Former Paraguayan president Santiago Pena has been arrested and his home searched as part of an investigation into the collapse of Ueno Bank, which froze the savings of nearly three million customers and triggered the country’s deepest economic and political crisis in years.
Pena was removed from office on Friday after Paraguay’s Senate unanimously rejected his attempt to resign. Vice President Pedro Alliana has since been sworn in and is expected to serve the remainder of the presidential term until August 2028.
A judge ordered Pena to remain in pre-trial detention at a military facility, saying he needed to be kept in Paraguay while the investigation continued. His lawyer, Ricardo Preda, said the former president would plead not guilty and co-operate with investigators.
Police searched Pena’s mansion outside Asuncion on Sunday. Prosecutors are examining allegations that he used his political influence to direct public funds towards Ueno despite having financial ties to the bank’s parent company.
What is Santiago Pena accused of?
Prosecutors have charged Pena with breach of trust and administration for personal gain. Each offence could carry a prison sentence of up to 10 years.
Pena held shares in Ueno’s parent company until March 2025. Investigators allege that, while president, he influenced government agencies and state-owned bodies to deposit substantial sums with the lender despite concerns about its financial health.
By June, Ueno held about 850 million US dollars in public funds, including money belonging to Paraguay’s state pension system. Regulatory reports had also raised concerns about excessive lending to certain companies and loans to businesses linked to the bank’s executives.
According to the indictment, Pena took two loans from Ueno worth about 500,000 US dollars in 2024 to build his mansion. His monthly mortgage payment was reportedly 38,000 US dollars, six times his presidential salary.
Pena has denied wrongdoing and said the bank’s difficulties were a regulatory matter. Mr Preda said: “What sets a serious country apart is not that its banks don’t fail, but how it responds. If there is one thing that undermines confidence in the financial system, it is attempting to oust the president without evidence.”
The case has also drawn in Carlos Carvallo, a former head of Ueno and former chief of the Central Bank of Paraguay. He has been charged with breach of trust, producing false public documents and administration for personal gain, and has been ordered into pre-trial detention.
Ueno Bank collapse sparks protests
The Central Bank intervened on Tuesday after finding that Ueno had breached minimum solvency requirements. The lender had made 146 million US dollars in questionable loans to companies linked to its owner, while corrected accounts showed that its capital had fallen below half the legal minimum.
The collapse left millions struggling to access savings, wages and pension payments. The resulting protests have brought thousands onto the streets, with demonstrators demanding access to their money and accountability from political leaders.
Some demonstrations have turned violent, with protesters clashing with police. Opposition senator Rafael Filizzola described the crisis as “the biggest corruption scandal in our democratic history”.
Alliana said on Sunday that the government had refunded 1.2 million Ueno customers whose funds were frozen. About 158 million US dollars had been paid out, he said, with further reimbursements expected during the week.
