This record is a partial extract of the original cable. The full text of the original cable is not available.

C O N F I D E N T I A L SECTION 01 OF 04 LIMA 001375 
 
SIPDIS 
 
E.O. 12958: DECL: 03/09/2015 
TAGS: PGOV KCRM PE
SUBJECT: PARTY REGISTRATION SCANDAL CONTINUES TO HOUND 
PRESIDENT TOLEDO 
 
 
Classified By: D/Polcoun Art Muirhead for Reason 1.4 (B, D) 
 
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SUMMARY 
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¶1. (U)  Congress President Antero Flores-Araoz' mediation 
seems to have defused a potential constitutional crisis over 
a Congressional committee's demand to question President 
Toledo; the committee is investigating accusations that 
Toledo's Peru Posible party forged signatures in its effort 
to register for the 2000 elections.  Still, this case will 
continue to shape the political environment in important ways 
probably through the end of Toledo's term.  Among the 
consequences we see: 
 
--  While opposition party heavyweights tell us they want 
Toledo to finish his term, many of the same people have 
publicly held out the threat of an impeachment process.  We 
think impeachment is improbable, but expect the opposition to 
continue alluding to it as a way of keeping Toledo on the 
defensive. 
 
--  President Toledo's already low credibility has taken a 
further hit from clumsy efforts to cover up the scandal by 
party loyalists.  Opinion polls show that an overwhelming 
majority of Peruvians think the President was involved in 
signature fraud; this is handicapping his already faltering 
efforts to shift public focus to his accomplishments. 
 
--  The "hard wing" of Peru Posible is exploiting Toledo's 
heightened sense of insecurity to increase his dependence on 
them.  This happens at a time when Toledo is pondering who 
will replace Carlos Ferrero as Prime Minister.  It makes it 
more than likely that the President will fall back on his 
ever-narrowing base rather than - as some of his advisors 
have urged - naming a respected non-political or "friendly 
opposition figure. 
 
--  Opposition parties have their own signature fraud 
problems, which will give them an incentive to slow-walk an 
investigation.  The next government, however, is likely to 
pursue criminal charges against Toledo and members of his 
Administration over the issue.  END SUMMARY. 
 
---------------------------- 
A MINI-CONSTITUTIONAL CRISIS 
---------------------------- 
 
¶2.  (U)  Thanks to the active mediation of Congress President 
Antero Flores-Araoz, a potential constitutional crisis 
between the executive and legislative branches seems to have 
been averted.  The crisis developed after President Toledo 
announced in late February that he was prepared to meet with 
the Congressional Special Investigative Committee (Villanueva 
Committee) looking into allegations that parties, including 
the President's Peru Posible (then Pais Posible), forged 
signatures to meet registration requirements for the 2000 
elections.  Toledo characterized the meeting as a 
Presidential audience for Committee members only.  The 
Committee, led by its Chairman Edgar Villanueva (of the 
opposition Peru Ahora), responded by demanding that the 
meeting be considered an ordinary committee session, that 
other legislators be permitted to attend and that it be 
recorded.  The President rejected these conditions, 
particularly the demand that the meeting be recorded , but 
then arranged for a nationally-televised interview with a 
prominent journalist, in which he denied the allegations 
against his party and himself. 
 
¶3.  (U)  The televised interview with Toledo, which 
effectively undercut the President's objection to being 
recorded, coupled with Prime Minister Carlos Ferrero's 
aggressive denunciations of the Villanueva Committee and 
forceful assertion that the matter was closed, led to threats 
by Villanueva and other committee members to subpoena the 
President and seek to vacate the presidency should Toledo 
refuse to testify.  Politicians and constitutional experts 
weighed in with their differing analyses as to whether a 
congressional committee has the authority to interrogate the 
President:  the Constitution does not directly address this 
issue, but it does provide that a serving President can only 
be accused of treason, impeding elections, unlawfully 
dissolving Congress, and impeding the functioning of 
electoral institutions.  Meanwhile, Flores-Araoz initiated 
direct discussions with the President, and on 3/17 announced 
that a tentative agreement had been reached under which 
Toledo would meet with the Committee, written notes would be 
taken of their discussions, and then all participants would 
sign off on the minutes.  The Villanueva Committee accepted 
this arrangement and the meeting with the President has 
tentatively been set for 3/24. 

