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The criminal association charge over his alleged role in the collapse of the bank comes a week after his removal.

Paraguayan prosecutors have charged former president Santiago Pena with criminal association over his alleged role in the collapse of the digital bank Ueno, a week after Congress removed him from office.

The prosecutor’s office announced the new charge on Friday, adding to the breach of trust and self-dealing charges already facing Pena, who is being held in pretrial detention at a military facility.

The 47-year-old former leader is accused of using his position to direct millions in government funds to Ueno and concealing or downplaying its financial troubles, despite warnings of risky lending practices, while having financial ties to the bank.

He denies all charges.

Pena, who entered office in 2023, held a stake in the bank’s holding company until last year.

On Thursday, investigators raided his official residence in the capital, Asuncion. The prosecutor’s office said agents from the economic crimes unit were extracting data and gathering relevant information for the investigation.

Last week, Pena tried to step down as president, but Congress rejected his resignation, instead removing him from office through impeachment. Pena was arrested shortly after his removal.

The collapse of Ueno left customers locked out of their accounts, prompting huge protests across the country as thousands demanded accountability and their money back.

Prosecutors had been looking for missing funds and said on Friday that assets had been located abroad, although they did not specify in which countries. They had previously asked the United States, Luxembourg and Argentina for help locating the missing money.

“The necessary steps are under way to request that they be frozen,” prosecutor Francisco Cabrera told reporters.

Three former central bank officials were also arrested on Friday, accused of having known about Ueno’s issues since late last year.

The bank, which held more than $800m in public funds, grew quickly under Pena’s presidency from a financial technology company into a large firm handling state pensions and the accounts of several government entities.

The credit ratings agency Fitch has placed Paraguay’s sovereign rating on watch for a possible downgrade, which would make it more expensive for the government to borrow money.

On Thursday, the Central Bank said it had returned savings to more than 1.8 million people who had deposited money at the bank.

Paraguay’s President Santiago Peña has been impeached and placed under house arrest after the collapse of a digital bank with links to his private business interests.

Peña was arrested on Friday minutes after lawmakers, including from his own party, unanimously voted to remove him from office due to a widening crisis triggered by the collapse of Ueno Bank earlier this week.

He had offered to step down on Thursday. Rather than accept his resignation, senators impeached Peña and charged him with misconduct, meaning he has been stripped of the immunity usually granted to ex-presidents.

Peña, who until last year held shares in the company that owned the bank, has denied any wrongdoing.

The demise of the digital bank has left more than half of Paraguay’s population without access to their savings after it was seized by Paraguay’s central bank.

An estimated three million depositors remain unable to access their savings and pensions prompting widespread protests particularly in the capital, Asunción.

The impeachment charges that led to Peña’s removal alleged he had conflicts of interest, manipulated regulatory oversight, diverted pension funds, and participated in an institutional cover-up involving the central bank.

Peña is due to be questioned on Saturday over allegations of breach of trust, influence peddling, and misappropriation of funds, prosecutor Silvia Margarita Gonzalez Vester said.

Peña’s impeachment passed with 44 out of 45 senators voting in favour of it. One lawmaker was absent.

Afterwards, senate president Basilio Núñez said Peña was found guilty of “dereliction of duty”.

Paraguay’s Vice-President Pedro Alliana was then sworn in as interim President.

“Compatriots who are now going through a difficult time as a result of the financial collapse will be fully compensated,” said Alliana, who will serve as President until 2028.

Pedro Alliana has been sworn in as the new president of Paraguay, after a banking scandal led to the impeachment of his predecessor, Santiago Pena.

On Friday, Alliana, 52, took the oath of office to become the South American country’s 53rd president.

Previously, Alliana had served as vice president under Pena since the start of the latter’s term in 2023.

But Pena’s tenure came to an abrupt end earlier in the day, after 44 of Paraguay’s senators voted to remove him from office. One senator in the 45-member chamber abstained.

“I take my leave with gratitude, while fully acknowledging the anguish of those who are currently awaiting answers,” Pena wrote on social media on Friday afternoon.

The impeachment marked a rapid fall from power for Pena, a member of the long-governing Colorado Party. His departure coincides this week with the sudden collapse of a prominent lending institution, Ueno Bank.

Questions have arisen about whether the bank was properly regulated by government institutions, and whether Pena himself had conflicts of interests involving the bank.

After Pena’s impeachment, prosecutors announced they would seek his arrest on suspicion of breaching the public trust and other crimes. The former president was reportedly detained at his home.

An arrest warrant was also issued for Carlos Carvallo, the former head of Paraguay’s central bank, which has been accused of failing in its oversight duties. Carvallo resigned earlier this week.

The scandal erupted early on Tuesday, when the central bank announced that Ueno had fallen below the legal standards for solvency, meaning it did not have enough collateral to cover its loans and other ventures.

It seized the lender, transferring its remaining assets to other banking institutions as a safeguard.

Millions of Ueno clients, however, abruptly lost access to their accounts and pension payments as a result of the crisis.

With roughly 3 million members, the bank counted nearly two thirds of Paraguay’s adults among its customers.

The company had rocketed to prominence in recent years, consolidating in 2023 under the brand Ueno — sometimes stylised with lowercase letters as “ueno”. It had grown to be Paraguay’s fifth largest bank by deposits, with $800m in public money fuelling its growth.

Prior to its collapse, Ueno claimed that more than a million Paraguayans had opened their first bank account with the firm.

In 2023, Pena was identified as a shareholder of Ueno’s parent company, though he claimed to have sold his shares in early 2025.

