Ousted Paraguayan President Santiago Pena Charged in Major Banking Scandal

Former Paraguayan President Santiago Pena has been formally charged following his impeachment and questioning at the attorney general's office in Asunción. The charges stem from his alleged involvement in a significant banking scandal that has left a substantial portion of the country's population unable to access their savings. Pena, who was placed under house arrest on Friday, faces charges of breach of trust and administration for personal gain, as reported by Reuters.

The scandal is centered on Pena's connections to Ueno, a digital bank that experienced rapid growth during his presidency, bolstered by over $800 million in public funds. The bank's subsequent collapse has triggered widespread protests across Paraguay, with citizens demanding access to their funds. Some demonstrations have escalated to violence, including clashes with police.

Pena, who held a stake in Ueno's parent company until March 2025, has denied any wrongdoing, attributing the bank's issues to regulatory matters. Prosecutors allege that Pena used his political influence to channel hundreds of millions of dollars in public funds to Ueno while allegedly shielding it from regulatory oversight amidst growing concerns about its risky lending practices. Evidence cited includes his appointment of Carlos Carvallo, a former executive at the company that later became Ueno, to lead Paraguay's central bank in 2023. Carvallo himself has been charged with breach of trust, producing false public documents, and administration for personal gain.

Further accusations against Pena include allowing Paraguay’s state pension fund to deposit $355 million at Ueno, exceeding legal limits. Pena had offered his resignation on Thursday, but lawmakers rejected it, proceeding with impeachment to prevent him from retaining political immunity. An arrest order was issued shortly after his removal from office. Prosecutors are seeking pretrial detention for both Pena and Carvallo.

The crisis began when regulators took control of Ueno on Tuesday due to solvency concerns, impacting nearly three million people who lost access to their savings and bank cards. While Paraguay's central bank has stated that 1.2 million customers have received partial or full reimbursement of insured deposits, public anger persists. Protesters have also voiced frustration over Pena's successor, Pedro Alliana, who is from the same conservative Colorado Party and is also under investigation related to the bank's collapse. Alliana, sworn in on Friday, has pledged to assist those affected by the scandal.