Paraguay's former president faces prosecutors after his removal over bank collapse

Paraguay’s former president was taken to the attorney general’s office for questioning Saturday, just hours after being ousted by Congress over the collapse of a major bank. The Central Bank said it was working to compensate hundreds of thousands of people who were locked out of their accounts this week.

Drone footage taken by Paraguay’s Telefuturo showed ousted President Santiago Peña arriving at the attorney general’s compound in a black SUV, escorted by police officers. He wore navy blue pants and a white shirt and was not handcuffed.

Paraguayan prosecutors on Friday ordered the arrest of Peña and former Central Bank chief Carlos Carvallo as part of a criminal investigation into alleged breach of trust and other offenses tied to the collapse of Ueno Bank. Peña was transferred to a military base late Friday as hundreds of protesters gathered outside his home.

The arrest order was issued soon after the Senate removed Peña from office in a unanimous vote. The verdict came just three days after regulators seized Ueno Bank, freezing nearly 3 million customers’ access to their savings and triggering a political crisis.

Peña was replaced by Vice President Pedro Alliana, who began naming a new Cabinet Saturday. The Central Bank said Saturday that 1.2 million Ueno customers had received partial or full reimbursement of their insured deposits under Paraguayan law.

Lawmakers accused Peña of using his political influence to steer hundreds of millions of dollars in public funds into Ueno while regulators overlooked risky insider lending. Peña has denied wrongdoing.

The removal of U.S. President Donald Trump's ally marks the biggest political crisis in Paraguay in over a decade. The landlocked country of 6 million people returned to democratic rule in 1989. Since then, it has mostly been governed by the conservative Colorado Party.

Peña submitted his resignation Thursday, but Congress did not accept it and pressed ahead with an impeachment trial. Opposition lawmakers insisted on his removal to prevent him from leaving office with immunity.

“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.”

In a farewell message released shortly before he was ousted Friday, Peña expressed hope his departure would spare Paraguay further harm.

“I do not want my presence to be a cause of greater division or instability,” he wrote. “My responsibility is to put the country above my personal fate.”

Public outrage has intensified by the day. Thousands of protesters demanding access to their frozen savings and accountability for Ueno’s failure have clashed with police firing rubber bullets and pepper spray this week. Paraguay’s largest teachers’ union, which has more than 40,000 members, plans to begin an indefinite national strike Monday to press for protection of public pension funds.