- 15 minutes ago
The closure of Ueno Bank prompted various actions on the part of its depositors, including the withdrawal of all their funds from the bank’s various products. But what is the link between Ueno Bank and Paraguayan public funds? We joined Mauricio Maluff to go deeper into this topic.
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00:00Tonight in this podcast for Tell Us Your English, we are going to be speaking with Mauricio Maluf.
00:05He's a political analyst. Thank you so much, Mauricio, for joining us here in Tell Us Your
00:09English. And please share with us what are your first impressions of what is happening tonight
00:15in Paraguay? What is the situation? Good evening. So they are doing a political trial of our
00:22president, an impeachment trial, which is essentially a way to, I would say, cover for
00:28the vast majority of the ruling party, the Corona Party, that has allowed and in fact
00:35enforced this bank to participate in the corrupt and illegal practices that allowed it to come
00:42to this point where a bank that were two out of three paragraphs have an account has now
00:50closed and people are left without their savings and without also the money that they use for
00:56their daily expenses. So people have been left without being able to even buy their usual
01:01daily supermarket purchases. They have been able to buy public transportation tickets.
01:07They've been left out cold without their money for a bank that allowed a large number of Paraguayans
01:14who've never had access to banking to bank through them. And this gave them a big market advantage,
01:21but made it so that their fall now left out millions, literally millions of Paraguayans
01:26without access to their money.
01:28Of course. And I was thinking how important it is to really understand, for example, that
01:34many Paraguayans did not have access to banking instruments before. And I understand that
01:40Walla Bank used this as a form of just going around with different financial and credit instruments
01:47that got to a lot of people. And now those are the main people affected, right? So can you help
01:54us,
01:54Mauricio, understand for our international audience, what is the link between this bank,
02:02this digital bank that collapsed, that showed it had no funds, was way below the limit of what was
02:08required by law and finally closed its doors, leaving all or almost three million people affected
02:16without access to their funds, as you were just saying, and public funds. Why is this bank linked
02:23to the political elite of the country, particularly President Santiago Pena, who is now facing an impeachment process?
02:32So President Santiago Pena himself used to be a stockholder for the parent company of Bueno Holding.
02:39So he held a large number of stock that he divested from before becoming president. This is true, but he
02:45maintained
02:46very close ties with the people who owned the bank. He participated in political or public events with them.
02:54So he even, just to give an anecdotal example, he walked into the team, to the dressing room with the
03:05national team,
03:06accompanied by the president of this bank. So he encouraged the bank publicly and also with his political actions.
03:13So he named a central bank president, somebody who had formerly been an employee of this bank,
03:20other high functionaries of the central bank had formerly been, or after leaving became high executives of this bank.
03:27So there were very strong ties and also political, even laws made to measure to encourage the growth of this
03:36bank.
03:36For example, our national social insurance company, EPS, where the vast majority of Paraguayanists who have a retirement account,
03:46hold one was allowed through action of the president directly and by people appointed by him to this, this entity
03:56to hold a larger amount of funds
03:59than was previously allowed into this account. Also laws that prevented banking executives from taking part of certain parts of
04:09the,
04:09especially the banking regulation industry, were changed so that this could happen.
04:14So it was a bank that always had special treatment from the government. It sponsored or co-sponsored events with
04:22the presidency or the first lady's office.
04:25So it had a lot of public support from the government. A lot of people in the government invested in
04:31it.
04:31And so this is a direct part of what allowed this to come to pass.
04:37I think the final link that's very important to mention is that an employee of the central bank, Fernando Rivarola,
04:43in July,
04:45wrote a report of practices of this bank that he thought were leading to trouble.
04:50And this report was suppressed on essentially questions of formality.
04:56So he sent it from personal email rather than his institutional email.
05:01And for this, he was removed from the central bank.
05:04And his report was suppressed until now, where we came to this political crisis that is paired now with the
05:12former bank.
05:13Of course. And all the links that you were just sharing. Right.
05:18The idea that this bank was directly tied to this political elites, particularly the president by we can imagine that
05:27more people.
05:28Right. Surrounding those decision makings in terms of the bank, as you were saying.
