Ousted Paraguayan president Santiago Peña put under house arrest after Senate impeachment vote

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Ousted Paraguayan President Santiago Peña was placed under house arrest on Friday after the Senate removed him from office over misconduct charges tied to the collapse of a government-linked bank.

All 44 senators present voted to remove Peña, making him the second Paraguayan president ousted by impeachment since the end of Gen. Alfredo Stroessner’s 35-year dictatorship in 1989. The Senate vote followed regulators’ seizure of Ueno Bank three days earlier, which left depositors unable to access savings and triggered the country’s worst political crisis in more than a decade.

Peña is ordered to remain at one of his homes in Asunción until he appears before prosecutors Saturday morning, facing charges including breach of trust, influence peddling and using public office for personal gain. The most serious charges carry penalties of up to 10 years in prison.

Prosecutors also ordered the arrest of Carlos Carvallo, who ran the finance company that became Ueno until Peña named him central bank chief in 2023; it was not immediately clear whether Carvallo had been taken into custody.

Vice President Pedro Alliana was sworn in as president on Friday to serve out the term ending in August 2028. In a statement, Alliana said the Paraguay he receives has “urgent needs,” and said he inherits a government under pressure to return depositors’ money and punish those responsible while he is also under investigation in connection with the bank.

Crowds gathered outside Congress as the verdict was delivered, with protesters demanding frozen savings and accountability for Ueno’s failure. As senators deliberated, demonstrators marched through downtown Asunción chanting “Santi Peña to Tacumbú!”—a reference to the capital’s main prison, where Ueno’s founder and former CEO, Miguel Vázquez, is being held.

The dispute traces to Ueno’s seizure by regulators, which prevented customers from withdrawing cash, accessing savings or using cards. The digital lender had opened accounts for more than one million Paraguayans, and its collapse affected more broadly than savers, including a ride-hailing app that shut down and left 3,000 drivers without work.

Deposits were reported as beginning to recover on Thursday for customers holding up to 10 million guaraníes (about $1,500). The central bank said deposits are insured up to about $35,000, covering 97% of Ueno customers, and said the collapse is an isolated case while the broader financial system is safe.

In a separate case against Ueno executives, prosecutors have charged 27 people, including Vázquez, with crimes such as breach of trust and attempted fraud. A judge ordered six former directors, including Vázquez, held in pretrial detention, and two others confined to their homes with electronic monitors, while authorities have seized luxury vehicles, a yacht and two small planes linked to Vázquez.

Before the verdict, Peña said in a farewell message that he did not want his “presence to be a cause of greater division or instability.” He wrote: “I say goodbye with gratitude, without ignoring the anguish of those who are waiting for answers today.”