UK court rejects Maduro’s claim on $1bn of Venezuelan gold held by BoE

A British court has dealt a blow to attempts by Nicolás Maduro’s regime to access $1bn of Venezuelan gold held at the Bank of England by ruling that opposition leader Juan Guaidó had been “unequivocally” recognised as Venezuela’s president by the UK.

Mr Justice Teare said on Thursday that it was the British government’s prerogative to decide who was the legitimate head of state. Previous cases had established that the government had to speak with one voice on such an issue and so there could be no doubt about its decision, he ruled.

“This is a tremendous victory,” said Vanessa Neumann, Mr Guaido’s ambassador to the UK. “The verdict is a victory for the people of Venezuela and for the rule of law more generally. It highlights the importance of a judiciary that is independent and non-political”.

Lawyers representing the Maduro government said they would appeal against the ruling.

Short of cash amid a dire economic emergency, Mr Maduro’s revolutionary socialist government is pursuing frozen Venezuelan assets around the world.

In its claim, Venezuela’s central bank (BCV) had tried to access the gold held at the Bank of England. It said funds from the sale of the gold would be routed to the United Nations Development Programme (UNDP) to combat coronavirus — a suggestion scorned by Mr Guaidó and his supporters, who said it would be stolen.

Mr Guaidó told the Financial Times after the court heard the case in May that the Bank of England would in effect be “financing torture” if Mr Maduro were to win.

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 case turned on who the High Court believed was legally recognised by the UK as Venezuela’s head of state: Mr Maduro or Mr Guaidó.

The British government, along with the US, the EU and most Latin American nations, issued a statement recognising Mr Guaidó as Venezuela’s “constitutional interim president” in February 2019, because they said Mr Maduro had rigged the presidential election the previous year. 

Unusually though, London continued to maintain full diplomatic relations with Mr Maduro’s government after recognising Mr Guaidó. It allowed a Maduro-appointed envoy, Rocío Maneiro, to serve as ambassador in the UK and to keep control of Venezuela’s diplomatic buildings. The UK also maintained a full embassy presence in Caracas.

The Venezuelan central bank’s legal team argued that this proved the UK had in reality continued to recognise the Maduro government and therefore Mr Guaidó had no legal backing for his claim to be president.

Sarosh Zaiwalla, senior partner at Zaiwalla & Co, representing Venezuela’s central bank, said: “The Banco Central de Venezuela will be seeking leave of the court to appeal this judgment, which it considers entirely ignores the reality of the situation on the ground.”

Mr Zaiwalla said it was “very rare for a case of such international legal importance to be decided by reference to legal questions alone without taking into account the facts on the ground, and still rarer for an English commercial court to be told that it can only decide a question in the way that the government says it must”.

Like other countries, Caracas has used the BoE for decades to store bullion that makes up part of its central bank reserves. It tried in late 2018 to obtain access to the gold but the BoE refused.

In a claim filed to the court, the Venezuelan central bank had sought 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 claimed, alleging that the BoE’s conduct was “wrongful”.

Ms Neumann said the Guaidó team had never sought to access the gold because they wanted it preserved for the Venezuelan people. “We will be directing the BoE to preserve the people’s assets,” she said.

The UN has identified Venezuela as a “priority country” in its global Covid-19 response because its healthcare system is so fragile. After years of government neglect, many hospitals lack basic equipment or even running water.

Gross domestic product has shrunk by about 60 per cent since Mr Maduro came to power seven years ago, while oil production, the mainstay of the economy, has crashed to levels not seen since the 1940s.

The crisis has been exacerbated by US sanctions, which are designed to throttle the economy and force Mr Maduro from power.