Paraguay’s Santiago Peña removed by Senate and detained as Pedro Alliana sworn in as president

Paraguay’s former president Santiago Peña arrived at the headquarters of the Public Prosecutor’s Office in Asunción at about 11.15am on Saturday local time (10.15pm AWST) to be questioned over the collapse of Ueno Bank, a day after the Senate removed him from office. Images from his arrival showed him without handcuffs.

His questioning had been set for the prosecutors’ economic crimes and anti-corruption unit at 11.30am, but the Public Prosecutor’s Office moved it to its headquarters for security reasons, keeping the same time.

On Saturday afternoon local time (early Sunday AWST), prosecutors announced they had charged Peña with breach of trust, as an instigator, and administration for personal benefit. They also charged the former central bank president, Carlos Carvallo, and asked a criminal guarantees court to hold both men in pre-trial detention and freeze their assets. The judge has not yet ruled.

Peña spent Friday night at the Presidential Escort Regiment, a military unit in Asunción. Prosecutors had ordered him detained at his home on Friday, but he was moved late that night for his security after large crowds gathered in response to his detention.

His vice president, Pedro Alliana, has been sworn in as the country’s new head of state.

The Senate voted 44 to nil, with one of its 45 members absent, to remove Peña after a fast-tracked impeachment trial over the collapse of Ueno Bank, a digital lender with about three million customers. Senate President Basilio Núñez declared Peña guilty of poor performance of his duties, the ground for removal under Paraguay’s constitution.

What is Peña accused of?

Prosecutors have charged Peña with breach of trust and administration for personal benefit, both linked to the Ueno Bank collapse. These are charges, not findings; Peña has not been convicted of any offence, and he has rejected the accusations.

In the impeachment, lawmakers pointed to Peña’s past ties to the group that controlled Ueno Bank, which he formally left last year under pressure, and accused him of conflicts of interest. They also raised the appointment of a former Ueno executive to lead the central bank and large deposits of state pension fund money in the bank.

Peña’s lawyers, Ricardo Preda and Adolfo Ferreiro, argued the impeachment was invalid and that Congress should have accepted his resignation instead. His defence said his right to due process was breached after the Senate refused a request for more time to prepare. Peña did not attend the Senate hearing.

Why did Congress refuse his resignation?

Peña offered to resign on Thursday after losing the support of his own Colorado Party, but Congress did not formally accept it and pressed on with the trial.

Opposition lawmakers wanted him removed rather than allowed to resign. Former presidents who leave office normally are entitled to a lifetime seat in the Senate, which carries parliamentary immunity. Removal through impeachment takes that seat, and its protection, away.

Who is Pedro Alliana?

Alliana, 52, was elected vice president on the Colorado Party ticket with Peña in April 2023 and took office in August that year. He will serve the nearly two years left in the five-year term.

A former governor of the southern department of Ñeembucú, he spent a decade in the Chamber of Deputies, twice serving as its president, and led the Colorado Party from 2015. He is a close ally of former president Horacio Cartes, which is expected to matter as he forms his government.

His immediate task is the banking crisis and the anger of depositors who cannot reach their money.

What happened to Ueno Bank?

Paraguay’s central bank took control of Ueno Bank before dawn on Tuesday 3 November, after finding the bank had fallen far below the minimum solvency level it is required to hold. The bank’s doors have been closed since.

Ueno had grown quickly to become one of the country’s biggest lenders by deposits, with about three million customers, and held hundreds of millions of US dollars in public money, including funds from the state social security institute that pays pensions.

The freeze has left a large share of Paraguay’s adults without access to their savings. Depositors have protested outside Congress and the central bank, demanding accountability and faster repayment. The central bank has said the collapse is an isolated case, that the financial system is sound, and has begun returning deposits.

Why does it matter beyond Paraguay?

The removal of a sitting president over a bank failure is rare. Paraguay is a member of the Mercosur trade bloc and one of the few countries that still recognise Taiwan, and Alliana is expected to keep the country’s existing foreign ties, including with the United States, Israel and Taiwan, and its market-friendly economic policy.

VNN will update this story as more is confirmed.