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Venezuela sues Bank of England over $1bn gold dispute

Venezuela has filed a lawsuit against the Bank of England over its refusal to release more than $1bn worth of Venezuelan gold stored in its vaults

Venezuela has filed a lawsuit against the Bank of England (BoE) over its refusal to release €930m (£830m, $1bn ) worth of Venezuelan gold stored in its vaults. Venezuelan president Nicolás Maduro has used the BoE for decades to store bullion that makes up part of its central bank reserves; in late 2018, Venezuela tried to get access to the gold but the BoE refused. 

The British government, along with 60 others worldwide, does not see Maduro as Venezuela’s legitimate leader, arguing that he rigged the last presidential election two years ago.  

Venezuela says it wants the Bank of England to sell part of the Venezuelan gold reserves so it can use the funds to combat the spread of coronavirus. It says it has agreed for the money to be sent directly to the UN to ensure it is not used for other purposes.

In a claim form filed to London’s High Court, Venezuela’s central bank (BCV) is seeking a court order to transfer €930m of the value of the gold held by the BoE. “There is no, or no sufficient, basis for such refusal,” the lawsuit claims, adding that the BoE’s conduct is “wrongful”. 

The UK’s central bank holds about 400,000 bars of gold worth £200bn and is the second largest custodian of gold in the world after the New York Federal Reserve, according to the BoE’s website.

The UN has identified Venezuela as a “priority country” in its global Covid-19 response, as its healthcare system is weak with several hospitals lacking basic equipment and running water. At the same time, the IMF recently refused Maduro’s request for a $5bn loan to deal with Covid-19. 

Venezuela is heading towards a severe economic crisis. Gross domestic product has shrunk by about 60 per cent since Maduro came to power seven years ago, while oil production has crashed to levels not seen since the 1940s. 

FURTHER READING: Gold dips as hopes build for eased lockdowns

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