Second former Peru president faces inquiry before campaign

LIMA Mon May 27, 2013 6:40pm EDT

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LIMA (Reuters) - Peru's Alejandro Toledo was grilled in Congress on Monday over his family's purchase of a luxury home in Lima, making him the second former president to face inquiries that could narrow the 2016 presidential field.

A preliminary investigation by the attorney general's office into Toledo's real estate dealings comes as two-time former President Alan Garcia faces official inquiries over thousands of presidential pardons he granted to convicted drug traffickers during his 2006-2011 term.

Both politicians have denied any wrongdoing. And though the inquiries are only getting started, they could lead to authorities blocking their expected 2016 presidential bids.

Toledo, like Garcia, has said unproven allegations against him amount to a political witch-hunt designed to derail his political future.

There are only two other probable contenders for the upcoming race with a chance of winning, according to polls.

They are first lady Nadine Heredia and Keiko Fujimori, a one-time lawmaker and the daughter of jailed former President Alberto Fujimori. Peru has never had a woman serve as president.

Heredia, the charismatic wife of President Ollanta Humala, is widely expected to run for the presidency in 2016 when her husband cannot because of a constitutional ban on consecutive terms. She has denied she plans to seek office.

Lawmakers spent hours questioning Toledo on Monday for his 86-year-old mother-in-law's purchase of a $3.8 million house in Lima through what appeared to be an offshore holding company in Costa Rica.

Toledo has said his mother-in-law, Eva Fernenburg, used a loan, inheritance wealth and reparation payments for being a Holocaust survivor to pay for the house.

He said his family's purchase of the house may have been a political miscalculation.

"I might have made some mistakes but I am not corrupt," Toledo told lawmakers on Monday. "My hands and pockets are not stained."

Toledo, who works as an academic and is active on the speaking circuit in the United States, said all funds for the house were legally earned.

He vowed to retire from politics if proof emerges that he used an offshore company to transfer illicit funds to buy the house.

Toledo's party is an important ally of Humala's government in Congress. Toledo, who governed from 2001 to 2006 but lost the 2011 race, told the local newspaper El Comercio he would break with Humala if his government were behind the allegations.

On Friday, three of Humala's ministers dismissed all suggestions they were maneuvering against Toledo and Garcia.

(Reporting by Marco Aquino and Mitra Taj; Editing by Terry Wade and Eric Walsh)

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