SAN FRANCISCO (CN) – Peru’s criminal case against its former president is too flimsy to warrant extraditing a once lauded leader to face corruption charges in his home country, a federal public defender argued in U.S. court Friday.
Alejandro Toledo Manrique, who led Peru’s government from 2001 to 2006, is accused of bribery and money laundering. Prosecutors say he helped the Brazilian construction company Odebrecht, which changed its name to Novonor last year, win a lucrative contract for a major highway project in exchange for $35 million in bribes.
During a hearing on Peru’s extradition request Friday, Toledo’s public defender Graham Archer argued that Peru’s entire case hinges on the conflicting testimony of two witnesses who have a motive to point the finger at Toledo so they can avoid prosecution themselves.
“Two cooperating witnesses who are internally inconsistent as well as contradict each other, I don’t think that’s sufficient to establish probable cause,” Archer said.
Josef Maiman, an Israeli businessman and formerly close friend of Toledo, testified that the former president directed him to launder $35 million in bribe money on Toledo’s behalf. Another witness, former Odebrecht executive Jorge Barata, said he personally delivered cash to Toledo and that when his company fell behind on payments, Toledo pressured him to keep the money flowing.
U.S. Magistrate Judge Thomas Hixson asked if those witnesses would be required to testify at trial under Peru’s legal system, suggesting a criminal trial, rather than extradition hearing, might be the more appropriate venue to weigh their credibility.
The Peruvian government claims Toledo inserted himself in the bidding process for the Interoceanic Highway, a 1,600-mile road that connects the Atlantic Ocean in Brazil to the Pacific Ocean in Peru. Prosecutors say Toledo helped prevent delays in the process that would have allowed more companies to submit competitive bids and that he exempted the project from certain requirements to help speed it along.
Toledo’s public defender said his client had no role in setting up a quick bidding process for the project, which is controlled by a Peruvian state agency.
“He rejected postponements of it,” Judge Hixson responded.
Archer replied that his client’s desire to speed things along was completely consistent with a leader who made the highway project a major priority for his administration.
“Those actions are not criminal,” Archer said. “To the extent that they benefitted Odebrecht, it did so not out of an illegal motive but the motive of trying to move along the project.”
Peruvian prosecutors mapped out a complicated web of financial transactions in which more than $31 million was transferred from Odebrecht to accounts controlled by Maiman, who was allegedly tasked with laundering the bribe money on Toledo’s behalf.
Toledo maintains that evidence only shows that Maiman received the bribe money, minus a $500,000 loan Toledo used to pay off two mortgages. Maiman stated in prior testimony that the $500,000 was a loan, but prosecutors say Toledo never explained if the loan was repaid and no evidence shows that it was.
On Friday, Judge Hixson suggested Toledo’s receipt of a loan that can be traced back to bribe money from Odebrecht might be enough to support corruption charges against him.
“If Odebrecht paid bribe money and half a million ends up in Toledo’s hands, how is that not a bribe to Toledo?” Hixson asked.
Archer implored the judge to consider why Toledo would risk his freedom and reputation to orchestrate a $35 million bribery scheme only to have received a measly half a million dollars in loans to pay off two “predatory” mortgages.
Evidence also shows more than $16 million in bribe money was transferred to a shell corporation called Ecoteva, for which Toledo’s mother-in-law, Eva Fernenbug, was named CEO. Prosecutors say Fernenbug used those funds to purchase two properties — a $3.45 million house and $842,000 office — as investments on Toledo’s behalf.
The government also cites evidence showing Toledo was personally involved in those purchases, including testimony from a real estate broker and sales representative who say they met with Toledo and discussed the properties.
But Toledo points out that Maiman retained control over Ecoteva’s purchasing decisions, according to an agreement between Ecoteva and one of Maiman's companies. Toledo insists that his mother-in-law, who had known Maiman since 1972 — a decade before she met Toledo — made the real estate investments for Maiman’s benefit.
On Friday, Hixson suggested the connection of Toledo’s formerly close friend and mother-in-law to the bribe money might be enough to establish probable cause that he committed a crime.
“Why is it necessary for the money to immediately end up in a bank account that Toledo has control of?” Hixson asked. “Why isn’t it good enough to end up in a company controlled by his mother-in-law or his close friend?”
Archer replied that it defies common sense that “Dr. Toledo, who is coming up on age 76, was sitting around for a decade plus and having no concerns that these tens of millions of dollars that he supposedly risked his career and freedom for money from Odebrecht would just be sitting around.”
Judge Hixson suggested the "sitting around” could simply have been a wise move for a shrewd politician after a scandal involving the shell company Ecoteva was made public in 2013.
“His mother-in-law ends up with a lot of this money, at least in her name, so you can’t dispute the money ends up close to him,” Hixson said.
The public defender said the government’s theory doesn’t square with the way Toledo has been living his life — working as a Stanford University professor and never obtaining the $35 million allegedly owed to him, minus a purported $4 million money-laundering fee.
“The government is asking the court to take this leap and this assumption that Dr. Toledo was aware of the money but somehow was this extraordinarily patient criminal who would be fine working into his later years, getting jobs as a professor to write his second book and living a very modest lifestyle while not complaining at all that Maiman was hanging on to this $31 million that is owed to him,” Archer said.
After about 90 minutes of debate, Judge Hixson took the arguments under submission and said he will issue a ruling within a few days.
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