Ousted Paraguayan president placed under house arrest after bank collapse

ASUNCIÓN, Paraguay (AP)

Ousted Paraguayan President Santiago Peña was placed under house arrest 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.

All 44 senators present voted to remove Peña for misconduct in office, making him the second Paraguayan president ousted by impeachment since the country returned to democracy in 1989. The verdict came three days after regulators took over Ueno Bank, locking nearly half of Paraguay’s more than six million people out of their savings and bank cards and setting off the country’s worst political crisis in more than a decade.

Prosecutors ordered that Peña be held at his home until he appears before their economic crimes unit Saturday.

“We have confirmed that he is present and has [made] himself available to the authorities for all legal proceedings,” said Silvia González, one of the prosecutors leading the case. Breach of trust carries a sentence of up to five years in prison, or up to 10 in serious cases.

Arrest of former central bank chief also ordered

The order also calls for the arrest of Carlos Carvallo, who ran the finance company that became Ueno until Peña named him central bank chief in 2023. It was not immediately clear whether Carvallo had been taken into custody.

Lawmakers accused Peña of using his political influence to steer hundreds of millions of dollars in public funds into Ueno while regulators overlooked risky insider lending. Peña has denied wrongdoing.

Vice President Pedro Alliana was sworn in as president Friday to serve out the term, which ends in August 2028. Alliana, who also is under investigation in connection with Ueno’s collapse, inherits a government under pressure to return depositors’ money and punish those behind Ueno’s collapse.

In a farewell message before the verdict, Peña expressed hope his departure would spare Paraguay further harm.

“I do not want my presence to be a cause of greater division or instability,” he wrote. “I say goodbye with gratitude, without ignoring the anguish of those who are waiting for answers today.”

Public outrage has become more thunderous by the day. As senators deliberated Friday, crowds of protesters demanding their frozen savings back and accountability for Ueno’s failure marched through downtown Asunción chanting, “Santi Peña to Tacumbú!” — a reference to the capital’s main prison, where Ueno’s founder and former CEO, Miguel Vázquez, is now being held.

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