Prosecutors in Paraguay ordered three criminal investigations tied to the collapse of Ueno Bank, launching impeachment proceedings that could end with President Santiago Peña removed from office.
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Paraguay President Santiago Peña is under criminal investigation following the collapse of Ueno Bank, prosecutors announced as the Senate proceeds with an impeachment trial that could remove him from office on Friday.
In a rapid sequence of events Thursday, Peña offered his resignation via X, and the lower house voted unanimously to impeach him. Both houses declined to accept his resignation, and the Senate decided to move forward with a trial that could result in his removal.
Prosecutor General Emiliano Rolón Fernández ordered three criminal investigations into the Ueno Bank crisis, including allegations involving Peña and other current and former government officials. The prosecutor’s office said the probes will examine oversight of the bank, authorities’ handling of its failure, and the placement of public funds in the lender.
Peña said he would cooperate with investigators and posted, “Whatever the outcome of this process, I will act with responsibility and respect for the Constitution.” Earlier Thursday, he said in a video on X that he was stepping down for “the stability of our country, social peace and the need to preserve our democratic institutions.”
Paraguay’s Vice President Pedro Alliana would replace Peña if he is removed from office.
The crisis left depositors, retirees and workers scrambling to recover frozen savings and unpaid wages. Prosecutors have charged 27 bank officials and associates with breach of trust and attempted fraud.
A judge ordered six Ueno executives jailed pending trial, including founder Miguel Vázquez and bank president Juan Manuel Gustale, while two others were placed under house arrest. Gustale’s lawyer, José Fernández Zacur, argued that senior executives had relied on staff for lending decisions and said, “The president or board is not responsible for deciding who receives a particular loan.”
Ueno Bank’s collapse followed regulators finding problems related to its lending and accounting. The central bank said Ueno had provided poorly documented loans to companies linked to its owners and wrongly counted certain expenses as assets, driving its capital below half the legal minimum. The lender was seized Tuesday, with its app and services going dark and branches locking their doors.
In response to the fallout, Paraguay’s Congress rushed through a law establishing a state guarantee fund to repay stranded depositors within five business days starting Thursday, with small accounts of up to about $1,600. The fund is described as insuring up to about $36,000 per customer, which the central bank said would cover the full balances of an estimated 97% of clients.
The labour ministry said the collapse has affected about 7,000 direct and indirect jobs at the bank and related businesses. Protesters marched to Congress on Wednesday and gathered outside the Labor Ministry on Thursday, including employees who demanded severance and unpaid wages even after Peña’s resignation attempt. One protester, Adolfo Villalba, said, “Let the impeachment process take place and let him lose his immunity.”
Prosecutors’ actions are tied to the Ueno crisis that, over about five years, expanded quickly from an obscure finance company into a major digital lender, with claims that it became a household name across Paraguay. Ueno had reportedly grown to hold roughly $800 million in public deposits as of last month, including money from the state pension and health fund and the operators of Paraguay’s hydroelectric dams.
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