Colombia’s leftist government rattled by campaign finance probe

Receive free Colombia updates

We’ll send you a myFT Daily Digest email rounding up the latest Colombia news every morning.

The sweeping economic reform agenda of Colombia’s leftist president Gustavo Petro is under threat following revelations from his son that criminal money entered last year’s election campaign.

Nicolás Petro, who is also a politician, was arrested on Saturday on charges of money laundering and illicit enrichment. He has pleaded not guilty in court, but pledged to co-operate with investigators.

At a hearing on Thursday in Bogotá, a prosecutor on the case said Nicolás Petro had admitted “large sums” of money from criminals financed the campaign that brought the elder Petro to power. The prosecutor said the son would provide audio recordings and other evidence in order to corroborate his claims.

“Mr Nicolás Fernando Petro Burgos gave relevant information that was unknown until now by the attorney-general’s office, including . . . about the financing of the past presidential campaign of the current president,” prosecutor Mario Burgos said during Thursday’s hearing.

The president has repeatedly denied knowledge of any illegal financing of his campaign.

A lawyer for his son, Nicolás, could not immediately be reached for comment.

The investigation into Nicolás Petro is taking place amid a wider campaign finance probe that threatens to derail the leftist government’s plans to expand the state’s role in pension and healthcare provisions. The president’s brother, Juan Fernando Petro, is under investigation on similar allegations and has denied wrongdoing.

Faltering progress on those reforms has frustrated Colombia’s first leftist president, who in April blew up his congressional coalition and reshuffled moderates out of his cabinet, including investor-friendly finance minister José Antonio Ocampo.

The peso has gained more than 20 per cent on the dollar this year, outperforming most emerging market currencies, as markets bet that the president’s push for a bigger state will fail. The government’s borrowing costs have also fallen lower in recent weeks, despite the political uncertainty.

“The best outcome for Petro from all this is that he isn’t impeached and doesn’t eventually get criminally investigated,” said Will Freeman, fellow for Latin American studies at the Council on Foreign Relations, who added that the scandal could hurt the left in future elections. “But even in that scenario, the reforms are done.”

The president’s ex-chief of staff, Laura Sarabia, and his former campaign manager and ambassador to Venezuela, Armando Benedetti, are also under investigation following a bizarre scandal involving wiretapping a former nanny.

Benedetti suggested in leaked audio recordings that illegal money entered the campaign. Sarabia and Benedetti have denied wrongdoing, while the latter has suggested the recordings were manipulated.

In March Nicolás Petro’s ex-wife, Daysuris del Carmen Vásquez, told local media her former husband last year arranged donations to the Petro campaign from individuals accused of drug trafficking. She was also arrested on Saturday and could not be reached for comment.

When the younger Petro was arrested, his father — who has repeatedly denied any wrongdoing — appeared to distance himself and promised not to interfere in his case. “The prosecution has guarantees from me to proceed in accordance with the law,” he tweeted at the time. “I wish my son luck and strength.”

During a speech on Thursday night, Petro said “no one but the people can end this government”.

Analysts said the president’s room for manoeuvre is narrow.

Freeman said: “If this scandal ultimately brings down the Petro government, or just makes him a lame duck during the rest of his time in office, it could be a very long time before a left-of-centre party gets the chance to govern in Colombia.”