Paraguay's ex-president Peña jailed pending trial over ueno collapse

A Paraguayan judge sent former President Santiago Peña to pretrial detention Saturday, locking him up at a military facility while prosecutors dig into his ties to the collapsed digital lender ueno. Judge Humberto Otazú said holding Peña was the only way to keep him in the country as the case moves forward. The charges: breach of trust and administration for personal gain. It came just one day after lawmakers threw Peña out of office, turning a banking meltdown into a full-blown political firestorm.

Peña showed up at the Attorney General's Office earlier Saturday to face prosecutors, then left in custody. His lawyer, Ricardo Preda, told reporters his client is pleading not guilty. 'We will submit to the investigation and I am sure that when this investigation is over the result will be the dismissal,' Preda said.

Prosecutors claim Peña leaned on government agencies and state-owned entities to keep piles of public money parked at ueno, even as he kept financial ties to the lender — a conflict of interest, they argue. Peña held shares in ueno's holding company until March 2025. He has denied any wrongdoing and said the bank's troubles were a regulatory matter. Prosecutor Nancy Salomón said each of the two charges could bring up to 10 years behind bars.

The judge didn't stop at Peña. Otazú also ordered former central bank chief Carlos Carvallo held in a detention center on charges of breach of trust, producing false public documents and administration for personal gain. Carvallo, who ran ueno until 2023 and resigned from the central bank earlier this week as the crisis boiled over, didn't respond to a request for comment.

Peña's fall vaulted Vice President Pedro Alliana into the top job. The longtime Colorado Party politician was sworn in Friday and will finish the term through August 2028. Meanwhile, protests have rocked Asuncion, regulators are scrambling to keep the damage from spreading across the wider financial system, and the central bank said Saturday it had paid out the equivalent of $160 million to nearly 1.2 million savers under the state deposit guarantee scheme.

For the millions of ueno customers still fighting to reach their accounts, the payouts offer a partial lifeline — and the arrests signal prosecutors aren't done. Peña's defense is betting the investigation clears him. Until then, he waits in a military facility, and Paraguay waits to see how far the fallout reaches.