Paraguay's former president Pena charged over banking scandal, faces trial from house arrest

Paraguay's former President Santiago Pena has been charged over a banking scandal. The charges were brought after he spent the morning being questioned at the attorney general's office in Asuncion, a day after he was impeached over the collapse of Ueno Bank.

Reuters reported that Pena was charged with breach of trust and administration for personal gain. He has been under house arrest since Friday. After announcing the charges on Saturday, prosecutors are also seeking pretrial detention for both Pena and Carvallo.

At the centre of the scandal is Pena's relationship with Ueno Bank. The digital bank grew rapidly during his presidency, partly through an injection of more than 800 million dollars in public funds. After the bank's collapse, nearly three million people have been unable to access their savings or use their bank cards.

The scandal came to light after regulators took control of the bank on Tuesday. Since then, protests have continued day after day across Paraguay. Thousands of people have taken to the streets demanding their savings back. Some demonstrations have turned violent, with protesters clashing with police.

Paraguay's central bank said on Saturday that 1.2 million customers have already received partial or full reimbursement of their insured deposits. But that has done little to quell public anger, as many people are still waiting for their money back.

Pena held a stake in Ueno's parent company until March 2025. He has denied wrongdoing, arguing that the bank's problems were a regulatory matter.

Among the allegations against him are that he used his political influence to direct hundreds of millions of dollars in public funds into Ueno, while shielding the bank from regulatory scrutiny as concerns grew over its risky lending practices.

It is further alleged that in 2023 he appointed Carlos Carvallo as head of Paraguay's central bank. Carvallo had earlier been an executive at a company that later became Ueno. On Saturday, Carvallo was also charged with breach of trust, producing false public documents and administration for personal gain.

Pena is further accused of allowing Paraguay's state pension fund to deposit 355 million dollars at Ueno, above the legal limit.

Pena had offered his resignation on Thursday. But lawmakers rejected it and pressed ahead with impeachment proceedings, so that he would not gain the political immunity he would have received had he stepped down. An arrest order was issued shortly after he was removed from office.

Pena has been replaced by Pedro Alliana. He belongs to the same conservative Colorado Party and was sworn in as president on Friday. He is himself under investigation in connection with the bank's collapse. Alliana has pledged to help those affected.

But many customers still have not received their money back. Some protesters have also expressed anger towards Alliana. Political unrest continues in the country in the wake of the bank's collapse.