Paraguay charges ousted President Peña over Ueno Bank collapse

Asunción — Paraguayan prosecutors have charged former President Santiago Peña over the collapse of Ueno Bank, a day after the Senate removed him from office in a unanimous vote. A judge ordered him held at a military base while the investigation proceeds, and prosecutors say he could face up to 20 years in prison if convicted on both counts.

Peña, who testified before prosecutors on Saturday, is accused of breach of trust, as instigator, and self-serving administration, as perpetrator, MercoPress reported. Former Central Bank president Carlos Carvallo — Ueno's chief executive before Peña appointed him to run the Central Bank — faces charges of breach of trust, producing false public documents and self-serving administration. He is already in custody. Peña denies any wrongdoing.

The case turns on where the money went. According to prosecutors, between 2023 and 2026 Ueno took large deposits from public bodies and the pension system while granting allegedly irregular loans to companies linked to its owners, the Vázquez Group. Lawmakers accuse Peña of using his influence to steer hundreds of millions of dollars in public funds into the bank while regulators looked past the insider lending. When regulators intervened last Tuesday, accounts belonging to nearly three million customers were frozen — in a country of six million people.

The payouts are now the government's most urgent bill. The Central Bank said 1.2 million Ueno customers had received partial or full reimbursement by Saturday, according to The Hindu; under Paraguayan law, deposits of up to $37,000 are insured. Customers with balances of up to about US$1,500 have begun recovering their money, with payouts later to rise to a maximum of about US$19,300. Banks were due to open exceptionally on Sunday so account holders could complete the paperwork.

Peña's fall — the country's biggest political crisis in a decade, after he was removed and replaced by Vice-President Pedro Alliana — has not calmed the streets. Protesters threw stones at police and tore down fences near his residence before he was moved overnight to the barracks of the Presidential Escort Regiment, the same barracks where dictator Alfredo Stroessner took refuge during the 1989 coup that toppled him. The opposition is demanding Alliana's removal too, plus early elections in early 2027, accusing the new president of failing to act in time.

Alliana moved fast to fill his cabinet, naming Ariel Martínez, a veteran of former President Horacio Cartes's government, as interior minister and Colorado Party chief Juan Carlos Baruja as public works minister. He has suspended foreign travel and promised every affected customer will recover their savings. The next test comes quickly: Sunday's exceptional bank opening, and the pace of reimbursements beyond the 1.2 million already paid.