Venezuela files complaint against Bank of England gold reserves

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Document distributed by the Venezuelan presidency showing Venezuelan President Nicolas Maduro speaking during a television announcement at the Miraflores presidential palace in Caracas, March 26, 2020, after the United States Department of Justice charged him with “narco -terrorism”.

JHONN ZERPA | Venezuelan Presidency | AFP

Venezuela has launched legal proceedings to try to force the Bank of England to hand over $ 1 billion in gold, saying it needs the money to finance an appropriate response to the coronavirus pandemic.

Gold is kept at the Bank of England following the sanctions of the United Kingdom and the United States against the country of South America in crisis.

The administration of President Nicolas Maduro has said it wants the Bank of England to sell part of the reserves to help finance the country’s response to the coronavirus pandemic.

The legal document, filed in a commercial court and dated May 14, calls on the Bank of England to transfer the funds to the United Nations Development Program (UNDP).

The claim indicates that the money would then be used to manage the purchase of food and medical supplies to fight the coronavirus epidemic.

Venezuela’s central bank was not immediately available for comment when contacted by CNBC on Wednesday, while the Bank of England said it did not comment on relationships with individual customers.

What’s going on in Venezuela?

The legal dispute arises as Venezuela’s healthcare system continues to collapse, with many hospitals in the country struggling to care for patients in the absence of reliable electricity or even running water.

A United Nations panel of experts warned earlier this month that hospitals across the country have reported a shortage of medical supplies and protective equipment.

To date, Venezuela has recorded 749 cases of coronavirus, with 10 deaths nationwide, according to data compiled by Johns Hopkins University.

A woman wearing a facial mask walks her dog on Libertador Avenue in Caracas on May 14, 2020 in the midst of the new epidemic of coronavirus (COVID-19).

FEDERICO PARRA | AFP via Getty Images

“The dragging of the feet by the Bank of England severely hampers Venezuela and the UN’s efforts to fight Covid-19 in the country,” London-based lawyer Sarosh Zaiwalla said in a statement. central of Venezuela.

“The Bank of England has a moral imperative to allow Venezuela to sell the country’s gold to enable the UNDP to effectively assist the Venezuelan people in the fight against Covid-19,” he added.

How did we get here?

The Bank of England is the second largest depositary of gold in the world, just behind the Federal Reserve in New York.

Central banks in many developing countries store their national gold reserves in the central bank of the United Kingdom, and Venezuela is one of them.

In January 2019, the Bank of England refused Venezuela to remove gold from its vaults and return it to South America. He has since declined to comment publicly on the decision.

A street in London, UK, with Royal Exchange, Bank of England and new modern skyscrapers.

Alexander Spatari | Moment | Getty Images

The announcement came just days after opposition leader Juan Guaido took to the streets of Caracas to declare himself the legitimate commander-in-chief of Venezuela, saying the 2018 election results were fraudulent.

The Speaker of the National Assembly was quickly recognized as the legitimate interim president of Venezuela by more than 50 countries, including the United States and the United Kingdom.

Nevertheless, the Maduro government – with the broad support of the military – refused to cede power.

This means that the country remains locked in a political impasse, where it has an internationally recognized government, without control over the functions of the state, parallel to the Maduro regime.

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