The rise and fall of Santiago Peña... from loyalty to Israel to the darkness of pretrial detention

The capital, Asunción, brought down the curtain on one of the most complex political and financial crises in its modern history, after the Paraguayan Senate unanimously announced the impeachment of President Santiago Peña and stripping him of his position, followed immediately by a judicial decision to arrest and criminally prosecute him on charges related to financial corruption and squandering of public funds, against the backdrop of the complete collapse of the “Ueno Bank,” which caused the freezing of the accounts and savings of nearly 3 million citizens, representing about Half of the country's population.

In accordance with the constitutional provisions, the position of the Presidency of the Republic was officially transferred to Vice President Pedro Aliana, to take over the administration of the country and complete the remaining term of the presidential term extending until 2028, amid an atmosphere of popular tension and massive demonstrations that demanded guarantees to recover depositors’ money and protect public pension funds.

The financial crisis that struck the Ueno digital bank is the driving force behind the rapid fall of Peña’s administration, as the bank faced a severe liquidity deficit, followed by the central bank’s decision to place it under judicial guardianship.

According to investigative reports published by local media outlets such as the “El Surtidor” platform and the “ABC Color” newspaper, the investigations demonstrated the existence of a blatant conflict of interest. The ousted president retained direct shares in the holding group that owned the bank until close to 2025, in addition to his administration directing hundreds of millions of dollars belonging to government pension funds towards this troubled entity without sufficient guarantees.

Peña, 47 years old, tried to anticipate the opponents' movements by recording a video speech in which he announced his voluntary resignation with the aim of preserving social peace and the stability of institutions. However, Parliament, with the support of representatives of his ruling Colorado Party, took a decisive legal step by refusing to resign and adhering to the path of "political trial." According to a detailed report by BBC Mundo, this parliamentary rejection came to prevent Peña from automatically obtaining the seat of “senator for life,” which is the constitutional privilege that grants former presidents permanent judicial immunity. Instead, 44 members of the Senate voted in favor of removing him directly, so that the legal cover would be lifted from him, and he would become subject to criminal accountability.

Immediately after the dismissal decision was issued, the Paraguayan Public Prosecution, led by a team from the Office of the Public Prosecutor for Economic Crimes, moved to issue an arrest warrant against the ousted president, and formally charged him with charges that included “mistrust and management for personal gain, illicit enrichment, and money laundering,” while the arrest warrants included a number of executive officials and the former governor of the Central Bank, Carlos Carvalho. The judicial authorities ordered Peña to be transferred to pretrial detention inside the headquarters of a military facility affiliated with the Presidential Escort Regiment, following the expansion of angry demonstrations and an attempt to besiege his personal residence by those affected.

Political analyzes in Asuncion indicate that the deterioration of the banking system isolated the president internally, and made his controversial foreign positions an additional political burden, accelerating the pace of the allies’ disengagement from him. Throughout his rule, Peña had adopted a close and controversial diplomatic policy with Israel, which culminated in an official visit during which he delivered an extraordinary speech before the Israeli Knesset in December 2024, in which he clearly declared that his country “will never abandon Israel,” considering that solidarity with it represents a political doctrine for his administration.

The Paraguayan Public Prosecution Office is studying the possibility of conducting a controlled explosion to open a highly fortified safe, hidden behind a false wall inside the countryside palace of deposed President Santiago Peña, after investigators failed to bypass the layers of security protection that secure it. Paraguayan newspaper ABC Color reported that investigators were able to open the first door leading to the safe inside the Peña property in the Cervo Cua area of ​​San Bernardino, but they failed to pass the second security barrier. The newspaper quoted Public Prosecutor Christian Benitez as saying that the prosecution will seek the help of experts to determine the most appropriate way to open the safe, explaining that investigators are studying three options: bringing the deposed president’s wife, Leticia Ocampos, to the property to verify whether her fingerprint is registered in the biometric identification system; Or communicate with other members of his family; Or resort to opening the safe by force.

On November 2, the Central Bank issued a decision to liquidate the bank, after its solvency ratio declined to less than half the legal minimum, following a re-evaluation of its accounts. The decision led to the suspension of the bank’s application, cards, and transfer services, depriving about 2.9 million customers of access to their accounts. La Nacion reported that 8 of the bank's executives were imprisoned in connection with the case, while the authorities began returning the money to depositors.