Teachers strike in Paraguay to demand pension fund protections following bank's collapse

Public schoolteachers went on strike in Paraguay Monday and took to the streets of several cities following the collapse of a major bank that resulted in the removal of the nation’s president last week.

Silvio Piris, the president of the Federation of Paraguayan Educators, said that teachers in Paraguay are concerned over the fate of around 60 million dollars in pension funds that had been deposited in Ueno, the bank Paraguay’s government intervened in last week.

“We want the return of that money to be a priority,” Piris told Paraguay’s Channel 9.

More than 3 million people were frozen out of their bank accounts last Tuesday after Paraguay’s government intervened in Ueno Bank. Its closure has also affected pension funds and government-owned accounts.

The bank’s collapse led to the removal of Paraguayan President Santiago Peña, who was accused by legislators of using his political influence to steer hundreds of millions of dollars in public funds into Ueno while regulators overlooked risky insider lending.

Peña was charged on Saturday with two crimes related to the bank's collapse, as an anti-corruption probe that also involves the former head of Paraguay’s central bank expands. The former president is being held at a military base while investigations continue. He has been replaced by his vice president, Pedro Alliana.

In a press conference Saturday, prosecutors said Peña would be investigated for the crimes of breach of trust and administration for personal gain, and could face up to 20 years in prison if found guilty.

The impeachment charges against Peña allege that the former president held a stake in Ueno’s holding company, which he divested under pressure last year, and appointed a former Ueno executive to run the central bank that regulated it. Lawmakers also accuse Peña of letting the state pension fund deposit $355 million at the bank, beyond legal limits. Peña has denied wrongdoing.

The Central Bank last week began to return deposits to account holders, and said that by Saturday it had partially or fully refunded more than 1.2 million Ueno customers. Bank deposits in Paraguay are insured up to an amount of around $37,000.

The crisis has sparked multiple protests from account holders that have resulted in clashes with police. It has also generated doubts over the stability of Paraguay’s financial system. The nation’s currency, the guarani, has lost about 8% of its value against the U.S. dollar since Ueno was intervened.

In a press conference Monday, U.S. Secretary of State Marco Rubio said Peña's removal will not affect relations between the U.S. and Paraguay. During his administration, Peña was an ally of the Trump administration and enlisted the South American country in the Shield of the Americas, an initiative that seeks to fight drug cartels in Latin America.

“We've had a good constructive relationship with President Peña, but there is an internal process going on in Paraguay, that we're not involved in and aren't going to get involved in,” Rubio told reporters. “I don't believe this change will in any way negatively impact our relationship.”

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