This Week in Markets and Democracy: Peru’s Elections, Corruption Arrests, and Panama Papers Response

Peru’s Presidential Candidates Head to Second Round

On June 5, Keiko Fujimori, the daughter of former president Alberto Fujimori, will face former finance minister Pedro Pablo Kuczynski in Peru’s presidential runoff election. Questionable decisions by Peru’s electoral board in the first round—disqualifying two competitive candidates and dismissing charges of vote-buying against Fujimori and Kuczynski—boosted Fujimori and clouded the vote’s legitimacy. Now the question will be the anti-Fujimori vote and whether Kuczynski (not a natural campaigner) can consolidate her opposition—much as current president Ollanta Humala did when he beat her in 2011’s second round. Although Fujimori is popular among the rural poor, many remember the corruption and human rights abuses of her father’s presidency, and fear that she could follow in his footsteps.

Corruption Arrests in Argentina and Brazil

Argentine and Brazil corruption probes widened this week with new arrests in both countries. In Argentina, police detained Lázaro Báez, a wealthy businessman with close ties to former president Cristina Fernández de Kirchner, on charges of money laundering and embezzlement. Federal prosecutors now want to investigate Kirchner herself in the case. In Brazil, police arrested former Senator Gim Argello on evidence he accepted at least $1.5 million in bribes from two construction companies to shield their executives from facing congressional testimony. This recent round of Lava Jato raids come as Brazil’s lower house moves to impeach the president this weekend. Brazilian judges and attorneys promise the investigations will continue, whatever the outcome.

Governments Respond to Panama Papers with New Laws

In response to the Panama Papers, governments and international organizations are proposing new legislation to catch tax evasion, money laundering, and graft. The European Union (EU) wants to require multinationals to share tax data from their operations beyond Europe, in countries considered to be tax havens. Germany and France go further, proposing the creation of a global public registry for shell company ownership. They also call for cutting blacklisted countries off from the international banking system. Though the more ambitious efforts may falter, transparency and legal cooperation look to grow in the face of the leaks.