Following the collapse of the lender, Pena offered to step down, citing the “the need to preserve our democratic institutions”.

But on Thursday, Paraguay’s Congress rejected his resignation and instead proceeded with his impeachment.

Pena’s conservative political movement, the Colorado Party, was among the groups in favour of the manoeuvre. The party has largely dominated Paraguayan politics since 1948.

“We support the impeachment of the president of the republic, Santiago Pena, in order to restore the republic’s institutions,” Horacio Cartes, a former president and party leader, wrote in a statement.

Had Pena been allowed to resign, he would have retained the right of former presidents to become a member of the Senate, with legal protections from prosecution.

In Thursday’s hearing, the Chamber of Deputies voted 78 to zero to impeach Pena, allowing for the Senate to remove him from office the following day.

It declined, however, to open impeachment hearings against Alliana.

The newly inaugurated president began his political career as the governor of his home department, Neembucu, in Paraguay’s south, and he served nearly a decade in the Chamber of Deputies, including three years as its president.

Alliana assumes the leadership of Paraguay at a time when it is facing one of its most severe political and economic scandals in recent history.

Prosecutors have questioned whether Ueno was shielded from accountability due to its government connections. Some $355m in state pension funds were invested in the bank.

At least 27 people are facing criminal charges in relation to the scandal, including lead shareholder Miguel Vazquez.

Among the crimes being investigated are attempted fraud, breach of trust, misappropriation of funds and influence peddling.

Pena has signalled he plans to cooperate with the investigation, though he did not appear at the impeachment hearings personally on Friday, sending his lawyers in his stead.

“I do not wish for my presence to be a source of greater division or instability. It is my responsibility to place the country above my own personal fate,” he wrote in a statement.

Earlier in the day, however, he signalled displeasure with the fast pace of the Senate impeachment hearing, requesting an extension “to exercise [his] constitutional right to a defence, as the time currently allotted is clearly insufficient”.

Political turmoil comes after a digital bank’s failure has left half the population without access to their accounts.

Lawmakers in Paraguay have resumed impeachment proceedings against President Santiago Pena, a day after he resigned amid links to the country’s worst financial crisis in decades.

The Senate convened a rare session on Friday to consider Pena’s political future, opting to move forward with efforts to remove the conservative economist from office.

Politicians formally filed impeachment charges against the president on Thursday, despite his resignation. Pena, who was elected in 2023, has requested a 72-hour extension to prepare his defence before the Senate.

The proceedings follow a vote in Paraguay’s lower house of Congress, where lawmakers overwhelmingly approved impeachment charges against Pena in a 78-0 vote.

The political turmoil surrounding the country’s president follows Paraguay’s central bank’s intervention earlier this week at Ueno Bank, one of the country’s fastest-growing digital lenders, citing breaches of minimum solvency requirements.

Pena previously held a stake in Ueno’s parent company, Grupo Vazquez, until last year, when he claims he sold his shares. Paraguayan lawmakers have accused the president of a conflict of interest and questioned whether authorities failed to act on warnings about the lender’s financial position.

The collapse of Ueno, which held $850m in public funds, has left more than half of Paraguay’s population without access to their accounts, drawing intense scrutiny over the government’s relationship with the bank and financial regulators’ effectiveness.

“My greatest wish is that the return of those funds be guaranteed, that the deposit guarantee fund fulfil its purpose, and that public funds — as well as the resources that belong to all Paraguayans — be protected,” Pena said in a Thursday video address where he apologised for failing to prevent the crisis.

The crisis has also prompted the resignation of Paraguay’s central bank chief, Carlos Carvallo, and arrest warrants for eight Ueno executives, who later turned themselves in.

Paraguay’s attorney general has ordered three criminal investigations into the bank’s collapse, including its regulatory oversight and the placement of public funds in the institution.

If Pena is convicted in an impeachment trial, he would lose the lifetime Senate seat and associated legal protections ordinarily granted to former Paraguayan presidents.

DEVELOPING STORYDEVELOPING STORY,

Paraguayan President Santiago Pena resigned on Thursday after calls for his removal swelled following the collapse of digital lender ueno that left millions of customers unable ‌to access their accounts.

“I do so with the stability of our country, social peace and the need to preserve our democratic institutions in mind,” he said in a video recorded address on Thursday.

Pena, an ally of US President Donald Trump, is stepping down after the ⁠opposition called an extraordinary session to begin the process of filing an impeachment motion in Congress, and as protesters demanded his resignation.

Earlier on Thursday Pena lost backing from members of his own conservative party. Vice President Pedro Alliana is set to take office as his replacement.

Lawmakers had accused Pena of conflicts of interest, misuse of pension funds and institutional cover-ups linked to the collapse of ueno, which had grown ‌quickly ⁠from a niche fintech player into a mid-tier bank administering close to $850 million in public funds.

“He is accused of negligence at the very least and complicity in covering up the fact that the bank was insolvent,” said Al Jazeera’s Latin America editor Lucia Newman.

“The congress right now is tying to impeach the president and the vice president, this session is underway,” she added. “As a I speak, there are people outside urging congress not to accept the resignation of the president because they say that they want him tried and impeached.”

Paraguay’s central bank intervened in ueno after determining ⁠that it had breached minimum solvency requirements, setting off a crisis that has left the company’s roughly 3 million customers, in a ⁠country of 6.5 million people, unable to access accounts.

“My greatest wish is that the return of those funds be guaranteed, that the deposit guarantee fund fulfill its purpose, and that ⁠public funds – as well as the resources that belong to all Paraguayans – be protected,” Pena added in his address.

Ueno has made no public statement on the issue.