Paraguay’s former president Santiago Pena has been impeached, placed under house arrest, and replaced by Vice President Pedro Alliana following a major banking scandal that locked almost half the country out of their accounts.
Paraguayan lawmakers swore in Alliana to lead the country on Friday, quickly replacing Pena, who is known for his close ties to US President Donald Trump and Israeli Prime Minister Benjamin Netanyahu.
Alliana is expected to serve out the presidential term until August 2028.
The country’s Senate voted on Friday to remove Pena from office over alleged misconduct linked to the collapse of Ueno Bank, a rapidly expanding digital lender with close ties to his administration.
Prosecutors subsequently placed the former president under house arrest on suspicion of breach of trust and other offenses.
Pena is accused of using his political influence to channel hundreds of millions of dollars in public funds into the lender while turning a blind eye to serious financial irregularities.
Pena, who has denied wrongdoing, announced his resignation on Thursday amid mounting public outrage and mass protests in the capital, Asuncion.
However, lawmakers refused to accept his departure and pressed ahead with impeachment proceedings, seeking to strip him of the legal immunity ordinarily granted to former presidents.
He did not appear at Friday’s Senate hearing after lawmakers rejected his request for an additional 72 hours to prepare his defense.
His lawyers claimed that he was denied due process and threatened to challenge the proceedings in court.
The political earthquake was triggered earlier this week when regulators seized control of Ueno Bank over serious solvency problems, freezing the accounts of nearly 3 million customers.
The lender reportedly accumulated more than $800 million in public deposits, including pension funds, while rapidly expanding under Pena’s presidency.
The arrest order also targeted former Central Bank chief Carlos Carvallo, who previously served as a senior executive at Ueno.
According to Senator Esperanza Martínez, Pena and his associates orchestrated a massive financial fraud involving a network of more than 50 shell companies.
“It was a colossal fraud project, involving the president of the republic and his economic circle,” she was quoted as saying by RT, describing the operation as a Ponzi scheme that artificially inflated the bank’s financial standing.
The banking collapse has sparked widespread demonstrations, clashes with police, and demands for accountability from thousands of Paraguayans whose savings remain inaccessible.
Prosecutors have also pursued numerous bank executives as the investigation into the financial disaster widens.
Pena, who took office in 2023, cultivated close ties with both Washington and the Israeli regime.
His government aligned itself with Trump’s so-called security initiatives, including the US-led “Shield of the Americas” and Gaza “Board of Peace.”
Trump praised his leadership, and Pena repeatedly described relations with Washington as being at their strongest in years.
Pena was also an outspoken supporter of Netanyahu, personally inaugurating Paraguay’s embassy in occupied al-Quds in December 2024 and pledging to stand with Israel “no matter what.”
He also vocally supported the US-Israeli war on Iran, endorsing the joint military offensive launched in February.
Paraguay designated the Islamic Revolution Guards Corps (IRGC), Hezbollah, and Hamas as “terrorist organizations,” a move welcomed by Netanyahu, who thanked Pena for his “unconditional support” for the Israeli regime.
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