Paraguay lawmakers impeach President Peña following major bank collapse

Paraguay's lawmakers have impeached President Santiago Peña and placed him under house arrest following the collapse of a prominent digital bank linked to his business dealings, which locked millions of citizens out of their funds.

The Senate voted unanimously to remove the leader on Friday, with 44 out of 45 senators backing the motion and one member absent. Although Peña had attempted to resign a day earlier, legislators rejected that offer and instead pursued formal impeachment on charges of misconduct, according to BBC News. The decision strips him of the legal immunity typically provided to former heads of state.

Authorities detained Peña shortly after the vote. Prosecutor Silvia Margarita Gonzalez Vester stated that he is scheduled for questioning on Saturday regarding allegations involving breach of trust, misappropriation of public resources, and influence peddling. Peña has denied any wrongdoing, while his defence attorney, Ricardo Preda, labelled the claims as reckless, opportunistic, and irresponsible.

The political turmoil stems from the failure of Ueno Bank, an institution taken over by the central bank earlier in the week. Peña previously held shares in the firm that owned the lender until last year. Official charges tied to his removal accused him of conflicts of interest, tampering with regulatory oversight, diverting money from pensions, and participating in an institutional cover-up.

The financial institution's closure directly impacted roughly three million depositors, leaving more than half the country's population unable to access their savings or pension payouts. Long queues formed outside branch locations in Asunción as account holders desperately sought withdrawals. The situation rapidly escalated into nationwide unrest, with thousands marching to demand their money. Earlier protests saw clashes where security forces deployed water cannons and tear gas against crowds.

In a video statement shared on social media prior to his removal, Peña insisted that he never intended to violate the public's confidence, asserting that his focus remained on restoring financial security for citizens. Senate President Basilio Núñez stated that lawmakers convicted Peña of dereliction of duty, and Senator Rafael Filizzola described the fallout as the most severe corruption scandal in the nation's democratic era.

Vice President Pedro Alliana has assumed the presidency on an interim basis to finish the current term through 2028. Following his swearing-in ceremony, Alliana pledged that the government would not abandon those harmed by the crisis and vowed that affected depositors would receive full compensation.