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Corruption scandals weigh on Ecuador's leftists ahead of vote

By Alexandra Ulmer and Alexandra Valencia

GUAYAQUIL/QUITO (Reuters) - A former oil minister's accusations that Ecuador's leftist government is involved in graft at state-run Petroecuador is raising the ire of voters as the ruling party seeks to extend its 10-year hold on power in a presidential election on Sunday.

Carlos Pareja, a fugitive accused of accepting $1 million in bribes to secure Petroecuador contracts for companies, has been tweeting theatrically produced videos that accuse officials of President Rafael Correa's administration of wrongdoing.

Vice President Jorge Glas, the running mate of ruling party presidential candidate Lenin Moreno, is among those targeted in the videos, which are divided into episodes with dramatic music and even a lie detector test.

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"He is the ringleader," Pareja said in a video posted this month, although he has yet to provide specific details.

Glas, who oversaw the oil and infrastructure sectors while serving as strategic sectors minister, has denied any wrongdoing. Pareja has not implicated Moreno, a paraplegic former U.N. envoy on disability.

The saga, coupled with the emerging scandal that Brazilian conglomerate Odebrecht paid $33.5 million in bribes to secure contracts, has transfixed the oil-rich Andean nation of 16 million people and cast a shadow over Sunday's election.

Correa has slammed Pareja as a corrupt coward who is trying to deflect blame for graft during the construction of the Esmeraldas refinery. Correa says authorities opened a probe as soon as irregular payments were detected.

But the mud-slinging is bad news for Ecuador's leftist government, analysts say, in a close-fought election that could spill over into an April runoff if Moreno fails to garner enough votes on Sunday.

Driving school director Fermin Olmedo was planning to vote for Moreno but was so turned off by the scandals that he now supports conservative ex-banker Guillermo Lasso.

"There was no control and they were all accomplices," said Olmedo, 37, in the coastal city of Guyaquil. "They don't want the truth to come out because it would be a big blow to the government and these elections."

With polls showing Ecuadoreans now see corruption as one of the top problems alongside the economy and unemployment, Moreno has repeatedly said at campaign rallies that "major surgery" is needed to clean out graft.

But pollsters warn it is tricky to measure how graft is affecting the campaign.

Although Moreno remains the candidate best poised to win the election, his popularity has been slipping: Some 32 percent of Ecuadoreans said this month they would vote for him, down from 37 percent in October, according to top pollster Cedatos.

While the country's economic downturn is the top issue for voters, corruption has become a growing concern, said Polibio Cordova of Cedatos.

"As Mr. Moreno is the government candidate he is the one who would be affected," said Cordova, adding that the corruption cases may also have increased the number of undecided voters.

'WHERE IS THE MONEY?'

Ecuador is the first South American country to hold a presidential election since Odebrecht [ODBES.UL] admitted in a leniency deal in December that it doled out hundreds of millions of dollars in bribes from Peru to Panama to pocket contracts.

Ecuador has not made any arrests, although authorities are investigating.

"Unfortunately the modus operandi of these companies is to give tips to those in charge of managing contracts, and that's hard to detect," Correa said during a recent press conference in the coastal city of Manta.

Observers are scrutinizing Ecuador to see whether it will follow Argentina, Brazil, and Peru in swerving right after a decade-long "pink rule" in much of the region.

While Correa brought stability to the politically volatile OPEC nation and launched popular social programs, many are fed up with his confrontational style and rising unemployment.

"These scandals are one more little drop in the glass that was already full," said systems engineer Ines Cueva, 42, who is torn between Lasso or opposition rival Cynthia Viteri.

Some ruling party supporters, however, are unfazed by the bribery revelations.

"Not all of them are perfect but they have done more than those before them," said business student Genesis Mariscal, 22, who added that she might have deserted Moreno had the opposition been less "retrograde."

Disillusioned Correa supporters have little faith in Lasso, whom they see as a stuffy elitist linked to the 1999 financial crisis when hundreds of thousands lost their savings.

Lasso has defended himself saying Banco de Guayaquil, which he presided over for almost two decades, was solid and survived the meltdown.

At a recent rally to support Lasso, who promises thorough graft probes, a man dressed as a rat held up wads of dollars and a sign that read: "Where is the money?"

(Writing by Alexandra Ulmer; Editing by Girish Gupta and Paul Simao)

 
 
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