Paraguay’s president removed from office, placed under house arrest

Senators, all 44 present, voted to impeach Peña for misconduct, abruptly ending his presidency. The move came just days after regulators seized Ueno Bank, impacting nearly three million customers who lost access to their funds and banking services.

According to a directive to the national police commander, Peña is being held at his residence pending an appearance before the economic crimes and anti-corruption unit. Carlos Carvallo, the former central bank chief appointed by Peña, is also under arrest, although his current whereabouts are unknown.

Lawmakers allege Peña improperly influenced the flow of hundreds of millions of dollars in public funds to Ueno Bank, while regulatory oversight was bypassed. Peña has maintained his innocence.

Pedro Alliana, the former vice president, was sworn in as president on Friday to complete Peña’s term, which extends until August 2028. He now faces the challenge of restoring depositor confidence and investigating the causes of Ueno’s failure.

Alliana, 52, previously served as governor of Ñeembucú province and speaker of the lower house. While a veteran of the Colorado party, he is also under scrutiny, as prosecutors are investigating him, though a motion to impeach him was recently shelved by lawmakers.

Peña’s removal disqualifies him from a lifetime Senate seat, denying him immunity from prosecution. Investigations are also underway involving current and former officials from the central bank and pension funds.

Although Peña submitted his resignation on Thursday, Congress did not accept it. His legal team argued that lawmakers should have approved his departure rather than proceeding with the impeachment trial.

In a statement released prior to the Senate’s decision, Peña expressed hope that his departure would mitigate further instability in Paraguay. “I do not want my presence to be a cause of greater division or instability,” he stated. “My responsibility is to put the country above my personal fate.”

Public demonstrations erupted in Asunción on Friday, with protesters demanding the return of their frozen savings and accountability for Ueno’s collapse. “This was an enormous betrayal of trust,” said Yinal López, an employee of the state electricity company whose pension fund was invested in Ueno.

The rapid unraveling of the situation has plunged Paraguay into its most severe political crisis in over a decade. The bank’s seizure occurred Tuesday, followed by Peña’s resignation offer Thursday and his subsequent removal Friday, marked by a series of resignations from his administration, including his interior minister, chief of staff, legal and political advisors.

Peña’s rise to power was largely orchestrated by Horacio Cartes, a powerful tobacco magnate and leader of the Colorado party. While Peña initially served as Cartes’ finance minister and benefited from his support for the presidency, he later attempted to establish his own political base, with Ueno Bank becoming a central element.

“It’s like a Shakespearean drama. He tried to displace his mentor, his political patron,” commented Miguel Carter, director of DEMOS, a Paraguayan research center.

Cartes retaliated, triggering a Senate inquiry into Ueno’s lending practices. With the bank’s collapse, Peña’s influence vanished, leaving him vulnerable to Cartes’ public call for his removal.