🏦 Santiago Peña under house arrest after Ueno Bank collapse

Paraguay's Senate voted on Friday, Nov 6, to remove President Santiago Peña for misconduct in office, and he was placed under house arrest shortly afterward, according to the Associated Press. The AP says all 44 senators present voted to remove him. The trigger was the collapse of Ueno Bank, which regulators seized three days earlier. The event was first reported at 4:47 PM ET on Nov 6; the reports read give no ET time for the arrest itself, only that it came minutes after the vote, per the BBC.

Who says what

The AP reports Peña was placed under house arrest on suspicion of breach of trust and influence peddling, among other charges, and must stay at one of his homes in Asunción until he appears before prosecutors Saturday morning. It says the most serious charges carry up to 10 years in prison. The BBC, citing prosecutor Silvia Margarita Gonzalez Vester, lists breach of trust, influence peddling and misappropriation of funds as the subjects of Saturday's questioning.

The lists do not match, and the charges are not final. Xinhua, via China Daily, quotes prosecutor Cristian Benitez saying Peña is held at his residence while the public prosecutor's office determines the final charges. DW likewise says the arrest stands pending that decision. DW adds that prosecutors also ordered the arrest of former central bank chief Carlos Carvallo; the AP says it was not immediately clear whether Carvallo had been taken into custody.

The scale of the lockout is also reported differently. The AP and CBS News say nearly half of the country's 6 million people were locked out of their savings. The BBC says more than half and estimates three million depositors remain unable to reach their money. The AP's earlier report puts Ueno's customers at about 3 million.

The impeachment record

The Chamber of Deputies approved the impeachment request with 78 votes on Nov 5, according to the chamber's own news release. It says 35 legislators filed the accusation, and that the Senate then sits as judge and needs a two-thirds majority to convict. The release says the document alleges a conflict of interest over Peña's stake in Ueno Holding, the appointment of Carlos Carvallo to head the central bank, support for changes to the conflict-of-interest law, and letting hundreds of billions of guaraníes of the state pension institute's money concentrate in Ueno beyond legal limits.

ABC Color's summary of the filing gives figures, all of them the accusers' claims. It says the pension institute's deposits at Ueno grew sharply from September 2023 to about $333 million, which it says was almost 11% of the institute's portfolio against a 10% per-issuer cap. It also says loans to firms tied to Ueno reached about $123 million, roughly 30% of effective capital against a 20% limit. The AP and DW put the pension money at $355 million.

Who holds the frozen money

The deposits sit at Ueno, now run by officials the central bank appointed. The AP reported on Nov 3 that the regulator's board voted unanimously to put the bank into resolution and hand management to officials charged with assessing its finances and protecting its assets. Resolution lets regulators transfer a failing bank's deposits to other institutions before liquidating what remains, the AP explains.

The AP put public money at Ueno at $800 million to $850 million, including about $380 million from the state pension and health fund. CBS News says the state power company reports $21 million in loans, earmarked for public works, trapped at the bank. Some depositors began recovering money Thursday, starting with balances up to 10 million guaraníes, about $1,500, CBS News reports. Balances above the insurance cap are not covered by the fund, the Rio Times reports, citing the central bank, which says it will apply resolution mechanisms to recover the remaining assets progressively.

The response

CBS News reports that Peña denied wrongdoing, and the BBC says the same. The BBC quotes his defence lawyer, Ricardo Preda, calling the allegations a "reckless accusation" that was "irresponsible and opportunistic". In a farewell message before the verdict, Peña said he did not want his "presence to be a cause of greater division or instability", the AP reports. On Nov 5 he said he would cooperate with investigators, per the AP.

"It was never my intention to betray the trust you placed in me"

Santiago Peña, in a video posted on X announcing his resignation, as quoted by the BBC

The new president, Pedro Alliana, said the Paraguay he receives has "urgent needs", per the AP, which adds that Alliana is also under investigation in connection with the bank. The BBC quotes him promising that affected compatriots "will be fully compensated". DW reports that lawyers for several detained Ueno executives said they needed time to review the allegations before commenting.

What happens next

Peña is due before prosecutors Saturday morning, per the AP. The reports read do not say what happened there, and final charges are still to be set, per DW and Xinhua. On payouts, the AP reported Nov 3 that insured deposits must be paid within 15 days of the takeover by law, a deadline that can be extended once. Whether depositors above the insurance cap get full repayment is not stated; the AP says the central bank promised only "the greatest possible protection".

Backstory

Peña held shares in the company that owned the bank until last year, the BBC reports. The AP says the central bank warned Ueno in June that it was lending too much to companies tied to its owners, and that Peña dismissed concerns about the bank as media fearmongering until weeks before it failed. In a separate case, the AP reports prosecutors have charged 27 people, including founder Miguel Vázquez, with crimes such as breach of trust and attempted fraud; a judge ordered six former directors held in pretrial detention.

As of Nov 7, 11:33 AM ET, the confirmed facts are the Senate's removal vote, Alliana's swearing-in and Peña's house arrest. Pending are Saturday's session with prosecutors, the final charges, Carvallo's custody and how much of the frozen money above the insurance cap comes back. Peña denies wrongdoing, and the reports read include no ruling by a criminal court.