Peruvian President Alejandro Toledo is getting a headache from too much beer -- not from drinking it, but from the fallout from a bitter million-dollar battle between Peruvian beer interests and those of Colombian and even Venezuelan producers.
The fallout comes in allegations that an adviser to Toledo took a $2 million "sweetener" to ease the entry of the Colombian beer company Bavaria, into the Peruvian market.
There are literally hundreds of millions of dollars at stake.
Beer, along with pisco (a strong grape aquavit), is the main alcoholic beverage of Peru, and for that reason there's a market that provokes a thirst for profit in just about anyone.
Even worse, in the Peruvian capitol of Lima, more than just control of the beer market is at the heart of this scandal. It also involves an intricate network of political intrigue, in which the biggest prizes are not just money but also power, which is just as tangible as cash.
All of this began with the desires of the Colombian brewery Bavaria to enter into the Peruvian market in the same way that it has done in Ecuador and Panama.
Bavaria began its Operation Peru at the end of the past decade and the beginning of the current, when there were intense conflicts.
The principal Peruvian contenders were Cervesur, owner of the beer business in the south of Peru with an eye to expanding towards the center, where Backus & Johnston, an old German brewer that had been transferred to Creole capitalists, was dominant.
From public insults to advertisements, the fight between the two companies involved a little bit of everything.
There was even a price war that concluded when the owners of Cervesur realized that they would end in ruin if they didn't sell out to the competition.
So Backus & Johnston ended up with a near monopoly over the Peruvian beer market. Since 1996, it had bought up three other companies -- the National Beer Co., the Northern Brewery and the Beer Society of Trujillo.
According to the Lima news media, the three families that owned Backus & Johnston -- Brescia, Bentín, and Romero -- had made a private pact not to sell their shares in the company in order to avoid the entry of new capitalists into the business.
Before it began falling apart, the Brescia family was the main stockholder of the Continental Bank and is also the owner of several mining operations, in addition to being the owner of 24 percent of the brewery.
The Bentin family -- which in 1955 headed the takeover of the company from the German group -- followed the Brescias as owners with 23 percent of the company.
Finally, the affluent Dionisio Romero, who was widely known for his investments in pension funds, banks and securities, held 22 percent of the company.
Of the remaining 31 percent, 10 percent was in the hands of minor investors; the remaining 21 percent was simply in the name of Backus.
At the end of 2001, Romero encountered financial setbacks because of the Sept. 11, 2001, attacks on the World Trade Center towers in New York and the Pentagon in Washington.
He had liquidation problems with his Pacific insurance company, and began to sell his shares in the beer company.
Lorenzo Mendoza, a Venezuelan businessman who owns Polar of Venezuela, bought 13 percent of Romero´s shares for $10.30 per share. He also acquired some of the stock of the minor shareholders, and overall became owner of 22 percent of the Backus & Johnston company, according to El Tiempo of Colombia.
Mendoza eventually had $195 million invested and then asked to see the books.
The Venezuelan capitalist finally came to the conclusion that not everything was on the up and up with the company and warned that it was possibly producing an exaggerated invoice of its purchase of hops, the main ingredient in beer, which could bring the company tax problems.
Seeing a possible financial black hole the Brescia family decided to sell their stock as well and on July 10, 2002, the Colombian brewery, Bavaria, offered to buy them at $22.00 per share, a more than 50 percent premium because the shares on the open market were at $10.80.
Mendoza and Polar reacted swiftly, saying through a spokesman it was "suspicious that the Colombian brewery would offer to pay two times the going rate" for the shares in Backus & Johnston.
In the middle of all this, enter the Cisneros Group of Venezuela which bought the Bentín shares and those of some of the minor holders, to get a stake in the Peruvian company of $250 million. Cisneros is a partner in several ventures with the Santo Domingo group of Colombia, now called the Bavaria Group.
At the time the chief lobbyist for Bavaria in the Peruvian deal was Jaime Carbajal Perez, now of Miami.
El Comercio of Lima in a recent article had an interview with a man named Hugo Duran, a driver and aide for one of the principal players, Alberto Farfán, who was the right hand man of Cesar Almeyda, an adviser to Toledo.
Duran, who is now in a witness protection program, told the newspaper he had overheard plans to pay $2 million in bribes to get the Bavaria deal approved quickly.
Peruvian law mandates that if a shareholder or several together are looking to acquire 25 percent or more of a company, they must agree to first participate in a what's know as a public acquisition offer in the stock exchange. However, this was never done in this case, thanks to an exception granted by the National Council of Supervision of Companies and Stocks of Peru (Conasev).
According to Duran's account to El Comercio, $2 million was passed through Carbajal to Almeyda, who went from being an aide and lawyer for Toledo to being the newest member of Conasev. Some of the money allegedly was to go to Toledo.
Almeyda, who left the Toledo government the same day that Conasev issued its ruling in the Backus case, is currently in custody on other corruption charges. Those include one related to the "Vladivideos," videos made of Vladimiro Montesinos -- who at that time was an adviser to Toledo -- while he paid bribes to legislators.
Faced with a new set of circumstances, with Bavaria and Cisneros now holding a controlling interest in Backus & Johnston, Polar agreed to sell its 23 percent to Bavaria, for $567 million, a transaction which once again would have made the intervention of Conasev necessary. Yet once again the deal quickly slipped through without ever going through a public acquisition offer."
Carbajal, who currently lives in Miami, is described as an important influence in the government of Toledo. From Miami he told El Tiempo, "The only thing that I can say for certain is that neither Bavaria nor Jaime Carbajal participated in an act outside of the law or morality. Our operations were clear and transparent, and I can say that for all of the investors involved and the authorizations received in a unanimous manner by the regulating bodies."
Reaction from Bavaria to Duran's accusation was also one accusing the newspaper of publishing lies.
For now, the penal investigations in Peru are pushing forward. In Colombia, the Stock Overseer -- which monitors those entities that are officially registered in the public stock market, like Bavaria -- said that for the moment it has limited itself to gathering information on the case.