Paraguay's President Santiago Peña impeached and arrested

Paraguay's President Santiago Peña has been impeached and placed under house arrest after the collapse of a digital bank with links to his private business interests.

Peña was arrested on Friday minutes after lawmakers, including from his own party, unanimously voted to remove him from office due to a widening crisis triggered by the collapse of Ueno Bank earlier this week.

He had offered to step down on Thursday. Rather than accept his resignation, senators impeached Peña and charged him with misconduct, meaning he has been stripped of the immunity usually granted to ex-presidents.

Peña, who until last year held shares in the company that owned the bank, has denied any wrongdoing.

The demise of the digital bank has left more than half of Paraguay's population without access to their savings after it was seized by Paraguay's central bank.

An estimated three million depositors remain unable to access their savings and pensions prompting widespread protests particularly in the capital, Asunción.

The impeachment charges that led to Peña's removal alleged he had conflicts of interest, manipulated regulatory oversight, diverted pension funds, and participated in an institutional cover-up involving the central bank.

Peña is due to be questioned on Saturday over allegations of breach of trust, influence peddling, and misappropriation of funds, prosecutor Silvia Margarita Gonzalez Vester said.

Peña's impeachment passed with 44 out of 45 senators voting in favour of it. One lawmaker was absent.

Afterwards, senate president Basilio Núñez said Peña was found guilty of "dereliction of duty".

Paraguay's Vice-President Pedro Alliana was then sworn in as interim President.

"Compatriots who are now going through a difficult time as a result of the financial collapse will be fully compensated," said Alliana, who will serve as President until 2028.

Senator Rafael Filizzola said: "We are facing the biggest corruption scandal in our democratic history – a tremendous blow to the state, to private citizens, and to the country's credibility and image."

Analysts say Peña is likely to now be prosecuted over the bank's collapse.

His defence lawyer Ricardo Preda described the allegations as a "reckless accusation" that was "irresponsible and opportunistic".

In an address to the nation on Thursday, Peña said that he was sorry and that "it was never my intention to betray the trust you placed in me".

Paraguay President Santiago Peña resigns after bank collapse