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Venezuela Sues Bank of England for Access to $1 Billion in Gold Reserves

Bloomberg logo Bloomberg 5/20/2020 Anthony Aarons and Patricia Laya
a clock tower in front of a building: Pedestrians pass the Bank of England in the City of London. © Bloomberg Pedestrians pass the Bank of England in the City of London.

(Bloomberg) -- Venezuela’s central bank sued the Bank of England for access to $1 billion in gold reserves to combat the coronavirus.

The Venezuelan bank asked the BOE to liquidate the gold and send the funds to the United Nations Development Programme (UNDP), which is working with the country to prepare for an increase in Covid-19 cases, Zaiwalla & Co., a London law firm representing Venezuela, said Wednesday in a statement.

While the coronavirus pandemic adds a dramatic new twist to the dispute, the lawsuit is part of a long-running fight over the funds related to American efforts to cut off President Nicolas Maduro’s regime from its overseas assets. Last year, U.S. officials successfully lobbied their British counterparts to block Maduro’s attempt to withdraw $1.2 billion in Venezuelan gold stored in the Bank of England.

As oil prices collapse, the gold is a now an even more important source of wealth for Venezuela, which has been driven into extreme poverty under Maduro’s socialist rule that’s left its health system poorly prepared to deal with an outbreak. While the country holds some 70 tons of gold in its vaults, selling it has become increasingly difficult.

“By holding on to Venezuela’s gold reserves, the Bank of England is putting many thousands of lives at risk,” Sarosh Zaiwalla, senior partner at Zaiwalla & Co, said in the statement, pointing to the recent collapse in oil prices and the effects of U.S. economic sanctions for the country’s vulnerable position.

Officials at the BOE and the Venezuelan central bank declined to comment.

While Venezuela’s total number of confirmed virus victims is among the lowest in the region, at 749, the country reported its biggest daily jump in cases on Tuesday.

(Updates with Venezuela’s gold reserves starting in the 4th paragraph)

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