MercoPress. South Atlantic News Agency

Fighting corruption and poverty, agenda of new Peruvian cabinet

Governor Yehude Simon

Peruvian President Alan Garcia swore in a new Cabinet headed by a leftist governor as Prime Minister following a scandal over possible corruption in the awarding of oil concessions which prompted all of his ministers to resign last week.

Garcia said on Tuesday that Yehude Simon main task would be to fight corruption and poverty and "defend the country from the dramatic international financial crisis that threatens it". Simon, who served as governor of the northwestern province of Lambayeque, oversees a 16-member Cabinet that retains Economy Minister Luis Valdivieso and Foreign Minister Jose Garcia Belaunde. Retaining Garcia Belaunde was seen critical since next month Peru is hosting the Asia-Pacific Economic Cooperation summit when the country will be receiving 21 world leaders. "This will be a balanced Cabinet, made up of representatives of the business and citizens groups'' Simon told reporters in Lima. "It's an alliance against all the forces trying to undermine the country". The appointment of a new Cabinet gives Garcia a chance to re-build support after labour unrest, quickening inflation and the oil scandal eroded support for his two-year-old government. Taped recordings of former officials discussing kickbacks on government oil contracts had paralyzed Garcia's administration, struggling with rock bottom approval ratings. Outgoing Prime Minister Jorge del Castillo was the most senior name mentioned on the audio tapes, which were released to the media by a former interior minister. Del Castillo denied any wrongdoing at a ceremony in the presidential palace. Garcia embraced Del Castillo moments before the swearing-in ceremony began in the presidential palace. Congress began hearings this week into accusations of corruption in the awarding of five oil concessions in September to Norway-based Discover Petroleum. The company's chairman, Jan Wennesland, said in an interview that the company ''never paid any bribes.'' "We feel we are on safe ground regarding these allegations", Wennesland said. However President Garcia suspended the five licences awarded. "Once the dust settles, we will definitely come out of this without any stain of corruption". Simon, 61, served as a member of Congress for the United Left Party from 1985 to 1990 before he was accused of ties with Tupac Amaru Revolutionary Movement, MRTA. He was arrested in 1992 and served eight years before being pardoned in 2000. He was elected governor of Lambayeque province in 2003. The new cabinet took office when reports of another attack by a guerrilla group left two soldiers killed and five wounded. This is the second bloody clash in less than a week, according to Peruvian military. The attack was attributed to the Shinning Path guerrilla group and took place in the Vizcatan region in the coca-growing valleys of Apurimac and Ene. Last Thursday, 15 people were killed when Shining Path guerrillas ambushed a military convoy. It was the deadliest battle with suspected rebels since President Alan Garcia took office in July 2006. President Garcia has been sending soldiers to the country's coca-rich regions since August in an effort to destroy what is left of the Shining Path, which security officials say includes about 300 guerrillas. Shining Path, which led a deadly insurrection for years that started in 1980, largely collapsed in the early 1990s after its leadership was captured. Holdout members of the group remain active and the government says they have mostly abandoned their Maoist ideology in favor of running drugs. Shining Path has killed about three dozen police, soldiers and anti-narcotics workers since Garcia began his term. Peru is the world's second largest producer of coca, the raw ingredient in cocaine, after Colombia.