ASUNCIÓN: Prosecutors in Paraguay have charged ousted former president Santiago Peña with offences linked to the collapse of Ueno Bank, which led regulators to freeze accounts belonging to nearly three million customers.
The charges include breach of trust and administration for personal gain. Prosecutors allege that Peña used his political influence to direct hundreds of millions of dollars in public funds to the bank, while regulators failed to act on risky insider lending. Peña has denied wrongdoing.
Paraguay’s Congress removed Peña from office unanimously on Friday after rejecting his resignation. Vice President Pedro Alliana has taken over as president.
A judge has ordered Peña to remain at a military base during the investigation and frozen his assets. Prosecutors say he could face up to 20 years in prison if convicted.
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The bank’s collapse has triggered protests and clashes with police, deepening the country’s political and financial crisis. Regulators intervened in Ueno Bank earlier this week, freezing customer accounts.
The Central Bank has said that 1.2 million customers have received partial or full reimbursements of their deposits. Deposits of up to $37,000 are insured.
Former Central Bank chief Carlos Carvallo has also been arrested as part of the investigation. A major teachers’ union has announced plans for an indefinite strike from Monday, demanding protection for public pension funds.
The charges against Peña are allegations and do not amount to a conviction.
With input from media reports.