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Peru finance minister denies offering quid pro quo on airport contract

LIMA, June 5 (Reuters) - Peru's Finance Minister Alfredo Thorne on Monday denied asking the comptroller's office to approve a $520 million airport contract in exchange for a bigger budget last month.

Local television station Panamericana released on Sunday night a recording of Thorne asking Edgar Alarcon, the head of the comptroller's office, to greenlight the contract for Chinchero airport, near Cusco, which Alarcon later said was irregular.

"We in the finance ministry never condition help on anything. It's an absolutely technical decision," said Thorne on local radio RPP, though he did acknowledge speaking with Alarcon in mid-May.

The comptroller flagged irregularities in the government's contract with consortium Kuntur Wasi, which includes Argentina's Corporacion America and Peru's Andino Investment Holding . President Pedro Pablo Kuczynski's government canceled the 40-year operating contract on May 22.

Kuntur Wasi and the government agreed to mutually dissolve the contract to avoid legal action and the government hopes to find a new operator.

Thorne told RPP his talk with Alarcon lasted nearly an hour and that there were gaps in the released recording.

"I was worried about growth and wanted investments to move forward and later we talked about whether we could increase the comptroller's budget," the minister said.

Prosecutors have said they are investigating Alarcon for money laundering in recent days.

At a press conference, Alarcon said his office had been pressured by Thorne and by other ministers in Kuczynski's government to move forward with the airport. He said the allegations of money laundering were an attempt to undermine his work.

"This is an ambitious campaign to cut off the head of the comptroller," Alarcon said.

Moody's said on Friday the uncertainty over the airport, which would serve the Machu Picchu archaeological site, could dissuade investments in future infrastructure projects in Peru.

Public work contracts have faced increased scrutiny in Peru since Brazilian builder Odebrecht revealed in late December that it distributed $29 million in bribes in the Andean country between about 2005 and 2014.

(Reporting by Marco Aquino; Writing by Caroline Stauffer; editing by Diane Craft)