmakers who left Kuczynski's party last year said that they were in favor of impeachment.
Their change of heart followed the release of secretly filmed videos that appear to show government-allied lawmakers telling a member of Peru's biggest opposition party, Popular Force, that he would control public works in his jurisdiction if he abstained in Thursday's planned impeachment vote.
Del Castillo, who previously said there were no grounds for ousting Kuczynski, told Radio Programas the president should resign. Salvador Heresi, a lawmaker with Kuczynski's Peruvians for Change party, said before the resignation that he would have voted for impeachment.
"What we saw in the videos released yesterday is disgraceful and gravely affects our democracy," Heresi said via Twitter.
Speaking to reporters before the videos were aired by Popular Force, Kuczynski said accusations of vote buying were "a big lie."
Araoz on Wednesday denied to reporters that the government offered projects or money to sway legislators.
Swept Away Kuczynski had been fighting for his political life since last year after claims that he lied to congress to hide his ties to Odebrecht, which is at the center of Carwash. Prosecutors across Latin America are investigating bribes that the company paid to public officials in exchange for billions of dollars in contracts. The company disclosed payments to Westfield Capital Ltd., owned by Kuczynski, of close to $800,000 between 2004 to 2007 for advice on projects that Peru awarded it.
The president has said he had no knowledge of the company's dealings at the time, because an associate was managing the firm. He said that, as sole shareholder of Westfield, he later received a dividend and thus "earned some money" from the Odebrecht deal. But he denied granting any favours to Odebrecht when he was finance minister.
The scandal and investigation has roiled the nation's construction industry and delayed major infrastructure projects while prompting the government and private economists to slash growth forecasts for the Andean nation.
Kuczynski's departure will bring "some peace" to markets, said Carlos Rojas, founder of Lima-based Andino Asset Management. If Vizcarra takes over as expected, investors can expect a "relief rally," said Bulltick's Kathryn Rooney Vera.