Paraguayan President Santiago Peña was removed from office and taken into house arrest on Friday, following a Senate vote to impeach him over the collapse of Ueno Bank, which left nearly half of the country's 6 million people unable to access their savings. All 44 senators present voted to remove Peña for misconduct in office, marking the second time a Paraguayan president has been ousted by impeachment since the end of General Alfredo Stroessner's 35-year dictatorship in 1989.
The crisis began when regulators seized Ueno Bank just three days earlier, sending shockwaves through the financial system and setting off the country's worst political crisis in over a decade. Peña was ordered to remain at one of his homes in Asunción until he appears before prosecutors on Saturday morning 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 Peña 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, but prosecutors also ordered the arrest of Carlos Carvallo, who ran the finance company that became Ueno until Peña named him central bank chief in 2023. Vice President Pedro Alliana was sworn in as president to serve out the term, which ends in August 2028.
The collapse of Ueno Bank has had far-reaching consequences, with over 1 million Paraguayans losing access to their savings and a ride-hailing app shutting down, leaving 3,000 drivers without work. The state power company says $21 million in loans from the Inter-American Development Bank and Taiwan, earmarked for public works, is trapped at the bank. Paraguay's bonds have posted significant losses, and the guaraní has slid against the dollar.
Some depositors began recovering their money on 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. The central bank 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 with crimes such as breach of trust and attempted fraud.
The impeachment charges cite Peña's stake in Ueno's holding company, which he divested under pressure last year, and his appointment of Carvallo to run the central bank that regulated it. Analysts say high-level connections helped shield Ueno from regulatory scrutiny even as concerns about its finances grew. Peña's fall from power came at dizzying speed, from a fêted Washington ally to prisoner in his own home.
Key points
- Peña's impeachment marks the second time a Paraguayan president has been ousted by impeachment since the end of General Alfredo Stroessner's 35-year dictatorship in 1989.
- The collapse of Ueno Bank has left nearly half of Paraguay's 6 million people unable to access their savings.
- Peña faces charges of breach of trust, influence peddling, and using public office for personal gain, which carry up to 10 years in prison.
