Peña skips Senate impeachment trial as Paraguay reels from Ueno bank collapse

Peña skips Senate impeachment trial as Paraguay reels from Ueno bank collapse By ISABEL DEBRE, NAYARA BATSCHKE and EMILIO SANABRIA The Associated Press People protest in front of police against the government and Ueno Bank, which Paraguay's central bank seized amid a solvency crisis, in Asuncion, Paraguay, Wednesday, Nov. 4, 2026. (AP Photo/Jorge Saenz) ASUNCIÓN, Paraguay (AP) — Paraguayan President Santiago Peña failed to appear for his impeachment trial in the Senate on Friday despite vowing to defend himself in person, as lawmakers moved toward a verdict that could remove him from office over the dramatic collapse of a bank tied to his administration. Senators voted 39-3 to reject Peña’s request for another 72 hours to prepare his defense. He said he received the summons only hours before the session, along with some 300 pages of accusations and evidence, which left him no time to review the case. Presidents impeached in recent years in other countries, including the United States and Brazil, have had weeks to prepare. Peña is accused of using his political influence to steer hundreds of millions of dollars in public funds into the bank while allowing regulators to overlook its financial irregularities. His lawyers, Ricardo Preda and Adolfo Ferreiro, argued that senators should have accepted the resignation he submitted to the Senate Thursday instead of pressing ahead with the trial. Opposition lawmakers insist Peña should be removed through impeachment. The legal distinction matters. Paraguay’s Constitution gives democratically elected former presidents a lifetime Senate seat, and with it immunity from prosecution, unless they are convicted in an impeachment trial. Prosecutors on Thursday opened three criminal investigations into the bank’s collapse, including complaints against Peña, Vice President Pedro Alliana and current and former officials at the central bank and the state pension fund. “He must go, but not home. He must go to a maximum-security prison,” opposition Sen. Yolanda Paredes told reporters. “The public is fed up with impunity.” Protests were planned for later Friday after three straight days of mass demonstrations in which crowds demanding the return of their frozen savings and accountability for the bank’s collapse have clashed with police firing rubber bullets and pepper spray. “This was an enormous betrayal of trust,” said Yinal López, a worker at the state electricity company, whose employee pension fund also had money at Ueno. “The president made a mockery of the people. He used their money, the people’s money, to do whatever he wanted.” A bank collapse becomes a political reckoning In just three days, Ueno’s implosion has plunged Paraguay into its deepest political crisis in more than a decade. Regulators seized the bank before dawn Tuesday. By Thursday afternoon, Peña had offered to resign as his own party turned on him, led by its chief and Peña’s longtime mentor, former President Horacio Cartes . It was a staggering reversal of fortunes for Peña, a telegenic technocrat and former International Monetary Fund economist who owed his rapid political ascent to Cartes. The tobacco magnate, widely considered Paraguay’s richest man, governed from 2013 to 2018. He made Peña his finance minister and twice backed him for the presidency over objections from rival party factions. But once in office, Peña quietly built a power base to rival Cartes’, analysts say. Ueno Bank, which absorbed hundreds of millions of dollars in public funds, became the core of his own business empire, and he courted provincial governors with state money in a bid to break free of his patron. “It’s like a Shakespearean drama. He tried to displace his mentor, his political patron,” said Miguel Carter, director of DEMOS, a Paraguayan research center. “But he did so on very fragile grounds.” Cartes’ camp began pushing back. In September, senators loyal to the business tycoon demanded answers from the central bank about Ueno’s lending, citing leaked internal reports that warned the bank’s loans to related companies put its solvency at risk. When the bank collapsed this week, so did Peña’s leverage, and Cartes, who was himself once sanctioned by the U.S. over alleged corruption, publicly backed his ouster. “He had no political base to rely on, and he was left high and dry,” said Andrew Nickson, a Paraguay expert at the University of Birmingham. A bank built on public money The impeachment charges center on Peña’s ties to Ueno. In just a few years, the little-known lender in Asunción became Paraguay’s fifth-largest bank by deposits, its splashy logo on everything from the national soccer stadium to the bank cards of street vendors. Fueled by more than $800 million in public money, it signed up more than two-thirds of the country’s adults as customers. In the charges, lawmakers point to Peña’s stake in Ueno’s holding company, which he formally divested under pressure last year, and his appointment of a former Ueno executive to run the central bank that regulated it. They also accuse him of letting the state pension fund deposit $355 million at the bank, beyond legal limits. Peña has denied wrongdoing, saying nothing illegal took place when he held shares in the company. Analysts say Ueno’s meteoric rise was inseparable from its proximity to power, with the central bank — long the mainstay of the economic discipline that investors prized in Paraguay — looking the other way. “The central bank under Peña began to lose credibility, lose neutrality and then relax all its control mechanisms to favor the business group that had Ueno Bank as one of its pillars,” said José Tomás Sánchez, a political theory professor at the National University of Asunción. The cracks began to show in July, when the banking superintendent was pushed out after warning in a departing memo that Ueno was funneling deposits into loans to its own companies. The memo soon reached Cartes’ allies, who used it to press the central bank for answers. By October, reports put those loans at about $150 million, and foreign investors were dumping Ueno’s bonds. Frozen accounts, rising anger The seizure of the insolvent bank left Ueno’s nearly 3 million customers unable to access their life savings, withdraw cash or use their bank cards. The digital lender had aggressively courted Paraguayans who had never had a bank account, and the damage cut across every social class. Even players on the national soccer team say their accounts are frozen, according to a statement posted by team captain Gustavo Gómez. “The ripple effect on the general population has been immense throughout the whole country,” Nickson said. “That has fueled the ire of many people in Paraguay who are not particularly politically aware or very interested in politics. That’s what makes this different.” Some depositors began recovering their money Thursday. The central bank said the first payments would go to customers with deposits of up to 10 million guaraníes (about $1,600) who have no debts to Ueno and hold an account at another institution, and that more groups would follow. It calls the collapse an isolated case and insists the broader financial system is safe. Former Ueno CEO Miguel Vázquez has been charged with crimes including breach of trust and attempted fraud, and a judge has ordered six bank directors held in pretrial detention. Police and prosecutors raided company offices in Asunción and confiscated nine luxury vehicles from Vázquez’s home early Friday. ___ DeBre reported from Salto, Uruguay and Batschke from Montevideo, Uruguay. Copyright 2026 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed without permission.