Paraguay President Santiago Peña impeached and arrested after bank collapse

The Paraguayan Senate unanimously voted to remove President Santiago Peña from office on Friday following the collapse of Ueno Bank, which froze the savings of millions. Vice President Pedro Alliana has been sworn in to lead the country until 2028 as Peña faces criminal charges.

The Senate voted 44-0 to impeach Peña for misconduct, making him the second president ousted this way since the end of the Stroessner dictatorship in 1989. According to the BBC, lawmakers rejected Peña’s offer to resign on Thursday, choosing instead to strip him of his political immunity through impeachment. While he was initially placed under house arrest in Asunción, Al Jazeera reports that Peña was later moved to a military base for protection.

The political crisis was triggered by the failure of Ueno Bank, a digital lender with ties to Peña’s private interests. CBS News reported that the bank’s seizure three days ago locked nearly half of Paraguay’s adult population out of their accounts. Lawmakers allege Peña used his office to steer hundreds of millions of dollars in public funds into the bank while regulators overlooked risky lending practices. According to France 24 and CBS News, the most serious charges against him could carry up to 10 years in prison.

New President Pedro Alliana, a 52-year-old former national basketball player and leader of the Colorado Party, vowed to compensate those affected by the financial meltdown. The fallout has been widespread, with CBS News reporting that a ride-hailing app was forced to shut down and millions in international loans for public works remain trapped. While the central bank has begun returning funds to some small depositors, an estimated three million people still cannot access their money.

Peña is scheduled for questioning on Saturday regarding charges of breach of trust, influence peddling, and misappropriation of funds. Although he denied any wrongdoing in a video statement, protesters gathered outside his home on Friday night to ensure he did not flee. Euronews noted that Alliana, who previously served as vice president, had publicly expressed his presidential ambitions a year after taking office.

Background

The crisis began when regulators seized government-linked Ueno Bank, which had aggressively courted unbanked citizens and sponsored the national soccer team. The collapse triggered mass protests in Asunción, where police used tear gas and water cannons against crowds demanding access to their frozen savings.