Paraguay's President Pena Impeached Amidst Banking Scandal; Vice President Alliana Sworn In

Pedro Alliana, a 52-year-old conservative politician, has been sworn in as the new president of Paraguay. The transition of power occurred in Asuncion on November 6, following the impeachment of his predecessor, Santiago Pena, due to a banking scandal. Alliana took the oath of office to become the South American nation's 53rd president. He previously served as vice president under Pena since the beginning of Pena's term in 2023.

Pena's presidency ended abruptly after 44 out of 45 senators voted to remove him from office, with one senator abstaining. Pena expressed his departure with gratitude, acknowledging the distress of those awaiting answers, via social media. This impeachment signifies a swift downfall for Pena, a member of the long-dominant Colorado Party.

His removal coincides with the sudden collapse of Ueno Bank, a prominent lending institution. Investigations are underway regarding the bank's regulation by government bodies and potential conflicts of interest involving Pena. Following his impeachment, prosecutors ordered Pena under house arrest on suspicion of breach of trust and other offenses. An arrest warrant was also issued for Carlos Carvallo, the former head of Paraguay's central bank, which is accused of failing in its oversight responsibilities. Carvallo had resigned earlier in the week.

The scandal surfaced on Tuesday when the central bank announced that Ueno Bank had fallen below legal solvency standards, indicating insufficient collateral for its loans and ventures. The bank was seized, and its remaining assets were transferred to other institutions to safeguard them. However, millions of Ueno clients lost immediate access to their accounts and pension payments. Ueno Bank, with approximately three million members, served nearly two-thirds of Paraguay's adult population and had become the country's fifth-largest bank by deposits, fueled by $800 million in public funds.

Prior to its collapse, Ueno reported that over a million Paraguayans had opened their first bank account with the firm. In 2023, Pena was identified as a shareholder in Ueno's parent company, though he stated he had divested his shares in early 2025. After the bank's failure, Pena offered to resign, citing the need to protect democratic institutions. However, Paraguay's Congress rejected his resignation on Thursday and proceeded with impeachment proceedings. Pena's own party, the Colorado Party, supported the impeachment, a party that has largely controlled Paraguayan politics since 1948. Horacio Cartes, a former president and party leader, stated their support for the impeachment to restore the republic's institutions.

Had Pena resigned, he would have retained former presidential rights, including Senate membership and legal protections from prosecution. In Thursday's vote, the Chamber of Deputies impeached Pena 78-0, enabling the Senate to remove him the following day. The Senate declined to open impeachment hearings against the newly inaugurated President Alliana. Alliana began his political career as governor of Neembucu department and served nearly a decade in the Chamber of Deputies, including three years as its president.

Alliana assumes leadership during a significant political and economic crisis for Paraguay. Prosecutors are examining whether Ueno Bank received preferential treatment due to government ties, with approximately $355 million in state pension funds invested in the bank. At least 27 individuals, including lead shareholder Miguel Vazquez, face criminal charges related to attempted fraud, breach of trust, misappropriation of funds, and influence peddling.

Pena has indicated his intention to cooperate with the investigation but did not attend the impeachment hearings, sending his lawyers instead. He stated his desire not to be a source of division or instability, prioritizing the country's welfare over his personal situation. Earlier on Friday, Pena had expressed dissatisfaction with the expedited impeachment hearing, requesting an extension to exercise his constitutional right to a defense.