Paraguayan Senate removes President Santiago Peña after Ueno Bank collapse

Senate removes president

Paraguay's Senate removed President Santiago Peña from office on Friday over accusations linked to the collapse of Ueno Bank. All 44 senators present voted to remove Peña for misconduct in office, making him the second Paraguayan president ousted by impeachment since the end of Gen. Alfredo Stroessner's 35-year dictatorship in 1989. The vote came just three days after regulators seized Ueno Bank, cutting off nearly 3 million customers from their savings and bank cards and setting off a political crisis.

House arrest and criminal charges

Peña was ordered to remain at one of his homes in Asunción until he appears before prosecutors on charges of breach of trust, influence peddling and using public office for personal gain. The most serious charges carry up to 10 years in prison. Lawmakers accuse him of using his political influence to steer hundreds of millions of dollars in public funds into Ueno while regulators overlooked risky insider lending. Peña has denied wrongdoing.

Prosecutors also ordered the arrest of Carlos Carvallo, the former central bank chief Peña appointed. It was not immediately clear whether Carvallo had been taken into custody.

New president sworn in

Vice President Pedro Alliana was sworn in as president on Friday to serve out the term, which ends in August 2028. "The Paraguay we receive today has urgent needs," said Alliana, who is also under investigation in connection with the bank and inherits a government under pressure to return depositors' money and punish those responsible.

Bank collapse and fallout

When regulators seized the bank, Ueno customers could no longer withdraw cash, access their savings or use their cards to buy anything. The digital lender had aggressively courted the poor and unbanked with generous supermarket rebates, and more than 1 million Paraguayans opened their first bank account there, according to Ueno. Even players on the national soccer team, which Ueno sponsored through its run to a World Cup upset of Germany this year, say they can't reach their money.

Some depositors began recovering their money Thursday, starting with those holding up to 10 million guaraníes (about $1,500). Deposits are insured up to about $35,000, which the central bank says covers 97% of Ueno's customers. It calls the collapse an isolated case and insists the broader financial system is safe.

Prosecutors have charged 27 people, including Ueno's controlling shareholder, Miguel Vázquez, with crimes including breach of trust and attempted fraud. A judge has ordered six former directors, Vázquez among them, held in pretrial detention, and two others confined to their homes with electronic monitors. Authorities have seized luxury cars, a yacht and two small planes linked to Vázquez.

Why it matters

The removal of a sitting president by impeachment is a rare event in Paraguay's modern democratic history. The collapse of Ueno Bank has frozen savings for millions of customers, disrupted businesses including a ride-hailing app that employed 3,000 drivers, and trapped public funds earmarked for public works. The new government faces pressure to compensate depositors and prosecute those responsible while stabilizing the financial system.

Sources

• apnews.com: Paraguay’s Santiago Peña arrested after Senate ousts him over Ueno Bank collapse | AP News
• ny1.com: Paraguay's Pedro Alliana sworn in as president after Senate removes Santiago Peña from office
• latimes.com: Paraguay's ousted president faces prosecutors after his removal - Los Angeles Times
• abcnews.com: Peña skips Senate impeachment trial as Paraguay reels from Ueno bank collapse - ABC News
• cbsnews.com: Paraguay's ousted president under house arrest after bank collapse leaves millions locked out of accounts - CBS News
• i24news.tv: Paraguay’s Santiago Peña Arrested After Senate Ousts Him Over Bank Collapse - i24NEWS

This article was drafted with AI assistance and checked against the sources above. Company claims are reported as claims. Cover image is AI-generated.