Paraguay’s Ousted Ex-President Peña Jailed as Court Orders Pretrial Detention
A Paraguayan judge has ordered former President Santiago Peña held in pretrial detention at a military facility, a day after Congress removed him from office over the collapse of digital bank Ueno.
Judge Humberto Otazú issued the order on Saturday, 7 November, after prosecutors formally charged Peña with breach of trust and administration for personal gain. The judge said detention was necessary to ensure the former president remained in the country while the case proceeds, Reuters reported.
Peña, 47, arrived at the Attorney General’s Office in Asunción on Saturday morning under police escort and was questioned for about three hours before being transferred back into military police custody. He will be held at the Presidential Escort Regiment, the military facility where he spent Friday night after being moved from house arrest for security reasons amid protests outside his home.
His lawyer, Ricardo Preda, told journalists that Peña was pleading not guilty. “We will submit to the investigation and I am sure that when this investigation is over the result will be the dismissal,” Preda said. BBC News Mundo reported that Peña declined to testify at the hearing.
The order is a pretrial measure, not a finding of guilt. But it deepens a crisis that has already ended one presidency and left millions of Paraguayans struggling to reach their savings.
What Peña is accused of
Prosecutors allege that Peña used his position as president to influence decisions by government agencies and state-owned entities to keep large amounts of public money deposited at Ueno, despite maintaining financial ties to the lender. They say that relationship created a conflict of interest, as Peña encouraged, facilitated or influenced decisions that benefited the bank.
The charges are known in Spanish as lesión de confianza, or breach of trust, and administración en provecho propio, administration for personal gain. Each charge could carry a sentence of up to 10 years in prison, prosecutor Nancy Salomón said.
Peña has denied wrongdoing and said the bank’s problems were a regulatory matter. He held business ties to Grupo Vázquez, the conglomerate behind Ueno, until March 2025, according to his own account.
The Attorney General’s office opened three separate criminal cases on 5 November, covering Peña and other officials, the bank’s regulators, and the public money deposited there. At least 27 people face criminal charges in connection with the scandal, including Ueno’s lead shareholder, Miguel Vazquez.
Carvallo also detained
Judge Otazú also ordered former central bank chief Carlos Carvallo held in pretrial detention after prosecutors charged him with breach of trust, producing false public documents and administration for personal gain. Carvallo did not respond to a request for comment.
Carvallo resigned as central bank chief earlier in the week as the crisis around Ueno escalated. He had headed the digital lender until 2023 before becoming the country’s top banking regulator.
How the crisis unfolded
Ueno grew from a niche fintech launched in 2021 into one of Paraguay’s largest banks, counting about three million customers — nearly half of the country’s roughly six million people — including many Paraguayans who had never previously held a bank account.
The bank also administered around $850 million in public money, including roughly $355 million in state pension funds, according to reporting by Reuters. On 2 November, the central bank began liquidation proceedings after Ueno’s solvency ratio fell to less than half the required regulatory minimum. The central bank intervened the following day, seizing the lender and transferring its remaining assets to other institutions, leaving customers unable to access their savings and disrupting pension payments.
Peña recorded a video address on Thursday offering his formal resignation. Congress declined to accept it. Instead, the Chamber of Deputies voted 78–0 to impeach him, and the Senate removed Peña from office on Friday by 44 votes to none, with one senator absent. Within the hour, Vice President Pedro Alliana, 52, was sworn in as Paraguay’s 53rd president. He will serve out the remainder of Peña’s term, which runs until 15 August 2028.
Removal, rather than resignation, stripped Peña of the lifetime Senate seat and legal immunity granted to former presidents, leaving him exposed to the criminal investigation. He is only the second Paraguayan president removed by impeachment, after Fernando Lugo in 2012.
The central bank said on Saturday that $160 million had been paid to nearly 1.2 million savers under the deposit guarantee scheme, though not every account has been restored.
What happens next
Prosecutors are weighing requests to freeze assets, and the courts have yet to rule on the substance of the charges. Alliana inherits a government in crisis and a banking system under strain, and has pledged to compensate customers affected by the collapse.
The removal capped a week of dramatic votes around the world, including New Zealand’s deadlocked election. For Paraguay, the next milestone is the progress of a case that reaches into the highest levels of the state.
