Ousted Paraguay President charged and jailed after bank collapse sparks major political crisis

Paraguayan prosecutors charged recently deposed former President Santiago Peña with breach of trust and administration for personal gain following the sudden collapse of Ueno Bank. Chief prosecutor for corruption and economic crimes Nancy Salomón announced the charges on Saturday after regulators intervened in the bank on November 3 amid a severe solvency crisis. Lawmakers accused Mr. Peña of using his political influence to steer public funds into Ueno while regulators ignored risky insider lending. Mr. Peña has denied any wrongdoing.

Impeachment And Arrest

The Senate removed Mr. Peña from office on Friday night in a unanimous vote after rejecting his resignation offer, choosing to press ahead with impeachment to strip him of his presidential immunity. Judge Humberto Otazu ordered that Mr. Peña be held at a military base during the anti-corruption investigation, where he could face up to 20 years in prison if found guilty. Vice-President Pedro Alliana was swiftly sworn in as the new interim leader and began forming a new Cabinet while promising full compensation for affected citizens.

Protests And Fallout

The bank failure left millions of customers unable to access their savings and pensions, triggering massive street protests in the capital Asuncion where crowds clashed with police firing rubber bullets, tear gas, and water cannons. Paraguay's largest teachers' union announced plans for an indefinite national strike starting Monday to demand protection for public pension funds. Meanwhile, the Central Bank reported that 1.2 million Ueno customers have already received partial or full reimbursement, with state insurance covering deposits of up to $37,000.

Context

Paraguay returned to democratic rule in 1989 and has since been governed mostly by the conservative Colorado Party, of which Mr. Peña was a member. Financial regulators step in to take over troubled commercial banks during solvency crises to protect depositors and maintain stability in the wider banking system. Major political scandals involving high-ranking state officials often spark widespread public outrage and large-scale street demonstrations over government accountability and corruption.