Paraguay detains ousted president over digital bank collapse
Santiago Peña faces up to 20 years in prison for alleged misuse of public funds tied to the failed lender ueno.
By Zoe Harrison ·
Former President Santiago Peña is in military custody after a judge ordered his pretrial detention on Saturday.
Judge Humberto Otazú placed Peña at a military facility to guarantee his presence in Paraguay during the investigation. Peña had been removed from office just one day earlier on Friday. Vice President Pedro Alliana was sworn in on Friday to serve the remainder of the term through August 2028. The new leader is a member of the ruling Colorado Party.
Prosecutors allege that Peña used his presidential authority to direct government agencies and state-owned entities to keep large sums of public money in accounts at the digital lender ueno. The bank has collapsed, leaving millions of customers unable to access their funds. Peña held shares in ueno’s holding company until March 2025. He faces two charges: breach of trust and administration for personal gain. Prosecutor Nancy Salomón stated that each charge carries a maximum sentence of 10 years. Attorney Ricardo Preda said Peña is pleading not guilty and expects the case to be dismissed after the investigation concludes.
The crisis also swept up former central bank chief Carlos Carvallo. Otazú ordered Carvallo into pretrial detention at a holding center on Saturday. Carvallo faces charges of breach of trust, producing false public documents, and administration for personal gain. He resigned as central bank chief earlier this week and had previously led ueno until 2023. Carvallo did not respond to a request for comment. The central bank reported on Saturday that nearly 1.2 million savers received payments totaling the equivalent of $160 million under the state deposit guarantee scheme.
Peña’s removal from power followed a dramatic political shift in Asuncion. The situation has triggered protests in the capital and led regulators to act to contain risks to the wider financial system. In 2024, Peña reopened Paraguay’s embassy in Jerusalem, making the country the sixth to do so at that time. Most other allies of Israel maintain their embassies in Tel Aviv.
Peña arrived at the Attorney General’s Office earlier on Saturday to appear before prosecutors. He has denied wrongdoing and described the bank’s issues as a regulatory matter. The detention marks a sharp escalation in the legal proceedings against former senior officials.
