Ousted Paraguayan President Santiago Peña has been placed under house arrest on suspicion of breach of trust and influence peddling, following his impeachment by the Senate over the collapse of Ueno Bank. All 44 senators present voted to remove Peña from office, marking the second presidential impeachment since the end of Gen. Alfredo Stroessner’s dictatorship in 1989.
The impeachment occurred after regulators seized Ueno Bank, an event that locked nearly half of Paraguay's 6 million citizens out of their savings. This triggered the country's most significant political crisis in over a decade.
Peña was ordered to remain at his home in Asunción until his court appearance on Saturday morning. Prosecutors are investigating him for breach of trust, influence peddling, and using public office for personal gain, charges that carry up to 10 years in prison. Lawmakers allege he used his political influence to direct hundreds of millions of dollars in public funds to Ueno Bank while regulators allegedly overlooked risky insider lending. Peña has denied any wrongdoing.
Vice President Pedro Alliana was sworn in as president to complete Peña's term, which ends in August 2028. Alliana faces the immediate challenge of addressing public anger and returning frozen savings.
Public outrage intensified following the bank's seizure, which prevented customers from withdrawing cash or making purchases. Ueno Bank had aggressively targeted lower-income individuals and those without bank accounts, attracting over a million customers. The bank's failure has had wider economic repercussions, including the shutdown of a ride-hailing app that relied on Ueno and the trapping of millions in funds designated for public works.
While some depositors have begun recovering limited amounts of their savings, the central bank stated that deposits up to approximately $3,500 are insured, covering 97% of Ueno's customers. The authorities consider the collapse an isolated incident, asserting the broader financial system remains stable.
In a separate investigation into Ueno's executives, 27 individuals, including the bank's founder and former CEO Miguel Vázquez, face charges. Several former directors are in pretrial detention, and authorities have seized assets linked to Vázquez.
Ueno Bank experienced rapid growth, becoming one of Paraguay’s largest banks by deposits in a few years, fueled by over $800 million in public funds. The impeachment charges against Peña cite his past stake in Ueno's holding company and his appointment of Carlos Carvallo, Ueno's former head, as central bank chief. Lawmakers also accuse Peña of allowing the state pension fund to deposit funds at Ueno beyond legal limits.
Analysts suggest that these high-level connections may have shielded Ueno from stricter regulatory oversight. Peña had publicly defended the bank until shortly before its collapse, accusing media outlets of causing panic.
Peña's political downfall was swift. Once a close ally of former President Horacio Cartes, analysts suggest Peña attempted to build his own power base, with Ueno Bank serving as a crucial component. Cartes, who had previously faced US Treasury sanctions for alleged corruption, publicly called for Peña's impeachment after the bank's failure, highlighting the complex political dynamics at play.
