Paraguay Prosecutors Open Criminal Cases Against Pena After Ueno Bank Collapse

Updated 22:49 UTC

Prosecutors announced on Thursday that Santiago Pena is under criminal investigation following the collapse of ueno bank, the Associated Press reported. The announcement came after Pena resigned and the lower house moved on impeachment the same day. Paraguay's Attorney General has opened three criminal cases against Pena and other former officials related to the bank crisis, CNN reported. The Wall Street Journal reported that the Chief Prosecutor's Office said on Thursday afternoon it had opened a criminal investigation into Pena. Reuters reported that prosecutors said Pena was among those being investigated over the bank's failure, and that he had not been taken in for questioning.

The Chamber of Deputies voted unanimously to trigger impeachment proceedings, accusing Pena of serious and systematic dereliction of duty in connection with his dealings with the bank, CNN reported. The Senate later announced that it would start an impeachment trial. Pena said he would present himself in the trial and defend himself. "I will do so with arguments and evidence, with respect for the Constitution and the institutions of the Republic," he said, according to CNN.

Both chambers then held a joint session to consider his resignation, but the session was adjourned without a decision after several lawmakers walked out during the vote, CNN reported. The choice matters for what happens to Pena next. If lawmakers accept his resignation, he receives immunity and special protections. If they remove him from office, he does not, CNN reported.

Latest update

President Santiago Pena resigned on Thursday, November 5, as calls for his removal swelled following the collapse of digital lender ueno, which left millions of customers unable to access their accounts, Reuters reported. Pena stepped down after the opposition called an extraordinary session to begin filing an impeachment motion in Congress, and as protesters demanded his resignation. Earlier on Thursday he lost backing from members of his own conservative Colorado Party, Reuters said.

In a recorded video address on Thursday, Pena said: "I do so with the stability of our country, social peace, and the need to preserve our democratic institutions in mind." Vice President Pedro Alliana is set to take office as his replacement.

Pena, 47, stepped aside while the Chamber of Deputies was debating an impeachment request against him, after a little more than three years in power of the five year term set in the constitution, Bloomberg Linea reported. The Colorado Party bloc, divided into factions, had said it would back the impeachment process, which could have advanced to the Senate. Lawmakers had accused Pena of conflicts of interest, misuse of pension funds and institutional cover ups linked to the collapse of ueno, which had grown quickly from a niche fintech player into a mid tier bank administering close to 850 million dollars in public funds, Reuters reported.

Paraguay's central bank intervened in ueno after determining it had breached minimum solvency requirements, setting off a crisis that left the company's roughly 3 million customers, in a country of 6.5 million people, unable to access accounts, Reuters reported. Ueno has made no public statement on the issue. Paraguayan regulators closed Ueno Bank early on Tuesday after the collapse of its solvency ratio, Bloomberg Linea reported. Pena took office on August 15, 2023, and was due to complete his term in 2028. The resignation followed a constitutional accusation promoted by 35 deputies against Pena and Vice President Pedro Alliana over a possible conflict of interest linked to his former shareholding in Ueno Holding, Enfoque News reported.

Paraguay's opposition filed impeachment articles against President Santiago Pena on Wednesday, November 4, blaming him for a banking crisis that has frozen the accounts of about 3 million people in a country of 6.5 million.

Thirty five lawmakers submitted the articles in the 80 seat lower house and asked congressional leaders to call an extraordinary session on Thursday to debate Pena's future, Reuters reported. The opposition accuses Pena of conflicts of interest, misuse of pension funds and institutional cover ups in the handling of the collapse of ueno, a digital lender tied to a group the president once held shares in. AFP reported the request charges misconduct and conflict of interest, and that Congress would hold a session on the motion on Thursday morning.

Pena has not publicly addressed the impeachment push, and the presidency did not immediately respond to requests for comment, Reuters said.

A bank that held the country's money

Ueno grew fast, from a small fintech firm into a mid tier bank and the country's largest credit card issuer, administering close to 850 million dollars in public funds, Reuters reported. Paraguay's central bank intervened in the bank after finding it had breached minimum solvency requirements. One report on the intervention put ueno's solvency ratio at 5.56 percent, less than half the 12 percent regulatory minimum.

The freeze hit at once. Ueno's app, cards and transfers went offline, and customers had no branch network to fall back on for most services. Pension money sat inside the bank, and protests by savers and retirees filled streets in Asuncion for two nights.

Pena was a shareholder until March last year in Grupo Vazquez, the group that controls ueno, according to Reuters. Ueno has said Pena was never a shareholder or investor in the bank itself. The central bank's former president, Carlos Carvallo, had run ueno until August 2023 before Pena appointed him to lead the central bank. Carvallo resigned on Tuesday at Pena's request. Prosecutors detained eight ueno executives, and Pena named Raul Vera Bogado, a former central bank president, as Carvallo's successor on Wednesday.

Pena also signed a law to speed deposit guarantee payouts. AFP reported the law sets payments within five days, and one account of the guarantee fund put its cover at deposits up to 228.3 million guaranis, covering 97 percent of account holders.

The arithmetic is against the opposition, for now

Advancing the impeachment takes 53 of the 80 lower house votes. It would then need 30 of 45 votes in the Senate. Pena's Colorado Party holds a majority in both houses, and Reuters reported the opposition remains short of the two thirds needed in the lower house, though several dissident Colorado members have backed the push.

That math makes Thursday's session a test of how far the anger travels inside the ruling party, not only outside it. A bank collapse that locks out half a country's account holders, including people waiting on pension payments, is the kind of event that moves legislators who normally vote with the palace.

What happens next

The lower house debates the articles on Thursday. If the motion stalls, the crisis returns to the central bank and the deposit guarantee fund, which have to return money to millions of customers fast enough to calm the streets. If dissident votes grow, Paraguay faces its first real impeachment fight of Pena's term, which runs to 2028.