05:34Right. Sponsoring a lot of events that gives it legitimacy as well.
05:39It makes people trust the institution and it's a legitimacy that is being banked and supported by the officials in
05:48the government as well.
05:49And there's also this question of public funds going into the online bank as well.
05:57Right. And then pensioners and their pensions being affected.
06:01What do we know about this people, the pensioners who are not being able to access their funds?
06:09I imagine that the climate on the street is of uncertainty, but also of a lot of anger and frustration.
06:16Right.
06:17What can you tell us of how the people are feeling, particularly these retirees, for example, being unable to access
06:24their money?
06:25Well, I think I think those two are the most directly affected groups and they're the angriest, obviously the people
06:30who invested their whole life into a retirement account that was entrusted to the government.
06:39So they were they were they were they were entrusted to hold these people's money and to invest it wisely.
06:45And because they invested in this bank, a lot of people also trusted it to put personal money into it.
06:52And the people who did their daily financial activities through this bank, even if they didn't have a lot of
06:57money saved up into it, there's not many people have a lot of savings in this country.
07:02But their day, their pay was deposited into it. They spent all their daily money. Their income came through it.
07:09People who did business, even like even informal workers.
07:14So, for example, people who will sell you a sandwich in the street, did their banking through this, received their
07:19money through it.
07:20And so all these people were left without access to their funds and without any ability to conduct financial transactions
07:26other than the cash that they held in hand, essentially.
07:29So, obviously, all these people are extremely angry and they're angry with with reason.
07:34Right. As you mentioned, not only did they the government sponsor the bank with all these regulations made to measure
07:42for it, they also gave a lot of public legitimacy to it.
07:45There was a lawsuit today, to give an anecdote to it, a lawsuit today where the players of the national
07:55football team are suing the government for essentially duping them into investing all their money into this bank.
08:02Because the president would come next to the president of the bank into their dressing room and say hi to
08:09all of them and encourage them to invest in this bank, literally.
08:13And so if it happened at that level, think of the image of that sent to ordinary Paraguayans who thought,
08:20well, I don't trust banks very much, but this one has the support of the president of my retirement account
08:25of the central bank of Paraguay.
08:27And this gave them a lot of confidence to put their money there. And now they're left without it.
08:32And in all this context, of course, the big question is, particularly if you're focusing on these people who have
08:39been affected, is who is accountable for this?
08:42Who is responsible for this? Who is going to respond? Because you have a lot of people, as you were
08:47saying, dealing not only with savings that may be lost, but but with the access to their income, their access
08:53to their pensions, their daily life completely disrupted in this way.
08:57And we tend to see banking institutions as impersonal institutions. And when something like this happens that the one of
09:06the biggest frauds that we can imagine, there's no one to turn to nothing, no one to hold completely accountable.
09:13And in that context, we have the process of impeachment that has that has begun. So how is that going?
09:21Is is that a way of holding accountable? Is that what the people are asking there in Paraguay?
09:28No, that's certainly not sufficient at all. The president is one person. He certainly is responsible for this. But the
09:36entire ruling structure of this country is directly responsible for this. So if we get rid of the president, the
09:42vice president also did perform all these tasks. He also gave public support for this bank. If the vice president
09:50falls, so did the president of the Senate.
09:52So the entire succession lines to the presidency, they're all responsible for this too. I would say the majority, the
09:59ruling majority in both houses of the legislature are all responsible for passing laws that were made to measure for
10:07specifically this bank, or for example, watering down the revolving doors regulation that would have prevented all of these executives
10:15from working in the central bank.
10:16They did this for precisely the purpose of allowing this to happen. And they're all responsible for it. They're all
10:23now putting to trial the president as a way to clean their hands from this case, but they're all responsible
10:28for this also.
10:29I think even that's not enough. You have to think of all the people who were invested in the bank
10:34who profited from this robbery of the entire people of Paraguay.
10:40And not only that, because I think it's also even taking this to a broader scale than just one bank.
10:47So when a bank functioned by getting a lot of people into its digital banking system, which allowed them to
10:56give credits to people who were certainly in no position to ever pay it back.
