Asuncion — Peña Charged Again Over Ueno Bank Collapse

Paraguayan prosecutors charged former President Santiago Pena with criminal association on Friday over his alleged role in the collapse of digital lender Ueno Bank, adding a third count against him a week after Congress removed him from office, Al Jazeera reported.

Pena, 47, is already facing charges of breach of trust and self-dealing. He is being held in pretrial detention at a military facility. He denies all charges, according to the prosecutor's office.

What is Pena accused of doing?

Prosecutors allege Pena used his position as president to direct millions of dollars in government funds to Ueno and to conceal or downplay the bank's financial troubles, despite internal warnings about its lending practices, while holding financial ties to the institution, according to Al Jazeera's reporting on the prosecutor's office statement. Pena held a stake in Ueno's holding company until last year, the outlet reported.

Investigators raided Pena's official residence in the capital, Asuncion, on Thursday. The prosecutor's office said agents from its economic crimes unit were extracting data and gathering material for the case.

How did Ueno Bank collapse?

Ueno grew during Pena's presidency from a financial technology startup into a large institution handling state pensions and the accounts of several government entities, Al Jazeera reported. The bank held more than $800 million in public funds at the time of its collapse, according to the outlet.

The failure locked customers out of their accounts and triggered large protests across the country as depositors demanded accountability and the return of their money, Al Jazeera reported.

By the numbers

• More than $800 million in public funds was held by Ueno Bank, according to Al Jazeera.
• Paraguay's Central Bank has returned savings to more than 1.8 million people who had deposited money with the bank, the outlet reported Thursday.

What happened to Pena's presidency?

Pena entered office in 2023. Last week he attempted to resign, but Congress rejected the resignation and instead removed him through impeachment, according to Al Jazeera. He was arrested shortly after his removal from office.

Three former central bank officials were also arrested Friday, accused of knowing about Ueno's problems since late last year, the outlet reported.

Where is the missing money, and can it be recovered?

Prosecutors said Friday that assets tied to the case have been located abroad, though they did not specify in which countries, according to Al Jazeera. Investigators had previously sought assistance from the United States, Luxembourg and Argentina in tracking the missing funds.

"The necessary steps are under way to request that they be frozen," prosecutor Francisco Cabrera told reporters, according to Al Jazeera.

The case has already drawn a market reaction. Fitch has placed Paraguay's sovereign credit rating on watch for a possible downgrade, a move that would raise the government's borrowing costs, Al Jazeera reported.

What to watch

• Asset freezes: Whether prosecutors formally request freezes on funds identified abroad, and in which jurisdictions.
• Fitch's rating decision: Whether Paraguay's sovereign rating is downgraded, which would affect government borrowing costs.
• Additional arrests: Whether charges against the three former central bank officials expand to other regulators or bank executives.
• Pena's defense: How his legal team responds to the criminal association charge, given his denial of the earlier breach-of-trust and self-dealing counts.
• Depositor repayments: Whether the Central Bank's reimbursement of more than 1.8 million account holders continues without further disruption.

The investigation remains active, with prosecutors describing the search for Ueno's missing funds as ongoing. Al Jazeera's report did not specify a timeline for additional charges or for the asset-freeze requests prosecutors said they intend to file.

For related coverage of institutional failures and their fallout, see HTT News' report on the Brooklyn building collapse that left eight dead and prompted its own investigation into oversight failures.

Did Pena appear before prosecutors?

Pena appeared at the Attorney General's Office a day after his impeachment, when he was first placed under house arrest amid what Al Jazeera described as a political and financial crisis triggered by Ueno's collapse. He has since been moved to pretrial detention at a military facility as the case against him has expanded from two counts to three. Al Jazeera's report, citing the prosecutor's office, did not say when Pena is expected to respond formally to the new criminal association charge or whether his legal team has filed objections to the pretrial detention order.