ASUNCIÓN, Paraguay — Paraguay’s Senate voted unanimously Friday to remove President Santiago Peña from office and authorities placed him under house arrest, capping a swift political unraveling triggered by the catastrophic collapse of a government-linked digital lender.
All 44 senators present in the 45-seat chamber voted to convict Peña of misconduct in office, BBC News and the New York Post reported. The decision stripped the former leader of the lifetime Senate seat and legal immunity normally reserved for former Paraguayan heads of state, clearing prosecutors to detain him immediately at his Asunción residence.
Fallout from bank seizure
Peña is the second president to face impeachment and removal in Paraguay since the end of Gen. Alfredo Stroessner’s military dictatorship in 1989, CBS News reported. The Senate’s action followed Tuesday’s regulatory takeover of Ueno Bank, an institution that held accounts for nearly three million customers, representing roughly 60 percent of the nation’s adult population, according to DW.com.
When central bank authorities initiated a resolution process because Ueno’s solvency ratio plummeted below half the legal minimum, digital transfers, payment cards and mobile applications abruptly halted. Millions of savers found themselves unable to purchase necessities or withdraw funds. State entities were also hit: the Social Security Institute held $355 million at Ueno, while the state electricity provider had $21 million in foreign loans frozen, according to media reports.
Following the Senate’s vote, Vice President Pedro Alliana took the oath of office Friday to complete Peña’s term, which runs through August 2028. Alliana, whom the New York Post reported is also under investigation related to the bank, pledged that depositors “will be fully compensated,” according to BBC News.
Charges and conflicts of interest
Police officers quickly formed a perimeter around Peña’s house Friday night as crowds rallied outside. Demonstrators demanded accountability, with some chanting calls to send the former president to Tacumbú prison, where Ueno founder Miguel Vázquez was placed into pretrial detention along with five other executives.
Prosecutors ordered Peña questioned Saturday morning on allegations that include breach of trust, influence peddling and using his public office for improper personal gain, according to reports by CBS News and BBC News. The most severe counts carry sentences of up to 10 years in prison. Peña has denied all wrongdoing.
Lawmakers accused Peña of using state authority to steer hundreds of millions of public dollars into Ueno while financial regulators softened scrutiny. Peña owned shares in the bank’s parent holding company until April 2025, and legislative documents cited two personal loans he received from the lender, DW.com reported. Critics also cited his 2023 appointment of central bank head Carlos Carvallo, who previously ran Ueno’s precursor firm. Carvallo also faces an arrest order, according to reports.
Peña had submitted his resignation Thursday afternoon after losing political backing from Senate President Basilio Núñez and former President Horacio Cartes, the influential leader of the ruling Colorado Party. Senators rejected simply accepting the resignation, opting instead to convict him to strip his immunity.
What happens next
Central bank officials maintain that Paraguayan bank deposits are insured up to about $35,000, which covers 97 percent of Ueno’s customer base, CBS News reported. Regulators began reimbursing smaller balances on Thursday, though long lines and widespread protests continued across Asunción.
Peña is scheduled to appear before prosecutors Saturday as investigators weigh formal charges. Meanwhile, prosecutors have brought criminal allegations against 27 bank directors and associated business figures in connection with the collapse.
