Paraguayan President Santiago Peña is under criminal investigation following the collapse of Ueno Bank, prosecutors announced, as the South American leader prepares to defend himself before the Senate against possible removal from office. The crisis at Ueno Bank has fractured the long-ruling Colorado Party's support for Peña, a former International Monetary Fund economist.
In a rapidly unfolding series of events, Peña offered his resignation via X on Thursday, moments after the lower house voted unanimously to impeach him. However, both houses declined to accept his resignation, with the Senate proceeding with a trial that could lead to his removal. Opposition senators are pushing for his removal, arguing that accepting his resignation would allow him to retain eligibility for a senator-for-life position, potentially shielding him from prosecution.
Paraguay’s Attorney General, Emiliano Rolón Fernández, has initiated three criminal investigations into the Ueno Bank crisis, examining allegations involving Peña and other current and former government officials. These investigations will focus on the authorities' oversight of the bank, their management of its failure, and the placement of public funds within the institution. Peña has stated his intention to cooperate with investigators, expressing on X that he would "act with responsibility and respect for the Constitution."
Peña had previously stated in a video posted to X that he was stepping down in the interest of "the stability of our country, social peace and the need to preserve our democratic institutions." He acknowledged a potential failure in his duties, saying, "I want to apologize to the people if I have failed them at any point. It was never my intention to betray the trust they placed in me."
Ueno Bank rapidly grew from an obscure finance company to a prominent institution, attracting over 60% of Paraguay's adult population as customers. The bank's swift expansion, despite alleged warnings about its lending practices, has raised questions about its proximity to Peña’s Colorado Party, regulators, and the business elite.
Concerns within the central bank escalated in June when inspectors reportedly found a pattern of risky lending to insiders. Ueno had extended significant sums to companies associated with its owners, exceeding legal limits and lacking adequate collateral. Despite these concerns, Peña had publicly defended Ueno and the central bank's oversight, dismissing them as a smear campaign.
The bank's collapse occurred on Monday after regulators discovered poorly documented loans and improperly recorded expenses. Ueno's capital reserves fell below the legal minimum, prompting the central bank to seize the lender on Tuesday. The government has implemented a law to ensure depositors are repaid within five business days, with a state guarantee fund covering accounts up to approximately $36,000 per customer, estimated to cover 97% of clients.
On Thursday, a judge ordered the jailing of six Ueno executives, including founder Miguel Vázquez and bank President Juan Manuel Gustale, pending trial. Two other executives were placed under house arrest, and 27 bank officials and associates face charges of breach of trust and attempted fraud. Gustale's lawyer argued that senior executives were not directly responsible for individual loan decisions.
Protests have occurred in the capital, Asunción, with former Ueno employees expressing anger and demanding unpaid wages and severance. The Labor Ministry estimates that around 7,000 jobs have been affected by the collapse. The situation has highlighted concerns about corruption in Paraguay, which ranks poorly on Transparency International's perceived corruption index.