Paraguay raids ex-president’s home: Why a bank crash brought down Pena 

Paraguayan police have raided the home of ousted President Santiago Pena as part of an investigation into the collapse of one of the country’s largest digital banks.

The raid on Sunday comes after Ueno Bank’s downfall plunged the South American nation into its deepest economic and political crisis in recent years, sparking widespread protests.

Pena, an ally of US President Donald Trump who came to power in 2023, was removed from office on Friday after the collapse of Ueno froze access to the savings of nearly three million customers, almost half the country’s population of 6.5 million.

The former president, who has denied wrongdoing, faces criminal charges over allegations that he used his political influence to channel public money into the lender despite having financial ties to its parent company.

So, what charges does Pena face, and what does the bank scandal mean for the country’s future?

Pena was arrested after Paraguay’s Senate voted unanimously on Friday to remove him from office, rejecting his attempt to resign a day earlier.

On Saturday, Judge Humberto Otazu ordered the former president to remain in pretrial detention at a military facility, saying the measure was necessary to ensure he remained in Paraguay while the investigation proceeded.

His lawyer, Ricardo Preda, said Pena would plead not guilty and would cooperate with investigators.

“What sets a serious country apart is not that its banks don’t fail, but how it responds,” Preda said on Friday. “If there is one thing that undermines confidence ⁠in the financial system, it is attempting to oust the president without evidence.”

Prosecutors also confirmed that police had searched Pena’s mansion outside the capital, Asuncion, as part of their investigation into the banking scandal.

Vice President Pedro Alliana has since been sworn in to replace Pena and is expected to serve out the remainder of his term until August 2028.

What has Pena been accused of?

Pena has been charged by prosecutors with breach of trust and administration for personal gain, offences that could each carry a prison sentence of up to 10 years.

The allegations are around Pena’s relationship with Ueno Bank, a digital lender launched in 2021 that rapidly expanded by offering banking services to Paraguayans who had previously been underserved by traditional financial institutions.

Pena held shares in Ueno’s parent company until March 2025. Prosecutors allege that while serving as president, he influenced government agencies and state-owned entities to deposit large sums of public money into the bank, despite concerns over its financial health.

By June, Ueno held approximately $850m in public funds, including money belonging to Paraguay’s state pension system.

Regulatory reports warning of excessive lending to certain companies had also emerged in recent months, raising questions about the bank’s solvency and its loans to businesses linked to its executives.

According to the indictment, Pena obtained two loans from Ueno worth approximately $500,000 in 2024 to construct his mansion. His monthly mortgage payment of $38,000 was reportedly six times his presidential salary.

The scandal has also implicated former Central Bank of Paraguay chief Carlos Carvallo, who previously headed Ueno. He has been charged with breach of trust, producing false public documents and administration for personal gain, and has been ordered into pretrial detention.

Pena has rejected the allegations, maintaining that the bank’s difficulties were a regulatory matter.

Newly sworn-in President Alliana said on Sunday that the government had refunded 1.2 million Ueno Bank customers whose funds were frozen following the bank’s collapse.

He said approximately $158m had been paid out so far, with further reimbursements expected this week.

How has the scandal affected the country?

The collapse of Ueno Bank has left millions of Paraguayans struggling to access their savings, wages and pension payments, while raising questions about the government’s handling of public money.

The central bank intervened on Tuesday after discovering that Ueno had breached minimum solvency requirements.

The bank had made $146m in questionable loans to companies linked to its owner, while its corrected financial accounts showed its capital had fallen below half the legal minimum.

The crisis has sparked widespread protests, with thousands demanding access to their money and accountability from political leaders.

Some demonstrations have turned violent, with protesters clashing with police.

“We are facing the biggest corruption scandal in our democratic history,” opposition Senator Rafael Filizzola said on Friday.