Paraguay's ex-president Peña under house arrest after bank failure

Paraguay's deposed president Santiago Peña is under house arrest after the bankruptcy of the digital bank Ueno. The public prosecutor's office accuses him, among other things, of infidelity, exerting influence and abusing his office for his own benefit. Peña is expected to remain at one of his homes in Asunción until his appearance at the prosecutor's office on Saturday morning. The most serious of the crimes he is accused of are punishable by up to ten years in prison. Prosecutors also ordered the arrest of former central bank chief Carlos Carvallo. It was initially unclear whether he had already been arrested.

The Senate had recently removed Peña from office on Friday for misconduct. All 44 senators present voted in favor. The previous vice president, Pedro Alliana, was sworn in as president on the same day. He is scheduled to complete the current term until August 2028.

Peña submitted his resignation on Thursday. However, Congress did not accept it and continued the impeachment process. As a result of the removal, Peña loses his right to a lifelong seat in the Senate and the associated parliamentary immunity.

Alliana belongs to the conservative Colorado Party, which has long ruled the country. The 52-year-old was governor of the southern province of Ñeembucú and president of the lower house. The public prosecutor's office is also investigating him. On Thursday, MPs shelved an opposition push for impeachment proceedings against him.

Lawmakers accused Peña of using his political influence to steer hundreds of millions of dollars in public money to Ueno. Peña denied wrongdoing. He had held a stake in the bank's parent company and had given up his shares under pressure last year.

Within a few years, Ueno became Paraguay's fifth largest bank in terms of deposits. More than $800 million in public funds contributed to the bank's growth. Ueno attracted more than two-thirds of the country's adults as customers.

After the central bank took control of Ueno on Tuesday, nearly three million customers were initially unable to access their savings. Thousands took to the streets in protest. A transportation service that relied on Ueno also stopped operating. This left 3,000 drivers without work.

The first customers received their money back on Thursday. Deposits are insured up to around $35,000. According to the central bank, this covers 97 percent of the bank's customers.