Page last updated at 11:20 GMT, Tuesday, 7 October 2008 12:20 UK

Oil contract scandal shakes Peru

President Alan Garcia speaking on 6 October
President Garcia has vowed to tackle corruption

Peru's energy and mines minister Juan Valdivia has resigned after a scandal allegedly involving kickbacks for oil concessions came to light.

Mr Valdivia denied any wrongdoing but said he was stepping down as he had to assume political responsibility.

On Sunday, a TV station broadcast a tape allegedly of a top state oil official and a lobbyist discussing payments to help a firm win contracts.

The two men have been suspended pending an investigation.

The company involved, Discover Petroleum of Norway, has denied any role in the scandal.

Managing director Jostein Kjerstad said that the company "has never known about or been party to any payments like these".

The taped conversation was allegedly between Alberto Quimper, a executive with the state energy agency, Perupetro, and a prominent lobbyist Romulo Leon.

The recording, made in February, apparently shows them agreeing to favour Discover in a round of auctions.

Discover was subsequently granted several contracts for oil exploration in collaboration with the state oil company, Petroperu.

Approval ratings

Petroperu's president, Cesar Gutierrez, who denied any involvement in the alleged irregularities, also tendered his resignation, in order, he said, to protect the company.

Peru's energy sector has pushed hard to attract billions of dollars in foreign investment in the country's huge mining industry and its fast-growing oil and gas sector, says the BBC's Dan Collyns in Lima.

President Alan Garcia, whose approval ratings have been falling fast amid rising food prices, vowed to tackle graft.

"The best way to deal with these outrages and these thieving rats is to respond immediately and make sure we cleanse our government of any corruption," he said.

But this latest development, the biggest in a series of corruption scandals, will do nothing to improve low public confidence in the government, our correspondent says.

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