Trump and Netanyahu ally impeached and detained

Paraguay’s former President Santiago Pena, a close ally of US President Donald Trump and Israeli Prime Minister Benjamin Netanyahu, has been impeached and placed under house arrest over a massive banking scandal that has put nearly three million people’s savings in jeopardy.

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, according to AP.

The arrest order also targets former Central Bank chief Carlos Carvallo, who previously served as a senior executive at Ueno. The authorities have accused Pena 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.

The embattled leader failed to appear at Friday’s Senate hearing after lawmakers rejected his request for an additional 72 hours to prepare his defense. His lawyers argued that he had been denied due process and threatened to challenge the proceedings in court.

Vice President Pedro Alliana has since been sworn in as Paraguay’s new leader and is expected to serve out the presidential term until August 2028.

The political earthquake was triggered earlier this week when regulators seized control of Ueno Bank over serious solvency problems, freezing the accounts of nearly three million customers. The lender had reportedly accumulated more than $800 million in public deposits, including pension funds, while rapidly expanding under Pena’s presidency.

Senator Esperanza Martínez previously told RT that Pena and his associates had 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 alleged, describing the operation as a Ponzi scheme that artificially inflated the bank’s financial standing.

Pena, who took office in 2023, cultivated close ties with both Washington and Israel. His government aligned itself with Trump’s regional security initiatives, including the US-led ‘Shield of the Americas’, while Pena also joined the American president’s ‘Board of Peace’. Trump personally 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 Jerusalem in December 2024 – joining the US, Guatemala, Honduras, Kosovo and Papua New Guinea – and pledging to stand with Israel “no matter what.” He also vocally supported the US-Israeli war against Iran, explicitly endorsing the joint military offensive launched in February. Paraguay designated Iran’s Islamic Revolutionary Guard Corps (IRGC), Hezbollah and Hamas as terrorist organizations, a move welcomed by Netanyahu, who personally thanked Pena for his “unconditional support” for Israel.

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.