UPDATE 3-Peru's president says he won't resign over Odebrecht payments


LIMA, Dec 14 (Reuters) - Peru's center-right President Pedro Pablo Kuczynski said on Thursday that he would not resign over a scandal involving payments Brazilian builder Odebrecht made about a decade ago to a company he controlled while holding public office.

In a televised address to the nation flanked by members of his cabinet and lawmakers in his party, Kuczynski acknowledged that he owned the firm, Westfield Capital Ltd, but said he did not manage it while he held public office and denied wrongdoing.

Before Kuczynski spoke, the leaders of several parties in the opposition-controlled Congress vowed to seek to force him from power if he did not leave voluntarily. The rightwing party that holds a majority of seats, Popular Force, called for him to resign by the end of Thursday.

"I'm an honest man and have been my whole life. I'm willing to defend the truth," said Kuczynski, a 79-year-old former Wall Street banker. He said he would resign his right to banking secrecy and promised to undergo questioning in Congress and the attorney general's office.

Odebrecht has been at the center of Latin America's biggest ever corruption scandal since admitting to bribing politicians across a dozen countries. It has not publicly named recipients of its bribes in Peru but has promised to cooperate with public prosecutors to determine who took part in its kickback schemes.

Kuczynski's promise to fight back after a week of escalating tensions could extend the worst political crisis to grip Peru since former President Alberto Fujimori fled the country amid a graft scandal in 2000. The scandal on Thursday spooked markets in one of the region's most stable economies and the world's No.2 copper producer, weakening the sol currency and driving down the select stock index.

Fujimori is now serving a 25-year sentence for human rights crimes and graft and shares a prison with ex-president Ollanta Humala, who was jailed earlier this year pending a trial over allegations he took illegal funds from Odebrecht.

Another former president, Alejandro Toledo, whom Kuczynski once served as finance minister and prime minister, is accused by prosecutors of taking a $20 million bribe from Odebrecht. Authorities in Peru are seeking Toledo's extradition from the United States.

Toledo and Humala have repeatedly denied the allegations.


As recently as last month, Kuczynski strenuously denied ever taking any money from Odebrecht or having professional links to the company.

But this week Odebrecht sent Congress a report in which it detailed deposits totaling about $800,000 to Westfield - some when Kuczynski held senior government roles in Toledo's government - and about $4 million to First Capital Inversiones y Asesorias, a firm controlled by a close friend of Kuczynski.

A source in the attorney general's office said prosecutors have summoned Kuczynski to explain the payments, which the source said may have violated laws against money laundering.

Kuczynski has presidential immunity from prosecution.

Kuczynski said only one of the deposits from Odebrecht had any connection to him: a payment for providing financial services on an Odebrecht project through First Capital when he was a private citizen.

"I've never had the slightest intention of hiding anything," Kuczynski said, stressing he correctly reported and paid taxes of the earnings.

Opposition lawmaker Rosa Maria Bartra said she was disappointed with Kuczynski's explanation.

"I hoped the president would be able to offer an answer that would meet the country's expectations. He hasn't," Bartra said on local television channel Canal N.

Prior to hours of talks between Kuczynski and his cabinet members and lawmakers late on Thursday, several senior officials in Kuczynski's government wanted him to resign to keep Congress from forcing him from office, two government sources said. (Reporting by Marco Aquino and Teresa Cespedes, Additional Reporting and Writing By Mitra taj; Editing by Matthew Lewis, Rosalba O'Brien and Nick Macfie)