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Latin America & Caribbean

Don’t let Maduro “steal” gold, opposition asks British bank

Opposition leaders have asked the Bank of England not to let the Venezuelan president have access to the country's gold reserves held in its vault, saying it belongs to the people.
3 Dic 2018 – 05:07 PM EST
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Nicolas Maduro, Venezuela's president, speaks as he touches a stack of 12 Kilogram gold ingots during a news conference on the country's cryptocurrency, known as the Petro, in Caracas, Venezuela, on Thursday, March 22, 2018. Crédito: Carlos Becerra/Bloomberg via Getty Images

Exiled Venezuelan opposition leaders are asking the Bank of England not to deliver 14 tons of gold bullion in its vaults, rather than hand it over to Venezuelan President Nicolás Maduro, arguing that his government is illegitimate and too corrupt to be trusted with it.

In a letter sent Friday, former National Assembly President Julio Borges and Voluntad Popular party coordinator, Carlos Vecchio, asked the bank’s governor, Mark Carney, to refuse Venezuela’s request to deliver the shipment, valued at $550 million.

They reminded the bank that the United States, United Kingdom and many European countries consider Maduro's government an illegitimate dictatorship following widespread allegations of fraud in his May re-election.

It also warned that repatriating the Venezuelan gold would “breach the BoE’s legal obligations to prevent money laundering and corruption” under UK law. “Maduro is not the legitimate owner of the gold,'' the letter said. “Without doubt the intention of Maduro and his regime is to steal these resources that rightly belong to the people, either for their own personal gain, or to finance further repression of the people,” they wrote.

The Bank of England has not indicated what it plans to do with the gold. "The Bank does not comment on these matters," it's press office told Univision in an email.

Fear of sanctions

Venezuela has been seeking to repatriate the gold bars since early November because of fears it could be seized under international sanctions, according to Reuters.

The Trump administration had piled mounting sanctions on top officials in the Venezuelan government, including Maduro, his wife, and the vice president, over the last two years. The Trump administration also issued an executive order last month prohibiting U.S. residents and citizens from engaging in any transactions with corrupt Venezuelan gold dealers, though it did not target legitimate gold transactions.

The Bank of England is one of the largest physical gold custodians in the world on behalf of more than 70 central banks and experts say it would be highly unusual not to honor a request for a shipment of gold from one of its clients.

"The more logical and likely explanation is that the US, through the White House, US Treasury and State Department have been liaising with the British Foreign office, HM Treasury to put pressure on the Bank of England to delay and push back on Venezuela’s gold withdrawal request," according to Ronan Manly, a precious metals analyst with BullionStar, a Singapore-based gold dealer.

One theory suggests that by delaying the delivery until after January 10, when Maduro begins his new term, it would be easier to make the case for holding onto the gold on the grounds of government illegitimacy.

"Network of corruption"

The letter by the two opposition leaders cited U.S. Justice Department investigations that have revealed “a network of corruption directed from the high government and containing the military, judiciary and state enterprises.” Recent court cases in South Florida have revealed stunning levels of corruption involving billions of dollars from the Venezuelan national treasury and state-run oil company, PdVSA.

“It is our understanding that there is enough legal grounding and evidence of wrongdoing for the BoE to refuse the handover of the gold, something we consider appropriate,” noted Borges and Vecchio. They cited the damage to the reputation of the bank when it returned Czechoslovakian gold after the country was occupied by Nazi Germany.

“Huge sums have been stolen by Maduro and his associates,” they added. “Maduro and his associates have systematically used the assets of the Venezuelan state (including the gold) to sustain money laundering efforts, and to facilitate the widespread and damaging system of corruption and repression financed by the Venezuelan dictatorship using the money of the Venezuelans.”

The Venezuelan economy is in free fall due to years of political turmoil, falling oil production, as well as corruption and disastrous fiscal mismanagement. As a result, the socialist government has increasingly had to lean on the nation’s gold reserves to pay off spiraling debts.

For his part, Maduro has long accused Borges, Vecchio and other opposition leaders of being behind coup and murder plots against him and attempts to wreck the economy.

Venezuela began to repatriate its gold in 2011 under late President Hugo Chávez in what was described at the time as a patriotic move to bring the reserves under national control. But much of it has since been sold off, experts say, with reserves falling from $21.3 billion in 2011 to $6.8 billion this year.