Paraguay Ousts President: Senate Votes to Remove Santiago Peña Over Bank Collapse

Paraguay’s Senate voted 39 to 3 on Friday to remove President Santiago Peña from office, ending his tenure after a rapid collapse of a major digital bank tied to his business interests. The vote convicted Peña of misconduct, a decision that forces Vice President Pedro Alliana to assume the presidency. By convicting rather than accepting a resignation, senators stripped Peña of the lifetime Senate seat and immunity granted to former presidents, leaving him vulnerable to prosecution.

Peña did not appear in person for the trial, despite promising to defend himself. Lawmakers rejected his request for an additional 72 hours to prepare, citing a late summons that included roughly 300 pages of accusations. His lawyers argued the Senate should have accepted his resignation submitted Thursday, but opposition lawmakers insisted on impeachment to hold him accountable. Sen. Yolanda Paredes told reporters, “He must go, but not home. He must go to a maximum-security prison.”

The crisis stemmed from the seizure of Ueno Bank by regulators before dawn on Tuesday. The central bank’s move locked nearly 3 million customers out of their savings and triggered mass demonstrations across the country. Ueno had grown from a little-known lender to the fifth-largest bank in Paraguay in just a few years, fueled by more than $800 million in public deposits during Peña’s presidency. The impeachment charges cite Peña’s financial stake in Ueno’s holding company and his appointment of a former Ueno executive to head the central bank.

Lawmakers accuse Peña of allowing the state pension fund to deposit $355 million at the bank, a sum that exceeded legal limits. Prosecutors opened three criminal investigations Thursday targeting Peña, Alliana, and current and former central bank and pension fund officials. The charges include breach of trust and attempted fraud. Twenty-seven people have been charged in connection with the collapse, including Ueno’s controlling shareholder, Miguel Vázquez. Six bank directors are currently in pretrial detention.

The political fallout has been swift. Peña’s interior minister, chief of staff, legal adviser, and political adviser all quit between Thursday and Friday. The reversal was driven by former President Horacio Cartes, Peña’s mentor and the head of the Colorado Party. Cartes publicly called for Peña’s ouster after senators loyal to him demanded answers about Ueno’s risky insider lending. Miguel Carter, director of the research center DEMOS, described the situation as a Shakespearean drama in which a protégé tried to displace his patron on fragile grounds.

Public anger has intensified as depositors struggle to access funds. Some customers began recovering money Thursday, with those holding up to 10 million guaraníes, or about $1,600, being paid first. The central bank states that deposits are insured up to about $37,000, covering nearly all customers. Authorities have seized nine luxury cars, a yacht, and small planes linked to Vázquez from a gated community outside the capital. Thousands of protesters have clashed with police using rubber bullets and pepper spray.

Yinal López, a worker at the state electricity company whose pension fund had money at Ueno, called the event an enormous betrayal of trust. She said the president used public money to do whatever he wanted. The teachers’ union, which has more than 40,000 members, plans to begin an indefinite national strike Monday to press for protection of public pension funds. The central bank calls the collapse an isolated case and insists the broader financial system remains safe.

Peña, a former International Monetary Fund economist, had relied on Cartes for his rapid political ascent. Cartes had twice backed Peña for president over rival factions. The current crisis marks Paraguay’s deepest political turmoil in more than a decade. Alliana is set to take the oath of office as the new president.