------------------------ 
THE FALSE SIGNATURE CASE 
------------------------ 
 
¶4.  (U)  The concurrent criminal and congressional 
investigations into the false signature charges have 
considered testimony and documentary evidence indicating that 
in 1997-98 electoral officials illegally supplied Pais 
Posible with copies of the electoral rolls, including the 
names/signatures of registered voters.  Using this 
information, President Toledo, Margarita Toledo and other 
Pais Posible leaders allegedly operated "signature 
factories," where up to 20 workers at a time forged the 
signatures of registered voters on forms listing these voters 
as members of Pais Posible in order to meet the electoral 
code requirement that new parties have 496,847 registered 
members in order to present candidates in the 2000 elections. 
 During the inscription period, Pais Posible presented 
1,390,213 signatures, of which 463,539 were invalidated. 
 
¶5.  (U)  The President and his sister have denied the 
accusations against them, and GOP and party officials have 
questioned the motives of several witnesses.  The evidence 
against the President appears to be weak, consisting of the 
rather vague testimony of several self-confessed workers at 
the "signature factories" that he visited the "factory," knew 
what was going on there, threw a party for the workers, and 
even forged a few signatures himself.  These witnesses, 
however, have tended to contradict themselves or each other, 
and/or have provided different accounts at the various stages 
of the investigation process.  The testimony against 
Margarita seems to be more substantial, and Judge Saul Pena, 
who is heading up the criminal investigation, has placed her 
under house arrest and embargoed her property. 
 
¶6.  (U)  While it seems clear that Peru Posible and other 
parties submitted forged registration lists, providing 
conclusive evidence of criminal responsibility may be very 
difficult.  Many parties hired canvassers to gather 
signatures and shift the blame for misconduct to them.  In 
deed, the Office of National Electoral Processes (ONPE) only 
recognized three million signatures as valid out of more than 
18,712,000 submitted by all parties seeking to register for 
the 2000 elections.  New ONPE director Magdalena Chu has 
offered to develop new software (costing USD 55,000 and 
taking 3-6 months to finalize) that could compare the 
signatures on the 2000 electoral rolls with those on Pais 
Posible registration forms, but she emphasized that this 
would not be definitive proof of forgery.  While the National 
Police has experts in detecting forgery, they reportedly have 
the capability of examining a maximum of 16 signatures per 
day. 
 
¶7.  (U)  Politically the signature fraud scandal has been a 
disaster for Toledo.  In polls, over two-thirds of 
respondents indicate that they believe he was involved in a 
massive signature fraud.  The President's public relations 
case was greatly undercut by the release of a video (said to 
be from 1997 or 1998) showing President Toledo, with his wife 
Eliane Karp at his side, at a lunch where Toledo saluted his 
sister Margarita for her work in directing the collection of 
signatures to register his party.  The presence of Karp and 
the recognition of Margarita as director of effort 
contradicted GOP and Peru Posible officials' previous claims 
that Karp had been out of the country during the period in 
question and that Margarita had no connection with the 
party's registration efforts.  In addition, the December 
2004/January 2005 replacement of Ad Hoc Anti-Corruption State 
Attorney Luis Vargas Valdivia and his team, who were actively 
investigating the signature fraud scandal, has been widely 
interpreted as a GOP effort to sidetrack the inquiry. 
 
¶8.  (C)  On the other hand, Toledo has been helped by the 
fact that his chief accuser, opposition Unidad Nacional 
alliance Congressman Rafael Rey, is also under investigation 
for directing an even greater signature forgery operation. 
Rey, who heads up the minuscule Code-Renovacion alliance, 
presented 2,270,000 signatures to register his party in 2000, 
of which only 479,000 were validated by ONPE.  Furthermore, 
Rey's notorious close links to associates of former President 
Alberto Fujimori and Fujimori's intelligence advisor 
Vladimiro Montesinos, have lent credence to Toledo defenders' 
charges that the allegations against the President and his 
party are politically motivated. 
 