10:59Not only the big lenders that we know about the cost of the bank's downfall. So the initial problem was
11:08that they were lending a lot of money to their own companies that were in no position to pay it
11:14back.
11:14But also ordinary Paraguayans who didn't have sufficient income to have, for example, a credit card in any other bank,
11:20were given access to credit through this bank, which may have felt at the time like a form of freedom
11:25as a kind of liberation from.
11:28And I think that a measure that allowed people to increase their daily expenses. People were buying their daily supermarket
11:35expenses on credit that they got through this bank, but were never in any position to pay it back because
11:41the bank never performed any verification.
11:43These people even have the money to keep back to the bank. And now this sort of essentially what I
11:49what I consider a form of large scale digital usury made a lot of our lives beholden to debt to
11:57this bank that is now going to be sold to private debt holders who will pursue them for many years
12:04into the country that already have been wracked by a crisis this year of corrupt money lenders going after people
12:12who have
12:13already even paid their loans. And so that you have to now add probably perhaps millions of debt to this
12:19bank who will that will not be sold in the private bond debt market.
12:23So clear. Thank you so much, Mauricio, for that explanation. Before we wrap up, I wanted to ask you precisely
12:30in this direction of understanding how to hold those responsible accountable for what is happening, what continues to happen.
12:38And first of all, what so that we explain our audience, what what is the exact moment in which the
12:46process of impeachment is right now?
12:49We understand that the Senate has rejected the resignation and continued with the impeachment process.
12:55The president has said that he will defend himself, but there were rumors of his him leaving the country.
13:04I don't know if there's something some confirmation one way or the other over there.
13:08And what are the following steps to hold the larger portion of people accountable as well?
13:15Those who have who can trace the money, those who were invested in the bank and maybe got it, got
13:20the money out.
13:21What should happen besides just the impeachment of the president?
13:26So before this call started, this may have evolved since, but before this call started, the process of conforming the
13:35people who conduct the process was being held in the bicameral chamber.
13:45The president had stated publicly that she would face this process, she would face this trial.
13:51Well, I'm not sure it's very possible that during this call, this may have advanced already, but that's where we
13:57were at before.
13:59And beyond that, so the president of the bank or the founder of the bank, Miguel Vasquez, was it's held
14:06by the national police and and a number of executives of high executives from the bank are also in home
14:16detention.
14:19And, however, beyond that, there's a lot of people responsible who are honestly not likely to face any kind of
14:26trial.
14:27So, first of all, all the senators and all the deputies that encouraged this behavior and profited from it directly,
14:33who even had loans themselves into it, are not likely to face any trials from themselves, certainly.
14:41And not to mention of the other executives, for example, the central bank functionaries who allow this to happen, or
14:48who, in fact, who even consciously suppressed information that would have prevented this from happening, have not yet faced any
14:57charges.
14:57So, I think all those people should be tried by the public prosecutor.
15:04And in addition to that, however, the larger number of people who owe us justice, I think, are not likely
15:11to face any trial unless there is sufficient public mobilization in that direction.
15:16But I think if I'm going to prognosticate, unfortunately, I think with the trial of the president, a lot of
15:23people will be satisfied and will leave the larger structure untouched.
15:27I think for there to be justice in this case, there would have to be nothing short of a financial
15:31revolution in this country that changes the entire way we organize our banking system.
15:36But nothing short of that would be sufficient to pay for what has happened, the financial crimes that have happened
15:43here.
15:44So clear. Thank you so much, Mauricio, for joining us here in this podcast, for bringing us all this information
15:51to really understand what is happening.
15:53A complex case, but I think it's so important for international audience to really understand how these banking systems are
16:02operating, particularly in Latin America,
16:05and how also the people are willing to stand up and ask for accountability when something like this happens.
16:12I think that is also very important.
16:14Thank you so much, Mauricio, once again, for participating.
16:16Of course. Of course. Thank you so much for this.
16:19I'm very happy to give a critical account after our national and international press have given nothing but praise for
16:24this bank for three years now.
16:27And it's good that it's finally come to light what they've always been responsible for.