Paraguayan President Santiago Peña was impeached and placed under house arrest on Friday after the collapse of Ueno Bank, a digital lender with ties to his administration. The move followed a unanimous Senate vote to remove him from office, citing charges of misconduct, breach of trust, and conflicts of interest.
Peña, who had offered his resignation the previous day, was arrested minutes after the impeachment vote. Prosecutors allege he used his political influence to benefit Ueno Bank, which served 3 million customers—over half of Paraguay’s adult population—before regulators intervened. The bank’s collapse has left depositors unable to access savings or pensions, triggering widespread protests in Asunción.
Vice President Pedro Alliana was sworn in as interim president, pledging to compensate affected depositors. Alliana will serve until the end of Peña’s term in August 2028.
Immediate Action & Core Facts
Paraguay’s Senate voted 44-0 to impeach Peña on Friday, stripping him of immunity and ordering his arrest. The impeachment followed the central bank’s seizure of Ueno Bank, which regulators accused of risky lending practices and mismanagement. Peña, who held shares in Ueno’s holding company until 2023, denies wrongdoing and called the proceedings a regulatory issue.
Prosecutors have charged Peña with breach of trust, influence peddling, and misappropriation of funds, with potential penalties of up to 10 years in prison. He is scheduled to appear before prosecutors on Saturday for questioning. Eight former Ueno executives have already been detained, and an arrest warrant was issued for Carlos Carvallo, the former central bank chief who previously led Ueno.
Deeper Dive & Context
The Bank’s Collapse and Public Impact
Ueno Bank, launched in 2021, rapidly expanded by offering cash-back incentives on groceries and targeting unbanked populations. Over 1 million Paraguayans opened their first bank accounts through Ueno, which also sponsored the national soccer team. The bank’s sudden collapse has left depositors unable to withdraw funds, with many relying on the institution for pensions and daily transactions.
Regulators intervened after reports of insider lending and risky financial practices, including allegations that public funds were diverted into Ueno. The crisis has deepened political instability, with protests erupting in Asunción demanding accountability. A ride-hailing app dependent on Ueno’s payment system also suspended operations, affecting thousands of drivers.
Peña’s Alleged Ties to Ueno
Peña’s connection to Ueno has been a focal point of the impeachment. As a shareholder in the bank’s holding company until last year, prosecutors allege he manipulated regulatory oversight to benefit the institution. The central bank has denied conflicts of interest, stating Carvallo recused himself from decisions involving Ueno.
Peña’s defenders argue the impeachment is politically motivated, pointing to his pro-market reforms and efforts to modernize Paraguay’s economy. His resignation offer was rejected by lawmakers, who proceeded with impeachment to ensure his accountability in ordinary courts.
Alliana’s Interim Leadership
Alliana, sworn in as interim president, has pledged to compensate depositors and stabilize the financial system. His administration faces the challenge of restoring public trust while managing the fallout from Ueno’s collapse. The crisis marks the second presidential impeachment in Paraguay since the end of the Stroessner dictatorship in 1989.
Prosecutors continue their investigation, with additional arrests expected as the case unfolds. The impeachment and arrest have set a precedent for holding high-ranking officials accountable in Paraguay’s evolving political landscape.