PARAGUAY SENATE IMPEACHES PRESIDENT OVER BANKING CRISIS

Read Time:3 Minute, 30 Second

By ‘Balogun Ibrahim

Paraguay’s Senate has impeached President Santiago Peña over a banking crisis that left approximately three million people unable to access their deposits following the collapse of Ueno Bank.

The impeachment vote took place on Friday, despite Peña reportedly offering to resign over the crisis. Lawmakers proceeded with the trial, a move that would strip him of the immunity enjoyed by former presidents.

Peña did not attend the Senate trial, despite earlier pledging to defend himself against the allegations.

Announcing the outcome, Senate President Basilio Núñez declared the president guilty of poor performance in the discharge of his duties following a vote of 44 senators in favour of impeachment, with one senator absent.

The crisis erupted after the Central Bank took control of Ueno Bank on Tuesday and froze its accounts over concerns about the institution’s financial stability, leaving millions of customers unable to withdraw their money.

However, a Central Bank official told Agence France-Presse that advance payments to some affected depositors began on Thursday afternoon.

The bank’s collapse triggered widespread protests across the South American country, with thousands of residents demanding accountability from Peña, who reportedly held a stake in Grupo Vázquez, the parent company that controlled Ueno Bank, until last year.

Members of the president’s own political party also supported his impeachment.

In a televised address to the nation on Thursday, the 47-year-old president apologised to citizens over the crisis, saying he never intended to betray their trust.

“ It was never my intention to betray the trust you placed in me,” he said.

The protests continued for a third consecutive night on Thursday in the capital, Asunción, and other cities, as depositors demanded the return of their savings.

One of the protesters, Cynthia Farina, told AFP that the collapse had affected families, business owners and individuals, including her son, who had savings in the bank.

Police reportedly dispersed demonstrators in the capital using tear gas and water cannons.

According to José Maciel of the Central Bank’s Deposit Guarantee Fund, the initial phase of the repayment programme would cover deposits of up to approximately $1,600 for eligible customers without outstanding loans who have accounts with other financial institutions in Paraguay.

He added that other categories of beneficiaries would be announced gradually as the payment process progresses.

Ueno Bank began as a small financial technology company operating a digital-focused model that attracted low-income customers before expanding into a major banking institution. It also managed state pensions and accounts belonging to several government agencies.

The opposition has accused Peña of having a conflict of interest in the bank’s operations, an allegation he has denied.

The Attorney General’s office has reportedly launched an investigation into the president over matters relating to the supervision and resolution of Ueno Bank, as well as the placement of public funds in the institution.

Meanwhile, the United States Embassy in Paraguay expressed solidarity with the country’s citizens on Friday without directly commenting on the president’s impeachment.

The banking scandal has shaken Paraguay, a country generally regarded as economically and politically stable.

Constitutional experts and lawmakers told AFP that impeaching Peña, rather than allowing him to resign, would prevent him from becoming a senator for life and enjoying immunity from prosecution.

Vice-President Pedro Alliana is expected to complete the current presidential term, which runs until 2028.

The crisis has also led to the departure of Central Bank President Carlos Carvallo and Interior Minister Enrique Riera, while eight Ueno Bank executives have been arrested.

In a related development, prosecutors on Friday raided the offices of ITTI, a technology company affiliated with Grupo Vázquez, recovering hard drives, computers and other materials as part of the investigation.

Prosecutor Francisco Cabrera said investigators discovered several documents that could assist their inquiries.

The crisis has also affected neighbouring Argentina, where approximately 1,000 ITTI employees were reportedly suspended for 30 days without pay.

The country’s football sector has equally felt the impact, as Ueno Bank sponsors several top-flight clubs and the national football team.

Reacting to the development, members of the national team said they were also victims of the crisis in a statement published on X.