Paraguayan police search the house of former president connected to bankrupt bank

A paraguay police conducted searches in the residence of Santiago Peña, near the capital, in the context of the investigation of the bankruptcy of Ueno Bank, case that resulted in the dismissal of the former president, the prosecutor said.

The banking crisis, which quickly turned into a political crisis, broke out on Tuesday when the Central Bank of Paraguay (BCP) put Ueno Bank under intervention due to insolvency. The deposits of almost three million people, the equivalent of half the country's population, were frozen.

The search for the residence of the destitute head of state was carried out on Sunday, in the context of accusations of “abuse of trust” and “deviation of resources for personal purposes”, the Public Prosecutor (MP), in a statement.

According to the prosecution of the MP, Santiago Peña obtained in May 2024 two loans from Ueno Bank, worth approximately 450,000 euros, to finance the construction of the residence that was the target of searches.

On Saturday, a Paraguayan judge had ordered preventive arrest for the former president, who was formally accused by the MP of breach of trust and administration for his own benefit.

“The citizen [Santiago Peña] is subject to the figure of the preventive arrest,” the judge of the economic crime court Humberto Otazú told journalists, saying that Peña “absted to make statements” during the judicial hearing.

The judge ordered the former 47-year-old President to remain detained in the premises of the Presidential Escort Regiment, to which he was taken on Friday when a warrant was executed.

This, after a 47-year-old Santiago Peña, whose term of office would normally end in 2028, would be removed from office by the Upper House of the Paraguayan Parliament for “bad performance of functions”.

According to the prosecution of the MP, Peña “interceded in the placement, and permanence of important sums of money from public entities” at Ueno Bank, which received during the mandate of the now former President of Paraguay the equivalent of more than 710 million euros from public coffers.

To this was added the concern of thousands of savers, who denounced not having access to their resources, including 32,000 pensioners from the Social Security Institute, one of the country's main pension funds.

The vice president, Pedro Alliana, took power in the country and determined on Sunday that taxpayers affected by Ueno Bank’s bankruptcy “do not pay fines, penalty payments or interest related to this problem.”.

The new head of state reported that deposits of almost 1.2 million savers have already been restored, totaling about EUR 142 million. The process should continue throughout the week.

In the Ueno Bank investigation, the MP accused 27 other people, including Miguel Vasquez, one of the founders of the bank.