By Daniela Desantis and Daina Beth Solomon
ASUNCION, Nov 13 (Reuters) - Paraguay prosecutors on Friday added criminal association to the charges facing impeached President Santiago Peña, expanding a probe
into the political links surrounding the collapse of digital bank ueno.
The collapse earlier this month paralyzed nearly 3 million user accounts, quickly triggering the ouster of Peña and a shakeup of the central bank, including the resignation of its head, Carlos Carvallo. The Central Bank did not immediately reply to a request for comment.
Both were charged with breach of trust and administration for personal gain and were placed in pretrial detention. They have denied wrongdoing.
The new charge was brought against Peña as well as Carvallo, three former central bank board members and the former banking regulator head, according to a charging document.
Prosecutors say the group sought to favor ueno and its parent company, Grupo Vazquez, and alleged Peña played a key role.
"From the presidency of the Republic, Santiago Peña Palacios allegedly acted as the head of the organization," prosecutors said.
Peña’s lawyer, Ricardo Preda, did not immediately respond to a request for comment.
Until March 2025, Peña had been a business partner of Grupo Vazquez. After his election in 2023, he tapped Carvallo - ueno's former president - to lead the central bank.
Prosecutors added that Peña was believed to have held "clandestine meetings" at the presidential residence with the head of Grupo Vazquez and personally received illicit payments - including envelopes filled with $200,000 in cash.
Prosecutors also described "systemic and coordinated" actions that blocked oversight of ueno between June and October 2026. The charging document included an organizational flowchart to outline each person's alleged role in the scheme.
Prosecutors allege Peña issued directives not to intervene in ueno and sought to suppress public warnings about the bank’s insolvency.
Another official allegedly provided regulatory cover, while another manipulated technical oversight, prosecutors alleged.
According to prosecutors, the high-level officials were aware the bank was plunging into dangerous territory, yet still pushed to attract more customers.
"They allegedly deliberately allowed the insolvent bank to carry out aggressive, large-scale marketing campaigns to attract deposits from new savers until the last minute," prosecutors said.
Ueno was launched in 2021 as a sleek, millennial-friendly banking app that quickly won over Paraguayans who had been underserved by brick-and-mortar institutions. It grew to serve about 3 million customers - nearly half the country's population of 6.5 million people.
But in recent months, internal regulatory reports warning of excessive lending to certain companies were leaked to local media outlets. Following growing public pressure, Paraguay’s central bank on November 3 determined that ueno had breached minimum solvency requirements and put the bank into resolution - its strongest measure short of immediate liquidation.
(Reporting by Daniela Desantis, Writing by Aida Pelaez-Fernandez, Editing by Nick Zieminski)
