Paraguay's Senate has removed President Santiago Peña from office, and prosecutors have charged him over his ties to Ueno Bank, a digital lender whose sudden failure froze the savings of nearly 3 million people. On November 7, 2026, a judge ordered him held in pretrial detention at a military facility.
Vice President Pedro Alliana, who was elected on the same ticket in 2023, was sworn in as president on November 6. Paraguay is Taiwan's only diplomatic ally in South America, and Taipei says the change of leader will not affect relations.
Five Days From Bank Failure to Impeachment
The crisis moved fast. On November 3, Paraguay's central bank found that Ueno had fallen below minimum solvency requirements and put it into resolution, its strongest step short of liquidation. Millions of customers were locked out of their accounts. In a country of 6.5 million people, Ueno held accounts for almost half the population.
Peña announced his resignation on November 5. Lawmakers refused to accept it and went ahead with impeachment instead. On November 6, the Senate unanimously found him guilty of malfeasance in office. He is the first Paraguayan president to be removed from office since Fernando Lugo in 2012.
Prosecutors Move Against Peña and Central Bank Chief
That same day, four prosecutors handling the Ueno case ordered the arrest of Peña and Carlos Carvallo on suspicion of breach of trust and other offenses, Paraguay's Public Ministry said. Peña was first confined to his home until he could be brought before the ministry's Economic Crimes and Anti-Corruption Unit. Carvallo, a former Ueno president, was held by the National Police. Peña had appointed him to run the central bank, and Carvallo resigned from that post days before Ueno failed.
On November 7, prosecutors formally charged Peña with breach of trust and administration for personal gain, and a judge ordered him moved to a military facility, Reuters reported. Carvallo faces similar charges, plus producing false public documents. He was also ordered held before trial.
Lawmakers said Peña put state assets at risk and profited from his ties to the bank. He was a business partner of the group that owns Ueno until March 2025. As of June, public institutions, including the state pension fund, held about $850 million at Ueno. Earlier this year, leaked internal regulatory reports had warned that the bank was lending too heavily to certain companies.
Peña Apologizes but Denies Wrongdoing
Peña denies wrongdoing, and his lawyer, Ricardo Preda, says he will plead not guilty. Preda argued that removing a president in the middle of a bank rescue is itself destabilizing. "What sets a serious country apart is not that its banks don't fail, but how it responds," he said. In a video message posted on X, Peña told Paraguayans: "I want to apologize to the Paraguayan people if I have failed you."
His critics were scathing. Opposition Senator Rafael Filizzola called it "the biggest corruption scandal in our democratic history." Former Finance Minister Manuel Ferreira compared the case to Bonnie and Clyde. "They didn't rob us with a pistol, they robbed us with an app," he said.
The central bank says it has paid the equivalent of $160 million to almost 1.2 million savers through the state deposit guarantee scheme. Analysts warn that the damage to Paraguay's reputation as a stable place to invest may last much longer.
Taipei Moves Quickly to Reassure Its Ally
Peña was one of Taiwan's most outspoken supporters. At the United Nations General Assembly in September, he said Paraguay would not "remain neutral." Paraguay has recognized Taiwan since July 1957 and is one of only 12 countries that still do.
Taiwan's Ministry of Foreign Affairs said on November 6 that it respected Paraguay's constitutional process and that the leadership change would not affect diplomatic ties or cooperation. That cooperation includes a Taiwan-Paraguay sovereign AI computing center and a smart technology park. Alliana belongs to Peña's governing Colorado Party, which Taipei sees as a sign of continuity. But public anger has not stopped with Peña. On the night Alliana was sworn in, protesters outside Congress held signs rejecting him and "any other Colorado" as president. He has not spoken publicly about Taiwan.
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