Bank / Credit Union

Venezuela demands BOE to return gold

photo provided by iStock

May 21, 2020

Banco Central de Venezuela has filed a legal claim in the UK's High Court against the Bank of England demanding the immediate release of $1 billion in gold that BOE has been holding for the country since 2008. 

According to an article in Forbes, the BOE often provides gold custodian services to countries — like Venezuela — that lack such services.

A court document filed in the UK on May 14 specified that BVC "wishes to facilitate the transfer of €930 million ($1 billion) of the value of gold held on its behalf by BOE to the United Nations Development Programme." By transferring the money to the UNDP, BCV claims the gold will be used in humanitarian efforts to assist those impacted by the coronavirus pandemic.

Venezuela's current president, Nicolas Maduro, has repeatedly requested the gold, but the BOE has ignored the requests, which recently led to massive protests from angry Venezuelans outside the BOE.

Zaiwalla & Co., a London law firm working on behalf of BVC, sent a letter to BOE's lawyers, asking them to "facilitate the transfer of US $1 billion of value of the gold bars in the accounts directly to UNDP."

"The foot-dragging by the Bank of England is critically hampering Venezuela and the UN's efforts to combat COVID-19 in the country," said Sarosh Zaiwalla, senior partner at Zaiwalla & Co,representing BVC in court. "By holding on to Venezuela's gold reserves, the Bank of England is putting many thousands of lives at risk."

Juan Guaidó, the UK-backed opposition to Madura, along with the U.S., sent a letter to the BOE asking them to refuse the request of Madura, claiming the gold would only be used to "repress and brutalize" the Venezuelan people.

According to the court document filed, "The BOE has refused to confirm that it will give effect to BCV's instructions." By not making the funds available, the document charges that the BOE is "depriving BCV of access to its gold reserves at a time of national and global emergency."

Venezuela has a growing increase in coronavirus cases. On May 19, Jorge Rodriguez Venezuela's information minister said in a state televised address that the infection curve in Venezuela was rising sharply.  

The UN has identified Venezuela as a priority country in its Global Humanitarian Response Plan for COVID-19 but indicated that there were food and medical shortages even prior to the first coronavirus case logged in March.

The country said it has few options to help its citizens if the gold is not returned. Venezuela did request a $5 billion loan from the International Monetary Fund, but the request was refused.

For more information on how the coronavirus is affecting the ATM industry, click here.