Paraguay President Impeached and Arrested Following Digital Bank Collapse

UPDATE - follow-up to How a bank collapse in Paraguay brought down the country's President | Explained: Paraguay's Senate unanimously removed President Santiago Peña from office and placed him under house arrest following the sudden collapse of Ueno Bank.

Arrest and Charges

Lawmakers voted 44 to one to impeach Peña, stripping him of his immunity and charging him with misconduct, breach of trust, influence peddling, and misappropriation of funds. Prosecutor Silvia Margarita Gonzalez Vester stated he is due to be questioned over the allegations. Ueno Bank's collapse left an estimated three million depositors unable to access their savings and pensions after the central bank seized the institution. The digital bank's demise cut off more than half of Paraguay's population from their accounts.

Political Fallout

Peña had offered to resign on Thursday, posting a video on X stating it was never his intention to betray public trust. Senators rejected his resignation in favor of impeachment and charged him with dereliction of duty, according to Senate president Basilio Núñez. The charges allege Peña had conflicts of interest, manipulated regulatory oversight, diverted pension funds, and participated in a cover-up involving the central bank due to his past links to the bank's owners. Senator Rafael Filizzola called it the biggest corruption scandal in the country's democratic history.

New Leadership

Vice-President Pedro Alliana was sworn in as interim president and will serve until 2028. Both men belong to the Colorado Party, which has dominated Paraguayan politics since the 1940s. Alliana promised that compatriots going through difficult times from the financial collapse will be fully compensated and that he will not abandon affected citizens. Thousands of protesters had taken to the streets in Asunción, leading to clashes with police who used tear gas and water cannons.

Context

Financial regulators step in to seize failing banks to prevent wider economic damage and protect remaining assets, though sudden closures of major digital lenders can instantly freeze daily commerce for millions of users. Impeachment mechanisms exist in constitutional democracies to remove high-ranking officials accused of serious misconduct before their terms naturally expire.