Paraguayan Senate removes President Santiago Peña, who is placed under house arrest

Senate removes president

All 44 senators present voted to remove Santiago Peña for misconduct in office, making him the second Paraguayan president ousted by impeachment since the country returned to democracy in 1989. The verdict came three days after regulators took over Ueno Bank, locking nearly half of Paraguay’s more than 6 million people out of their savings and bank cards and setting off the country’s worst political crisis in more than a decade.

Prosecutors ordered that Peña be held at his home until he appears before their economic crimes unit Saturday.

“We have confirmed that he is present and has himself available to the authorities for all legal proceedings,” said Silvia Gonzalez, one of the prosecutors leading the case. Breach of trust carries a sentence of up to five years in prison, or up to 10 in serious cases.

The order also calls for the arrest of Carlos Carvallo, who ran the finance company that became Ueno until Pena named him central bank chief in 2023. It was not immediately clear whether Carvallo had been taken into custody.

Ueno Bank collapse and depositors

Overnight, 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.

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

In a separate case against Ueno’s executives, prosecutors have charged 27 people, including Vazquez, with crimes such as breach of trust and attempted fraud. A judge has ordered six former directors, Vazquez among them, held in pretrial detention, and two others under house arrest. Authorities have seized nine luxury cars from Vazquez’s home, along with a yacht and two small planes linked to him, and searched his business group’s offices and executives’ homes in a gated community outside the capital.

Transition and political context

Vice President Pedro Alliana was sworn in as president Friday to serve out the term, which ends in August 2028. Alliana, who also is under investigation in connection with Ueno’s collapse, inherits a government under pressure to return depositors’ money and punish those behind Ueno’s collapse.

In a farewell message before the verdict, Peña expressed hope his departure would spare Paraguay further harm.

“I do not want my presence to be a cause of greater division or instability,” he wrote. “I say goodbye with gratitude, without ignoring the anguish of those who are waiting for answers today.”

Why it matters

The removal of a sitting president by impeachment and the collapse of a major bank have triggered Paraguay’s worst political crisis in more than a decade, with millions of depositors locked out of their savings and the government under pressure to return funds and hold those responsible accountable.

Sources

• ctvnews.ca: Ueno Bank's implosion sends Paraguay into political crisis
• bnnbloomberg.ca: Ueno Bank's implosion sends Paraguay into political crisis

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