Venezuela Sues UK over Frozen Gold Reserves, Loses CITGO Appeal

The US $1 billion worth of gold would be used in the fight against COVID-19.

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The Bank of England has refused to repatriate $1 billion worth of Venezuelan gold. (Bank of England)
The Bank of England has refused to repatriate $1 billion worth of Venezuelan gold. (Bank of England)
By Ricardo Vaz
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Mérida, May 20, 2020 (venezuelanalysis.com) – The Venezuelan government filed a lawsuit to use its gold reserves held by the Bank of England in the fight against the coronavirus.

Since late 2018, the Bank of England has refused to repatriate 31 tons of gold belonging to the Venezuelan Central Bank that had been deposited in its vaults.

The May 14 claim, filed in a London commercial court, seeks to force the UK Central Bank to return an estimated US $1 billion worth of Venezuelan gold.

The Venezuelan government would then sell the gold and transfer the proceeds to the United Nations Development Programme in order to buy food, medicines and healthcare equipment, according to Reuters.

Venezuela has been one of the countries least affected by COVID-19 in the region. However, recent days have seen a spike in cases, most of them returning Venezuelan migrants. The country’s authorities announced 131 and 75 new cases on Tuesday and Wednesday, respectively,  over 85 percent of them “imported” from Brazil, Colombia and Ecuador, taking the total to 824, with 10 deaths so far.

The lawsuit follows an April request that the Bank of England itself sell part of the reserves and send the funds to the United Nations to help the country battle the pandemic.

Following the self-proclamation of Juan Guaido as “interim president” in January 2019 and his recognition by Washington and several allies, the Venezuelan government has seen a host of other state assets abroad blocked, including bank accounts and US-based oil subsidiary CITGO.

The subsidiary of state oil company PDVSA, valued at around $8 billion, was the subject of legal battles before US courts granted control to an ad-hoc board named by Guaido. CITGO is now at risk of being seized after the US Supreme Court refused to hear an appeal in a case involving Canadian mining giant Crystallex.

The decision upholds a 2019 ruling by the third US Circuit Court of Appeals allowing Crystallex to seize Citgo shares as a way of collecting on a $1.4 billion payment owed by the Caribbean nation. The compensation for a 2008 nationalization of Las Cristinas gold mine under the government of Hugo Chavez was awarded by the World Bank’s international arbitration tribunal.

Crystallex’s right to seize CITGO shares had been the subject of several appeals and counter-appeals, while US financial sanctions have blocked Caracas from making payments to the Canadian firm as part of a possible settlement.

However, Crystallex will face further legal hurdles in laying hands on the shares. Last November, the Treasury Department decreed that claimants against Venezuela require a special permission before seizing assets.

The CITGO shares are likewise imperiled by ConocoPhillips, with the Texas-based oil multinational looking to collect on a $2 billion indemnization awarded by the International Chamber of Commerce over the 2007 expropriation of the company’s assets in Venezuela.

Additionally, 51 percent of CITGO was pledged as collateral for PDVSA’s 2020 bond. After a $900 million payment was missed in November, the Trump Administration moved to block transactions involving the bond or the attached CITGO shares until July.

The US Treasury Department has imposed successive rounds of punishing sanctions against the South American nation in recent years. Following the first financial sanctions in 2017, the US imposed an oil embargo in January 2019 which was later expanded to a blanket ban on all dealings with Venezuelan state entities.

Edited by Lucas Koerner from Santiago de Chile.