Once lauded, former Peru president now fights extradition on bribery charges

As far as mistakes, McClintock explained that Toledo could have been more careful about his public image. Media reports of him snorting cocaine, sipping expensive Scotch whiskey and vacationing at a luxurious beach house tarnished his image as a common man from humble beginnings who could relate to average Peruvians. His failure to acknowledge a daughter from an extramarital affair for more than a decade also harmed his reputation, she said.

Because modern presidents are barred from serving two consecutive terms in Peru, Toledo could not run for president in 2006. He sought the office again in 2011 and 2016 but lost both elections. McClintock blamed those losses on negative press attention and “the baggage from previous criticisms" lingering from his time in office.

If Toledo is extradited, McClintock predicted it will be tough for him to overcome the criminal charges because almost all Peruvian TV and newspaper coverage of him has been negative. About “99% of Peruvians believe Toledo is guilty," she said.

A corrupt highway

Corruption is a major problem in Peru, and it often takes the form of kickbacks for infrastructure projects, according to McClintock.

The bribery scheme Toledo is accused of masterminding was reportedly cooked up in a meeting on Nov. 4, 2004, at a Marriott hotel suite in Rio de Janeiro. Toledo denies having been there, and he points out that witness descriptions of who attended the meeting are inconsistent. But prosecutors cite travel records, hotel records and other official records, which they say show Toledo was there.

When charges were first filed against Toledo in 2017, Peru had accused him of taking $20 million in bribes. Since then, new evidence uncovered in the probe has led to the government to upgrade that figure to $35 million.

Prosecutors say Toledo agreed to help Odebrecht win a government contract to construct parts of the Interoceanic Highway, which saw costs balloon from an estimated $658 million to $2 billion.

The project was touted by Toledo’s administration and other South American leaders as one that would “integrate the region by developing infrastructure for transport, energy, and communications.” Critics say it has done little to help Peru’s economy and has more so helped accelerate deforestation in the Amazon rainforest.

The government maintains that Toledo got involved in the bidding process and helped prevent delays that could have allowed more companies to bid. In February 2005, Toledo signed an executive order exempting the project from certain feasibility requirements. U.S. Justice Department lawyers say that move was intended to speed up the process and reduce the potential that companies other than Odebrecht would submit competitive bids.

On the day the contract was to be signed in August 2005, a government official raised concerns that Odebrecht was not eligible for the project because it had pending litigation against the Peruvian government. Prosecutors say a board chairman appointed by Toledo helped overcome that obstacle by citing a report, which had not yet been written, finding the company was qualified. A contract was signed that day for Odebrecht to build two sections of the highway.

In his motion to deny extradition, Toledo argues that his formerly close friend, Israeli businessman Josef Maiman, was the person who planned and benefitted from the bribery scheme. According to Toledo, Maiman knew the highway project was a top priority for the administration and that Odebrecht was likely to win the contract without any help from the president.

“Maiman’s history with Odebrecht, combined with his knowledge of Dr. Toledo’s political priorities, enabled him to craft a scheme whereby it would appear to Odebrecht that Dr. Toledo was performing per the bribery agreement, when in fact Dr. Toledo had no idea that the agreement existed,” Toledo’s public defender wrote.

In a responsive court filing, U.S. prosecutors insisted it was “not a foregone conclusion” that Odebrecht would win the contract without Toledo’s help, especially since other companies successfully obtained contracts to work on different sections of the road.

Money trail

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 argues that evidence only shows that Maiman received the bribe money, minus a $500,000 loan that Toledo used to pay off mortgages for two homes. Maiman acknowledged 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.

Peruvian prosecutors obtained a copy of a “sham agreement” in which Odebrecht agreed to pay $34.3 million to a company owned by Maiman, purportedly for “technical services in relation to the preparation of the tender documents and the execution of the Projects.”

According to Maiman, Toledo provided instructions for funds to be transferred to two accounts controlled by his chief of security, Avi Dan On. More than $16 million was later transferred to Ecoteva, a company prosecutors say Toledo was involved in creating and for which his elderly mother-in-law was named chairman.

Toledo maintains that Maiman retained actual control over these companies and the funds were intended for his benefit.

A notary public in Costa Rica who incorporated Ecoteva told prosecutors that he met with Toledo in January 2012 to discuss creating the company. The notary public said Toledo chose the company’s name and stated that his mother-in-law, who was 85 years old at the time, would be named CEO and legal representative of the company.

According to prosecutors, Toledo’s mother-in-law, Eva Fernenbug, used funds transferred to Ecoteva’s account to purchase a $3.45 million house in an affluent suburb of Lima and an $842,000 office in a brand new, 17-floor tower in Peru’s capital on Toledo’s behalf.

Toledo points out that Maiman retained control over Ecoteva’s purchasing decisions, according to an agreement between one of Maiman’s companies and Ecoteva. 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. Toledo also notes that Maiman testified in 2013 that “he was the true owner of Ecoteva’s funds, and that all investments were made at his direction, for his financial benefit.”

But prosecutors cite evidence showing that Toledo was personally involved in the purchases. A real estate broker, who handled the sale of a house in the wealthy suburb of Las Casuarinas, told prosecutors that he met Toledo in 2009 and visited various houses with Toledo and his wife for three years, including the house that was ultimately purchased. According to prosecutors, Toledo also acknowledged his involvement in discussions about buying an office at the Torre Omega tower in Lima. The office seller’s representative told the authorities that he discussed the office’s sales price with Toledo and a real estate agent representing Toledo's mother-in-law.

Another key witness, former Odebrecht executive Jorge Barata, also testified that he personally delivered money to Toledo as part of the bribery scheme. Barata said that when his company fell behind in its payments, Toledo would summon him to his home and pressure him to continue the payments. Toledo argues there is no evidence those meetings actually took place, but the government cites an address book found in Toledo’s home that contained Barata’s name and details. Prosecutors also point to government palace records that document multiple meetings between Barata and Toledo during his presidency.

“Peru’s request for Toledo’s extradition contains evidence, from multiple sources, identifying Toledo as the person who, through intermediaries, made arrangements with Odebrecht for the payment of a bribe in connection with the Highway tender,” U.S. Justice Department lawyers wrote. “This evidence spans the inception of the illicit agreement to well after the plan was executed.”

Toledo insists that much of this evidence is based on testimony by two key witnesses — Barata and Maiman — who have everything to gain by pointing the finger at him and avoiding prosecution themselves. Maiman paid a $7 million fine and he and his family were given immunity in exchange for his testimony. Toledo claims Peru’s deal with the Israeli businessman effectively allows Maiman to keep most of the bribe money gained through the scheme.

“Without the testimony of Barata and Maiman, the remaining evidence builds a strong case, but not a case against Dr. Toledo,” the former’s president’s legal team wrote. “The evidence establishes that Maiman and Barata entered into a bribery scheme for their own benefit.”

Both sides will make their final pitches during a video-conference hearing before U.S. Magistrate Judge Thomas Hixson in San Francisco this Friday. Whatever the judge decides, his ruling is expected to be appealed, which could delay the outcome of this drawn-out extradition fight for another year or longer.

Follow Nicholas Iovino on Twitter

Follow @NicholasIovino

Subscribe to Closing Arguments

Sign up for new weekly newsletter Closing Arguments to get the latest about ongoing trials, major litigation and hot cases and rulings in courthouses around the U.S. and the world.

Email *

Submit