IRAZOLA, Peru (AP) — In his run for governor of a rough Peruvian jungle state, Manuel Gambini has repeatedly cited his plaudits from the US Government for promoting the cultivation of cocoa beans over coca leaves in this cocaine-producing hotspot.

But the man the US Agency for International Development (USAID) held up as recently as 2012 as a “dynamic new partner” is now under investigation for money laundering, having amassed a curious-sized fortune despite a small mayoral salary.

Gambini was among hundreds of candidates in yesterday’s local and state elections suspected of being bankrolled by drug trafficking, a phenomena that threatens to hijack democracy in a country that became the world’s top cocaine producer two years ago. The infiltration of drug money in Peru’s politics has become so brazen and widespread as to draw comparisons with the conditions in Colombia and Mexico that preceded major political bloodletting.

“We are now a despicable reflection of what Colombia was — and what Mexico is today,” said Sonia Medina, Peru’s public prosecutor for drug enforcement. Peru is far less violent, but drug-related murders have been on the rise since the mid-2000s, when Colombian and Mexican traffickers began arriving in greater numbers.

One of every three Peruvian voters lives in a region with candidates under investigation, on trial or previously convicted of drug-related crimes. Medina said her office has identified 700 such candidates.

Gambini, a 43-year-old former coca farmer, is among at least seven gubernatorial candidates — in a quarter of Peru’s 24 states — under investigation for drug trafficking or related crimes.

A separate “narco candidate” list compiled by the interior minister names 124 electoral hopefuls, including two current governors.

Of note is an incumbent mayor, Silvia Cloud, whose husband is a fugitive drug boss in the Upper Huallaga Valley, cradle of the global cocaine trade.

In Irazola, one of Gambini’s associates, a convicted cocaine trafficker, ran for mayor. He has been the district’s treasurer since 2009.

And in the state of Huanuco, Luis Picon ran for re-election even though he faces probes for money laundering, drug trafficking, embezzlement, tax evasion, and illegal enrichment. A report by financial investigators details questionable deposits of US$4 million — mostly in cash — made to companies he and two of his brothers own.

Picon, who hails from the heart of coca country, denied Medina’s claim that his companies don’t make a profit and are propped up by illicit income.

“We are more than happy to co-operate in this kind of investigation,” he told The Associated Press when questioned after a campaign rally two weekends ago just outside Huanuco, eponymous capital of the state he governs. He said the unusual cash deposits should be “investigated scientifically”.

But Medina says Picon has resisted co-operation at every turn in the money-laundering probe, which was opened in 2010 and which a local prosecutor tried to shelve last year. That happens to her all the time, Medina says.

Picon could soon find resistance more complicated. He has just been ordered to appear tomorrow before a judge after a prosecutor requested he be jailed preventively on charges of allegedly embezzling US$50 million from overvalued public works projects, said Christian Salas, Peru’s anti-corruption public prosecutor.

Gambini entered the governor’s race in adjacent Ucayali state after a money-laundering probe made national headlines, sidelining the incumbent.

As two-term mayor of Irazola, a poor farming district where the Andes meet the Amazon, Gambini enriched himself as well as relatives and associates “closely tied to drug trafficking”, according to an eight-page order for a money-laundering probe issued August 29 and obtained by AP.

Supporting documents say Gambini personally acquired more than 38 square miles (10,000 hectares) of land, some of which “may have coca fields”, has two homes worth US$180,000 and is now president of the football club based in the regional capital of Pucallpa, whose monthly payroll exceeds US$50,000.

As mayor, he earns less than US$2,000 a month.

Since Gambini first entered office in 2007, the order said, he apparently hid his wealth through his brother and several associates, transforming “simple farmers into economic potentates” with multiple properties, late-model SUVs and heavy trucks.

At a political rally two weeks ago that featured free beer on ice, Gambini denied the accusations, calling them lies fabricated by political foes.

He said that his land holdings amount to half-a-square mile (130 hectares) and that he owned a saw mill before being elected mayor. He gave up growing coca in 2003 at the encouragement of USAID, he said.

