Paraguay President Resigns And Is Impeached As Prosecutor Opens Criminal Bank-Collapse Probes

Paraguay's President Santiago Peña resigned and was impeached within minutes on Thursday in Asunción, as the country's attorney general simultaneously opened three criminal investigations into his administration's role in the sudden collapse of Ueno Bank, which held about $800 million in public funds.^[1]

Attorney General Emiliano Rolón Fernández ordered probes into how Peña's government oversaw Ueno, why so much pension and health money was parked there, and how officials handled the bank's failure, explicitly including allegations involving the president and other current and former officeholders.^[1] The lower house of Congress voted 78-0 to impeach Peña just after he posted a video on X announcing his resignation, while opposition senators vowed to push ahead with removal proceedings on Friday to prevent him from exiting in a way that could preserve lifetime senatorial immunity from prosecution.^[1] Thousands of demonstrators flooded central Asunción demanding accountability from Peña and the long-dominant Colorado Party, as authorities rushed through measures to backstop depositors and stem job losses tied to the failed lender.^[1]

The criminal fallout around Ueno intensified Thursday as a judge ordered six of the bank's top executives, including founder Miguel Vázquez and president Juan Manuel Gustale, jailed pending trial, placed two others under house arrest, and confirmed charges against 27 officials and associates for breach of trust and attempted fraud.^[1] Central bank inspectors say that once they stripped out improperly booked expenses and insider loans, Ueno's capital was less than half of what Paraguayan law requires, triggering regulators to seize the bank on Tuesday and start transferring deposits and recoverable assets to other institutions.^[1] Congress responded by fast-tracking a new law on Wednesday forcing a state guarantee fund to begin repaying stranded depositors within five business days, with coverage capped at about $36,000 per person, which officials say should fully reimburse roughly 97% of clients.^[1] The Labor Ministry estimates that around 7,000 direct and indirect jobs linked to Ueno and its affiliated businesses are at risk, underscoring why the bank's collapse has rapidly escalated from a financial scare into a full-blown political crisis.^[1]

Central bank examiners first uncovered deep problems at Ueno as they dug into its balance sheet and found that losses had been masked by misclassified expenses and loans to insiders, leaving the lender far below minimum capital standards and vulnerable to a run.^[1] By Tuesday, regulators had seized the bank and begun carving out good assets and deposits, but political anger surged when it became clear that enormous sums in public money, including pension and health funds, had been concentrated at Ueno despite its aggressive growth and exposure to related parties.^[1] Demonstrations swelled in Asunción, with protesters accusing Peña and the Colorado Party of steering state funds into a politically connected institution and then failing to act until collapse was inevitable, even as officials insisted that most small savers would be protected under the new guarantee law.^[1]

Mainstream coverage initially framed Peña's impeachment as a lightning-fast response by Congress to his surprise resignation video, but the decision by Attorney General Rolón Fernández to explicitly fold the president's conduct into the Ueno probes marked a clear shift from a purely institutional crisis to one centered on potential criminal liability at the top of government.^[1] Lawmakers from the opposition argue that accepting Peña's resignation before an impeachment verdict would allow him to claim a constitutionally granted lifetime Senate seat with attendant legal protections, which they fear could slow or complicate any future prosecution arising from the bank investigation.^[1] Their push to complete impeachment despite the resignation underscores how, for many in Paraguay's opposition and on the streets, the collapse of Ueno is no longer only about financial mismanagement, but about whether a political system long dominated by one party will allow a former sitting president to face the same courts now jailing bank executives.^[1]

1. PBS News