KVIG Informative

In four days, Paraguay went from a bank intervention to a president removed and jailed. The Senate voted with all 44 senators present, and a judge ordered pretrial detention the next day.

Paraguay’s Senate removed President Santiago Peña on Friday, November 6, through impeachment for poor performance of duties. All 44 senators present voted in favor, according to EFE. Peña had submitted his resignation Thursday after losing his party’s support, but Congress did not accept it and pressed ahead with the trial, Infobae reported. He is the second Paraguayan president removed by impeachment since the end of the dictatorship, according to El Financiero.

The fall began Tuesday, November 3, when the Central Bank ordered the resolution of Ueno Bank, an institution with 2.94 million customers in a country of 6.1 million people, according to EFE. Infobae reported the bank held $850 million in public deposits, including funds from the Social Security Institute. About 32,000 retirees from that fund reported their accounts blocked.

The lawmakers who acted as prosecutors accused Peña of conflicts of interest, manipulating regulatory oversight, diverting pension funds and taking part in an institutional cover-up that involved the Central Bank. Opposition lawmaker Rocío Vallejo told the Senate that losses exceed $1.2 billion and are still growing, and that Peña “knew the bank was going to fall.” Peña denies any wrongdoing, and his defense denounced a violation of due process.

On Friday night, as Pedro Alliana was sworn in as president, police and prosecutors served Peña the arrest order at his home in Asunción. On Saturday, Judge Humberto Otazú, who hears criminal cases on economic crimes, ordered pretrial detention at the Presidential Escort Regiment rather than an ordinary prison. According to EFE, the judge reasoned that a former president handles too much sensitive information. Peña declined to testify.

Prosecutors charged Peña with breach of trust, as instigator, and with self-dealing administration, as author. The indictment alleges he took part in the placement, renewal and retention of large sums from public and pension entities at Ueno, and that he had a prior economic and corporate relationship with the bank’s holding company. Another 27 people are charged, including Miguel Vásquez, one of the bank’s founders.

Alliana, 52 and until then vice president, will serve out the term through August 2028. The Chamber of Deputies had rejected opening an impeachment process against him over the same scandal on Thursday, according to Europa Press, and Euronews reported he is also under investigation over possible ties to the bank. Alliana promised to fully compensate savers, with priority for the least well-off, according to Infobae.

Carlos Carvallo Spalding, who headed the Central Bank until he resigned Tuesday, is also named in the arrest warrant, according to EFE. The Central Bank has begun paying advances to Ueno savers, Infobae reported. Bloomberg Línea reported the dollar in Paraguay is on track for its biggest weekly rise in 28 years. Euronews also noted the break between Peña and his former mentor, Horacio Cartes, leader of the Colorado Party.

A removed president, a former president in pretrial detention and 27 people charged do not by themselves return a single guaraní to Ueno’s 2.94 million customers. The full accounting, how much they recover and when, now sits with Pedro Alliana, who promised to settle it.