Paraguay's ousted president charged with crimes linked to collapse of major bank

Prosecutors in Paraguay on Saturday charged recently deposed former President Santiago Peña with two crimes linked to the collapse of a major bank that has jeopardized the savings of hundreds of thousands of account holders and unleashed the nation's biggest political crisis in a decade.

In a press conference Saturday, Nancy Salomón, the South American nation’s chief prosecutor for corruption and economic crimes, said Peña would be investigated for the crimes of breach of trust and administration for personal gain.

Peña’s removal marks a major crisis for Paraguay, which returned to democratic rule in 1989. Since then, the nation of 6 million people has been mostly governed by the conservative Colorado Party, of which Peña was a member.

Prosecutors said the former president could face up to 20 years in prison if he is found guilty of both crimes and have asked a judge to freeze Peña's assets and send him to prison while investigations continue.

Later on Saturday, Paraguayan Judge Humberto Otazu complied with that request and said Peña will be held at a military base as investigations continue, in order to “guarantee his compliance” with the anti-corruption probe.

On Tuesday, regulators in Paraguay intervened in Ueno Bank, freezing the accounts of nearly 3 million customers and triggering a political crisis that led to Peña's removal by Congress on Friday night.

Earlier on Saturday, Peña was questioned by prosecutors at the Attorney General's compound, in the capital Asuncion. The former president was not in handcuffs but was escorted by police.

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.

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. He was replaced by Vice President Pedro Alliana, who began naming a new Cabinet on Saturday. The Central Bank said Saturday that 1.2 million Ueno customers had received partial or full reimbursement of their deposits. Under Paraguayan law, deposits of up to $37,000 are insured.

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.

On Saturday, a few dozen protesters gathered outside the Attorney General's compound hoping to express their frustration with Peña, who was driven quickly out of the building.

Some of the protesters said they also want Paraguay's new president, who was a close ally of Peña, to be investigated.

“They are all accomplices,” said Liliana Jara, a demonstrator who showed up at the site. “They are part of the same clique.”