Bloomberg News

Reformed Rebel’s Rise in Contest to Run Bogota May Jar Investors

October 28, 2011

Oct. 28 (Bloomberg) -- Gustavo Petro has received so many death threats for exposing Colombian corruption that he deploys 15 bodyguards as he campaigns for mayor of Bogota. The former guerrilla’s latest target is the graft he blames for the city’s decline from urban-planning model to traffic-clogged muddle.

Petro emerged as the frontrunner to win the capital’s Oct. 30 mayoral election after denouncing kickbacks in transportation contracts that led to the jailing last month of Mayor Samuel Moreno, whose party he quit last year. He began to campaign against misconduct when he led a drive in 2007 that exposed ties between pro-government lawmakers and paramilitary death squads.

“The city’s insecurity and congestion have a precursor, which is corruption,” Petro, 51, said in an interview at a campaign rally in downtown Bogota this month. He said people see him “as the one candidate who can truly undo corruption because of my actions over the past decade to dismantle powerful mafias and paramilitary assassins with links to politics.”

Petro’s victory could spook investors as the former member of the M-19 urban guerrilla movement seeks to expand government control over the city’s economy, said Rodrigo Jaramillo, head of Bogota-based Grupo Interbolsa, which owns Colombia’s biggest brokerage.

ETB Share Sale

If elected, Petro says he would “democratize wealth” by blocking a possible sale of the city’s 87 percent stake in phone company Empresa de Telecomunicaciones de Bogota SA and instead use its profits to subsidize Internet access, food, and utilities in Bogota’s slums. ETB shares fell 17 percent since Petro launched his campaign May 31, more than double the 8 percent decline in the benchmark IGBC index.

“Petro seems to prefer a state-run economy over a free- market,” Jaramillo said in an interview, citing his plans to create a city-run bank and offer public health insurance. Petro creates an “incipient political risk” and may use a mayoral win as a springboard to the presidency, he added.

Petro’s rise is also stunting a comeback by Green Party candidate Enrique Penalosa. As mayor from 1998 to 2001, Penalosa invested in bike lanes, public parks and a mass transit system that endeared him to the city’s 8 million residents and made Bogota a model for urban planning in the developing world.

Ahead in Polls

Petro had 25.8 percent support compared with former Senator Gina Parody’s 19.8 percent and Penalosa’s 18.4 percent in a survey of 1,200 people by Bogota-based pollster Datexco Colombia SA. The poll taken Oct. 24-25 had a margin of error of plus or minus 2.83 percentage points. He led by a smaller margin over Penalosa in two other polls published since Oct. 19.

Bogota contributes more than any other city to Colombia’s economy, which grew 5.2 percent in the second quarter from a year earlier. The capital is responsible for 26 percent of the country’s $288 billion gross domestic product and traditionally receives about three-quarters of its foreign direct investment, which this year may reach a record $12 billion.

Colombia’s peso jumped to a one-month high yesterday, paring its decline in the last three months to 5.1 percent. The IGBC index fell 12 percent this year and the yield on Colombia’s benchmark 10 percent bonds due in July 2024 has fallen 70 basis points to 7.46 percent.

Born in a wattle and daub house near the Caribbean coast, Petro joined the Marxist-leaning M-19 at the age of 17, taking as his nom de guerre Aureliano Buendia, a character from his literary hero Gabriel Garcia Marquez’s novel “100 Years of Solitude.” He said he was tortured while in jail in 1985 as his comrades in arms stormed the Palace of Justice and took the Supreme Court hostage.

When the M-19 demobilized in 1991, Petro helped rewrite Colombia’s constitution. After a stint in Europe, he resumed his political career in 1998 and was elected to the Senate in 2006. That same year he led the opposition to then-President Alvaro Uribe’s rule by denouncing allies who allegedly took money and helped plot assassinations by paramilitary groups.

Uribe’s Enemy

Uribe in 2007 called Petro a “terrorist in civilian clothing,” though his efforts later led to the jailing of dozens of pro-government congressman and Uribe’s former spy chief. Petro, who says he has received numerous death threats, handpicked some of his bodyguards from the disbanded M-19 because of concerns that police escorts may double as spies.

Petro buoyed his credibility further by then training his sights on the Revolutionary Armed Forces of Colombia guerrillas, or FARC, who he compared with Pol Pot’s murderous Khmer Rouge regime in Cambodia. The comments earned him a new round of threats, this time from the FARC.

Earlier this year Petro’s attacks on Moreno split their Alternative Democratic Pole party and led Petro to create his own Progressives movement. Moreno has denied allegations by prosecutors of taking payoffs in exchange for awarding contracts including for a still-incomplete highway to Bogota’s airport from downtown.

Bogota’s Past Glory

Bogota has a history of electing inventive mayors often out of step with the national trend. In the 1990s, city leaders including Penalosa and former presidential candidate Antanas Mockus built libraries, employed mimes to shame unruly motorists and developed the TransMilenio surface subway that became a touchstone of urban pride amidst Colombia’s bloodbath.

“There was a big change in Bogota under Mockus and Penalosa when everything looked really promising,” said Ricardo Castro, a Bogota-born architecture professor at McGill University in Montreal. “That wonderful thing is now decaying.”

Under Moreno, crime and traffic have worsened. Since 2008, residents who say the city is heading in the right direction have fallen by half to 32 percent, according to an annual city government survey published in July. The number of murders, while below their peak a decade ago, has risen steadily since 2007 to 1,743 last year.

Wealth Concentration

Petro says redistributing wealth is a must for “one of humanity’s most segregated cities.” Gains from economic growth have been concentrated in the chic areas of northern Bogota with scant benefits in slums that house many of the 4 million people displaced by Colombia’s four-decade conflict, he said.

Petro has had to defend himself against a campaign of Blackberry messages and radio advertisements questioning whether a former guerrilla is fit to occupy Colombia’s second-most important political office. His lack of experience -- he’s never held executive office -- has also drawn criticism.

“My rivals want to use that to delegitimize my campaign but haven’t been able to because people remember positive things the M-19 did for Colombia,” he said.

Still, in a race defined by voter concerns over corruption, Petro’s chief appeal is his reputation for honesty, said Cesar Caballero, a political science professor at Bogota’s Universidad de Los Andes. Penalosa may have hurt his chances by seeking the endorsement of the scandal-tainted Uribe, Caballero added.

“Those at the top are busy getting theirs instead of building roads,” said taxi driver Jorge Rueda, as he crawled through traffic. “There are traffic jams here where you might as well turn off your engine.”

--With assistance from Matthew Bristow in Brasilia. Editors: Joshua Goodman, Harry Maurer

To contact the reporters on this story: Blake Schmidt in Bogota at bschmidt16@bloomberg.net

To contact the editor responsible for this story: Joshua Goodman at jgoodman19@bloomberg.net


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