Critics say Peru’s lawmakers have intentionally made its political system fertile ground for dirty money through inaction or intentional legal loopholes.

Gambini, for example, does not mention his earnings or holdings in the official biography submitted to the National Electoral Commission and posted online. It is not required.

Of the roughly 126,000 candidates, only 11 per cent filed such disclosures, according to the independent watchdog group Transparencia, which partnered with news website Utero.pe to compare official bios with various public databases. They discovered 1,395 convicted criminals, including 13 drug traffickers. In Peru, convicted criminals are not barred from elected office as long as they’ve been “rehabilitated” by court order.

Ricardo Soberon, a former drug czar, said institutions tasked with fighting illicit activity are, at best, indifferent. “Politics has lost all ethical sense. Now, it’s just about being a pickpocket,” he said.

Take campaign finance law. The penalty for failing to report a campaign donation is the loss of public financing. But there is no public financing. It was authorised in a 2003 law but the finance ministry has yet to free up any money.

Peru’s banking secrecy law is no better. Reports of suspicious financial operations are up 30 per cent to 40 per cent this year, said Sergio Espinosa, director of the country’s Financial Investigations Unit. Yet his office can’t widen probes to include other banks and tax records without a prosecutor’s approval. And he is barred by law from sharing suspicious activity reports with police.

Peru has had fewer than 20 money laundering convictions, by Espinosa’s estimate, and none involving a politician.

All of which helps make political campaigning a no-holds-barred affair in places like Huanuco, which straddles the Andes ridge.

While one can’t legally buy a house in Mexico or Colombia with a bag of cash, it is common in Peru. Luis Picon and his brothers bought 21 properties from 2003 to 2012, all with cash, according to the financial investigations report.

A decade after USAID approached Gambini and other local farmers about planting cacao and African palm instead coca leaf, Irazola is a top cacao producer and Gambini has got much of the credit.

In 2008, the US Government agency paid his way to Miami for a conference of mayors from across the Americas.

In March 2011, Gambini attended a meeting with then-US Ambassador Rose Likins and the Ucayali governor as USAID renewed its commitment to the region. An embassy press statement said USAID had invested more than US$50 million in the region over the past 15 years.

A year later, a USAID report highlighted Gambini as “a dynamic new partner” who helped transform Irazola into a “model for alternative development”.

But back home, local activists filed legal complaints against Gambini for alleged embezzlement and fraud. They say he awarded contracts to cronies for projects that were never finished or poorly executed.

In one case, Gambini plowed more than US$4 million of public money into providing electricity, water and sewers to the 400-family community of Neshuya. He then helped arrange the sale of the land to a close associate, residents claim, who then began selling people the parcels beneath their homes at inflated prices.

Gambini denies the accusations. But the community’s former leader, Eugenio Longa, said those abuses led residents to publicly denounce him.

The US Embassy in Lima said in a written response to AP questions that it had requested a background check on Gambini before the 2008 trip to Miami. It did not say who performed the check, what it found, or how much USAID assistance went to Irazola’s district government. Most of the aid, it said, went to farmers through contractors and non-governmental groups.

It cited UN figures on the district’s coca crop dropping from 3.5 square miles (908 hectares) in 2009 to 2.3 square miles (591 hectares) last year.

In March, police seized 28 kilograms (about 62 pounds) of unrefined cocaine found in a moto-taxi, but the local prosecutor did nothing, Longa said. A group of local men immediately filed a complaint with a senior Pucallpa prosecutor.

The official, Pedro Cesar Rios, told the AP that the alleged misconduct remains under investigation.

Asked about the drug seizure, Gambini said he didn’t know anything about it. “That’s not the responsibility of the mayor.”

A mayor shouldn’t be aware of cocaine seizures in his district? he was asked.

“No, no, when there’s that kind of investigation, a seizure, the police do it discreetly, and the mayor doesn’t know,” he said.

Gambini acknowledged that cocaine trafficking remains a problem, especially in the district next door, where coca eradication is currently under way and where Peruvian marines were seen patrolling with assault rifles.

“I don’t get involved in any of that,” said Gambini,” because if I did, the mafia would kill us.”