A major battle for the control of over $1.8 billion worth of Venezuelan gold stored at the Bank of England has favored Nicolás Maduro’s government in the latest appeal. The appeals court in London overturned a previous high court ruling about who the United Kingdom recognized as Venezuela’s president.
The court of appeal granted an appeal by the Banco Central de Venezuela (BCV) and set aside the judgment made by the high court in July. At that time, the court had found that Britain’s recognition of the opposition leader Juan Guaidó as the “constitutional interim president of Venezuela” which meant that the gold could not be released for the Maduro-backing bank.
BCV sued the Bank of England (BoE) in May this year aiming to recover control of the gold. The says that it will sell mainly to finance Venezuela’s response to the current pandemic. BoE, allegedly working independently of the Foreign Office, refused to release the gold.
It referred to a British government decision in early 2019 to join many other nations in supporting Guaidó on the basis that Maduro’s election victory in 2018 was rigged. Now, a British commercial court will be needed to re-examine the issue.
The judgment on October 5 said that it was important to determine whether:
“(1) the UK government recognizes Mr. Guaidó as president of Venezuela for all purposes and therefore does not recognize Mr. Maduro as president for any purpose. Or (2) HMG [the UK government] recognizes Mr. Guaidó as entitled to be the president of Venezuela and thus entitled to exercise all the powers of the president but also recognizes Mr. Maduro as the person who does exercise some or all of the powers of the president of Venezuela.”
The court of appeal suggested that the Foreign Office should offer clarification on the matter. However, it was quick to add that it is up to the Foreign Office to decide whether to do so.
In the case that the Foreign Office declines to offer clarification on the matter, the appeal court said, it would be a matter for the commercial court on its own merits to decide whether the British government recognizes Maduro as the de facto president.
Britain maintains total consular and diplomatic relations with the Venezuelan government. It suggested that the British position is best described as ambivalent. The Venezuelan central bank alleges that the money raised from the sale of the gold will be transferred directly to the UN development program to procure humanitarian aid, medicine, and equipment to fight the coronavirus pandemic.
Venezuela’s opposition remains adamant that Maduro wants to use that money to pay off his foreign allies. His lawyers have vehemently denied this claim. In the last two years of Maduro’s leadership, his government has taken at least 30 tonnes of gold from its local reserves to sell abroad to raise the much needed hard currency. That is the story according to people familiar with the operations of the bank’s local data.
A memoir by President Trump’s former national security adviser John Bolton said that the United Kingdom Foreign Office agreed to block the release of the gold at the request of the United States.
One senior partner at Zaiwalla & Co, representing BCV, Sarosh Zaiwalla, said that the ruling was a crucial point of international law since Guaidó was a virtual prime minister who has no definite power inside the company. He warned that in the case that his client lost the case it would strive to:
“present a further threat to the international perception of English institutions as being free from political interference, as well as the Bank of England’s reputation abroad as a safe repository for sovereign assets.”