Paraguay’s President Pena impeached over Ueno banking crisis, placed under house arrest

Paraguayan President Santiago Pena was placed under house arrest on Friday on suspicion of breach of trust, shortly after the Senate removed him from office over the collapse of a major bank tied to his government.

Pena had offered his resignation over the disaster, but lawmakers pressed ahead with impeachment proceedings that would strip him of immunity granted to former presidents.

He did not attend the trial in the Senate despite earlier pledging to defend himself.

The president “is declared guilty of poor performance in his duties”, Senate President Basilio Nunez declared after a vote of 44 in favour of impeachment and one absence out of 45 senators.

Around 3 million people have been unable to access their money since the Central Bank took control of Ueno Bank on Tuesday and froze its accounts over concerns about its solvency.

A Central Bank official said that advance payments to some affected depositors had begun on Thursday afternoon.

The bank’s demise brought thousands of people onto the streets demanding repercussions for US-backed Pena, who until last year had a stake in Grupo Vazquez, which controlled Ueno.

Lawmakers from Pena’s own party backed his impeachment.

Pena, 47, apologised during an address to the nation on Thursday. “It was never my intention to betray the trust you placed in me,” he said in a video statement.

Around 250 people were gathered outside Congress awaiting the outcome of the trial, one of them waving a sign that read: “Pena in prison.”

On Thursday, thousands protested for a third consecutive night in Asuncion and other cities to demand the return of their money.

“Santiago Pena has hurt so many Paraguayans, so many families, business owners and small businesspeople, including my own son, who had savings in Ueno Bank,” Cynthia Farina said at a protest in the capital that police dispersed with tear gas and water cannons.

Advance payments to an unspecified number of affected depositors began on Thursday afternoon, Jose Maciel of the Central Bank’s Deposit Guarantee Fund said.

The first phase of aid deposits, up to around US$1,600, will go to clients who do not have loans and have an account at another bank or institution in Paraguay to receive the funds, Maciel said.

The next beneficiaries “will be announced progressively over the course of the payment process”, he said.

Ueno began as a small fintech company with a digital-first model that attracted low-income customers, rapidly becoming a major bank that handled state pensions and the accounts of several state entities.

The opposition accuses Pena of a conflict of interest, which he denies.

The Attorney General said it was investigating him for “acts related to the supervision and resolution of Ueno Bank S.A. and the placement of public funds in said entity”.

The US embassy in Paraguay expressed “its solidarity with the Paraguayan people” on Friday, without mentioning the president.

Ueno’s downfall shocked the South American country, which is generally considered economically and politically stable.

By impeaching him rather than letting him resign, lawmakers have prevented Pena from becoming a senator for life and enjoying immunity from prosecution, constitutional experts and lawmakers said.

Paraguayan senators on Friday appointed Vice-President Pedro Alliana to lead the country. Alliana, who will serve as president until 2028, promised not to “abandon” the millions of Ueno Bank depositors who lost access to their money after its takeover.

The scandal has claimed the heads of Central Bank President Carlos Carvallo and Interior Minister Enrique Riera.

Eight Ueno executives have been arrested.

Prosecutors on Friday raided the offices of technology company ITTI, which is part of Grupo Vazquez, confiscating hard drives, computers and other items.

“We found a large amount of documents that will be useful for the investigation,” prosecutor Francisco Cabrera told reporters.

Nearby Argentina felt the impact of the crisis as some 1,000 ITTI employees were suspended for 30 days without pay.

Football also took a hit.

Ueno Bank sponsors several first division teams as well as the national team.

“We were also victims of this situation,” members of the national team said in a social media statement.