Guatemala Congress says it will withdraw contested graft reforms

GUATEMALA CITY (Reuters) - Guatemala’s Congress announced on Thursday that it will withdraw controversial reforms that critics had described as a serious setback in the country’s fight against political corruption.

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On Wednesday, Guatemala’s Congress approved a “national emergency” decree to curb penalties for illegal election financing after President Jimmy Morales was linked to suspected irregularities during his 2015 election campaign.

Morales, whose immunity from prosecution was reinforced by Congress earlier this week, had said he would veto the reforms if they were found to be harmful to the nation.

After rowdy demonstrations in the capital on Thursday, Morales announced he had suspended an independence day parade that was to have taken place on Friday.

And as the public outcry mounted, leaders of the principal parties in Congress agreed to vote on Friday to cancel the measures, independent congressman Oliverio García said.

“There has been an objection from the general citizenship, organizations and institutions with respect to two decrees, and there is an agreement to not send those decrees to the executive (branch) and file them away definitively,” he told reporters.

The decrees would have been the latest blow to the attorney general’s office and the United Nations-backed International Commission Against Impunity in Guatemala (CICIG) after Congress this week voted to preserve Morales’ immunity from prosecution.

Morales also urged Guatemalans on Thursday to remain calm and peaceful amid a charged atmosphere.

The reforms were widely criticized in Guatemala, with opposition from the press and various government institutions and the human rights office.

The U.S. ambassador to Guatemala, Todd Robinson, posted a scathing message on Twitter about the reforms, before Congress decided to withdraw them.

“Years of malnutrition, insecurity, crime, corruption. Congress? No action. Amazing how fast they act to protect selves from prosecution,” he said.

Separately, Morales’ presidential spokesman, Heinz Heimann, said the president would return a mysterious salary bonus that he had been receiving from the army and which raised his salary by more than a third, making him one of Latin America’s best-paid leaders.

“The president returned it out of good faith,” Heimann said of the payment, which is being probed by Guatemala’s federal comptroller.

On Monday, Morales will travel to New York and will head to the United Nations for the annual general assembly the following day.

Reporting by Sofia Menchu; writing by Julia Love; Editing by Simon Cameron-Moore