Paraguay’s ousted president charged over banking scandal

A judge in Paraguay has ordered formerPresident Santiago Penato be held in pretrial detention after he was charged over his alleged role in a banking scandal that left nearly half the country unable to access their savings and led to his impeachment.

Judge Humberto Otazu on Saturday ordered Pena to be held in pretrial detention at the Presidential Escort Regiment headquarters, a military facility, rather than a conventional prison. Otazu said the detention was necessary to ensure Pena remained in the country while prosecutors investigate his ties to digital lender Ueno.

The decision came hours after Pena was charged with breach of trust and administration for personal gain.

Central Bank of Paraguay chief Carlos Carvallo faces the same charges as the former president, plus one of falsifying government documents. Otazu also ordered Carvallo to be held in pretrial detention.

The scandal centres on the former president's ties to Ueno, a digital bank that grew rapidly during his presidency, partly through an injection of more than $800m in public funds, and attracted millions of customers.

The bank's collapse led to days of protests across Paraguay, with thousands taking to the streets demanding access to their savings. Some demonstrations have turned violent, with protesters clashing with police.

Pena, who held a stake in Ueno's parent company until March 2025, has denied wrongdoing, arguing that the bank's problems were a regulatory matter.

What is Pena accused of?

Among the allegations against Pena are that he used his political influence to direct hundreds of millions of dollars in public funds into Ueno while shielding the bank from regulatory scrutiny as concerns grew over its risky lending practices.

Prosecutors also point to his 2023 appointment of Carvallo, a former executive at the company that later became Ueno, as head of the central bank.

Pena is further accused of allowing Paraguay's state pension fund to deposit $355m at Ueno, above the legal limit.

Pena had offered his resignation on Thursday, but lawmakers rejected it and began impeachment proceedings to prevent the political immunity he would have had if he stepped down.

An arrest order was issued shortly after he was removed from office.

Bank collapse sparks political crisis

The scandal erupted after regulators took control of Ueno on Tuesday over concerns about its solvency, leaving nearly three million people unable to access their savings or use their bank cards.

The Central Bank said on Saturday that 1.2 million customers had already received partial or full reimbursement of their insured deposits.

But that has done little to quell public anger, with many still waiting for their money to be returned.

Some protesters have also expressed frustration about Pena's replacement, Pedro Alliana, who belongs to the same conservative Colorado Party and is himself under investigation in connection with the bank's collapse.

Alliana, who wassworn in as presidenton Friday, has pledged to help those affected.