Paraguay’s rightwing president has been placed under house arrest minutes after he was impeached by Congress, amid a severe crisis that left more than half the country’s population unable to access their bank accounts.
Santiago Peña is being investigated about allegations he used his political influence to favour a bank that expanded exponentially under his government and was suspended this week after irregularities.
The move froze the accounts of ۲.۹ million people, about ۶۰% of the country’s adult population, who were customers of the bank – Ueno – and who overnight could no longer use their own money even for basic purchases such as bread and water.
Protests spread across the country, some involving violent clashes with police. Impeachment proceedings began on Wednesday before being concluded on Friday, minutes before Peña’s arrest was ordered.
His vice-president, Pedro Alliana, was being sworn in as the country’s new leader while a public prosecutor, accompanied by police outside Peña’s home, told local media the former president had been placed under house arrest.
“It has been established that he is indeed inside his home. He voluntarily allowed officers to enter and made himself available for all procedural purposes,” said prosecutor Elena Fiore Franco.
The public prosecutor’s office had opened an investigation into Peña on Thursday on suspicion of illicit enrichment, money laundering and influence peddling.
Peña, who was one of US president Donald Trump’s main allies in the region, had tried to resign on Thursday in an attempt to retain the special jurisdiction afforded to former presidents – who become senators for life in Paraguay – but lawmakers did not accept his resignation, leaving him subject to the ordinary courts.
Amid rumours he had fled to Argentina, the ۴۷-year-old economist was expected to appear before Congress to present his defence during the impeachment proceedings, but left that to his lawyers and instead continued posting on social media.
Before the impeachment was concluded or the arrest warrant issued, he posted: “I say goodbye with gratitude, while fully recognising the anguish of those who are now waiting for answers,” referring to former Ueno customers who are unable to access their own money.
Soon after taking office, Peña appointed Carlos Carvallo Spalding, a former CEO of Ueno, head of the country’s central bank. Three months later, Spalding – who was by now regulating the company he used to run – allowed Ueno to become a digital bank, which put it on the path to becoming one of Paraguay’s largest banks by deposits in just a few years.
The arrest warrant for Peña also includes Spalding.
Peña himself had about US$۱m in shares he bought in ۲۰۱۹ in a company that would become Ueno Holding in ۲۰۲۲, the parent company of the conglomerate that controlled Ueno Bank. Even after becoming president, he only disposed of the shares in April ۲۰۲۵. He said he had bought them purely as an “investor”.
As the bank aggressively expanded through an easy account-opening system and by promising returns far above those offered by the rest of the market, it also managed to bring public pension funds controlled by Peña’s administration into its portfolio.
“Because Ueno had the blessing of the presidency, most of the pension funds close to the government went to deposit their money in the bank,” said political analyst Hugo Duarte. An estimated $۸۰۰m to $۸۶۰m in state and pension funds were invested in Ueno.
As pressure mounted and retail sales fell by as much as ۸۰% because much of the population could not access their own money, Peña lost the support of his own party.
During the impeachment session, opposition senator Rafael Filizzola said Paraguay was facing “one of the biggest corruption scandals since the return of democracy” and the “biggest fraud carried out from political power in the democratic era”.
