Paraguay’s president removed and detained as Ueno Bank scandal deepens

Paraguay has entered a new political crisis after Congress removed President Santiago Peña from office and prosecutors sought his arrest over an expanding scandal surrounding the collapse of Ueno Bank. Peña was reportedly detained at his home on Friday, according to Al Jazeera, while local media cited by NDTV also reported his arrest shortly after the impeachment. Vice-president Pedro Alliana was sworn in later the same day as Paraguay’s 53rd president.

Alliana, 52, had served as Peña’s deputy since the start of the president’s term in 2023. He previously governed the department of Ñeembucú and spent almost a decade in the Chamber of Deputies, including three years as its president. The Senate voted 44-0 to remove Peña, with one senator abstaining in the 45-member chamber.

The vote followed a 78-0 decision in the Chamber of Deputies on Thursday to impeach him. Congress rejected Peña’s offer to resign and instead proceeded with the impeachment process. His lawyers represented him at the Senate hearing, while Peña asked for more time to exercise what he called his constitutional right to a defence.

Peña said on social media that he was leaving office with gratitude while acknowledging the anguish of people awaiting answers. In another statement, he said he did not want his presence at the hearing to deepen division or instability and that the country should take priority over his personal fate. He has indicated that he will cooperate with the investigation.

The crisis followed the central bank’s announcement on Tuesday that Ueno had fallen below legal solvency requirements. Regulators seized the lender and transferred its remaining assets to other banks, but millions of customers reportedly lost access to accounts and pension payments. Al Jazeera said Ueno had about three million customers, nearly two-thirds of Paraguay’s adults, and had become the country’s fifth-largest bank by deposits.

The report said about $355m in state pension funds had been invested in Ueno, while roughly $800m in public money had helped fuel its growth. Ueno consolidated under its current brand in 2023 and said more than one million Paraguayans had opened their first bank account with the company. Prosecutors are examining whether the bank received protection because of connections to government figures.

Peña was identified as a shareholder of Ueno’s parent company in 2023, although he said he sold his shares in early 2025. Prosecutors announced they were seeking his arrest on suspicion of breaching the public trust and other crimes. An arrest warrant was also issued for Carlos Carvallo, the former central-bank chief, who resigned earlier in the week and has been accused of failing to oversee the lender properly.

At least 27 people, including lead shareholder Miguel Vazquez, face criminal charges linked to the scandal. The allegations under investigation include attempted fraud, breach of trust, misappropriation of funds and influence peddling. Peña’s Colorado Party supported his removal.

Former president and party leader Horacio Cartes said impeachment was necessary to restore the republic’s institutions. Had Peña resigned, Al Jazeera reported, he would have retained eligibility for the Senate and legal protections available to former presidents.