PROSECUTORS and a UN anti-corruption commission accused former Guatemalan president Alvaro Arzu on Thursday of campaign financing corruption.

Mr Arzu, now mayor of Guatemala City, signed the 1996 peace accord which ended the country's 36-year dirty war that killed hundreds of thousands.

Chief prosecutor Thelma Aldana claimed he was involved in transactions with a business that channelled money to his Unionist party and said she would seek to have his immunity of office lifted.

The accusations are based on testimony from the wife of ex-army officer Byron Lima, who was serving a sentence for the 1998 murder of Guatemalan Bishop Juan Jose Gerardi before he was killed in a prison riot last year.

Mr Arzu said after the press conference that he had given municipal jobs to inmates' relatives to help them out, but said they had real duties.