Resigned Paraguayan President Placed Under House Arrest Amid Collapse of One of the Country's Largest Banks

The Public Prosecutor’s Office in Paraguay on Saturday filed charges against ousted President Santiago Peña, who was placed under pretrial detention in connection with his alleged responsibility for a banking scandal.

The 47-year-old conservative president, a close ally of Washington whose term was scheduled to end in 2028, was removed from office on Friday after the Senate unanimously voted to convict him over the collapse of the “Ogdo” bank.

Following a hearing with Peña, Judge Hernán Otazú told reporters that he had ordered the former president to remain in pretrial detention at the same facility in Asunción to which he was transferred after his ouster on Friday.

The banking crisis, which quickly escalated into a political crisis, erupted on Tuesday when the Central Bank placed the once-thriving digital “Ogdo” bank under guardianship due to its financial troubles.

The central bank’s intervention froze the deposits of nearly three million people, the number of customers declared by the bank, which amounts to roughly half of Paraguay’s population. The impact also extended to companies, institutions, and pension funds.

Peña, who had ties to the group controlling the bank, had offered his resignation.

However, lawmakers proceeded with impeachment proceedings to strip him of the political immunity he would have enjoyed had he stepped down voluntarily.

He was succeeded by his vice president, Pedro Alliana, who pledged not to abandon the rights of depositors, thousands of whom took to the streets in protests demanding the return of their money.

Peña, who assumed power in 2023, held shares in Ogdo Holding, the parent company of the bank, before selling them last year.

Peña is also accused of a conflict of interest for appointing Carlos Carvalho, the former head of Ogdo bank, as the president of Paraguay’s Central Bank.

Ricardo Breda, Peña’s lawyer, denied the allegations against his client, clarifying that the decision to deposit government funds in banks is not made by the president in Paraguay, but by a minister.

Giovanni Catulinom, 40, was not among those who received their funds. He told Agence France-Presse that approximately $16,000 in funds from a travel agency he recently established remain frozen in the bank.

“I lost the fruits of 16 years of work,” he said.