------------------------ 
THE COVER-UP ALLEGATIONS 
------------------------ 
 
¶9.  (U)  The investigation into charges that GOP and Peru 
Posible officials engaged in a conspiracy to obstruct the 
judicial inquiry into the signature fraud allegations appears 
to be heading toward the criminal prosecution of several 
former government and party figures.  The testimony and 
evidence to date indicates that Immigration Service officials 
conspired in the irregular after-hours issuance of passports 
to Carmen Burga and her family.  Burga was the key witness 
who first made the fraudulent signature allegations against 
Toledo in July 2004.  Soon after she made a video recanting 
her allegations, which was publicized by GOP officials, and 
disappeared from Peru.  The Burgas were then escorted by a 
Peruvian Airports and Commercial Aviation Corporation 
(CORPAC) official and two employees of Peru Posible 
activist/businessman Dante Matos across the Ecuadorian border 
and into temporary exile in Colombia and Venezuela, where 
they lived for several months on funds provided by Matos. 
 
¶10.  (U)  The prosecutor handling the case, Arturo Chalco, in 
December filed criminal charges against six former 
Immigration Service officials, including ex-Director Pedro 
Torres, accusing them of committing irregularities in the 
issuance of the passports to the Burgas.  Chalco also filed 
charges against then-Immigration Service Director Diomendes 
Diaz, accusing him of attempting to cover-up his 
predecessor's actions; Diaz subsequently resigned.  In 
addition, Chalco reportedly is considering charging former 
CORPAC Director Freddy Otarola with arranging the Burgas' 
flight to Ecuador and Dante Matos for facilitating the 
Burgos' travel and then providing the funds to sustain their 
stay abroad. 

------------------------------- 
THE CONGRESSIONAL INVESTIGATION 
------------------------------- 
 
¶11.  (C)  The opposition-controlled Congress has shown 
surprising restraint in its investigation of the signature 
fraud and cover-up allegations.  Although Carmen Burga's 
charges were first brought in July 2004, followed quickly by 
her temporary recantation and disappearance into exile, the 
five-member Special Investigative Committee was not formed 
until late October and did not commence substantive hearings 
until January 2005.  At the GOP's request, the Committee's 
mandate was expanded from investigating the Peru Posible 
charges to an investigating the registration of all parties 
for the 2000 elections.   Opposition APRA and Unidad Nacional 
congressmen (with the exception of Rey) have told Emboffs 
repeatedly that their parties have no/no interest in pursuing 
these scandals at the present time.  APRA's Mauricio Mulder, 
who serves as the party's hatchet man, told Poloffs that 
while he believes that there is solid evidence of fraud, APRA 
will not/not seek to use the scandal to remove Toledo.  APRA 
legislative bloc leader Cesar Zumaeta reiterated this to 
Polcouns on 3/17, emphasizing that his party supports Toledo 
finishing his mandate in 2006. 
 
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COMMENT 
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¶12. (C)  The signature fraud/cover-up scandals may be a 
political nightmare for the Toledo Administration, 
contributing to the President's continued low popularity, but 
they do not/not appear to threaten his removal from office. 
In the current political environment, the major parties and 
their presidential hopefuls favor the political and economic 
stability that Toledo completing his term of office will 
provide. 
 
¶13.  (C)  The President and other high-level GOP and Peru 
Posible officials implicated in the scandals probably have 
more reason to be concerned that they will be the subject of 
criminal prosecutions after Toledo leaves office in July 
¶2006.  It is a tradition in Peruvian politics that an 
incoming government supports criminal investigations of a 
hostile outgoing government, as the Fujimori regime did with 
respect to Alan Garcia's APRA administration, and as the 
Toledo Government has done with respect to Fujimori and his 
followers.  In that respect, it is somewhat ironic that one 
of the chief criminal prosecutions promoted by the Toledo 
Government has been the forgery of signatures by Fujimori's 
"Peru 2000" party in its efforts to register for the 
elections that year. 
 
¶14.  (C)  Some Palace insiders tell us that the President's 
concern over the scandals reportedly is being fed by Prime 
Minister Ferrero, Peru Posible co-Secretary General and 
Congressman Jesus Alvarado, Labor Minister Juan Sheput and 
other members of the "hard wing" ("ala dura") faction of the 
ruling Peru Posible party, who then employ their strident 
public defense of Toledo to maintain and solidify their 
dominant influence in the administration.  Self-defense may 
also be involved, as members of the Hard Wing faction are 
themselves primary suspects in the scandals.  But hard-nosed 
politics also plays a role at a time when Toledo is weighing 
who should replace Prime Minister Ferrero.  END COMMENT. 
STRUBLE