Venezuela Files Claim Against Bank of England Over Refusal to Release $1B of Gold Reserves

The Banco Central de Venezuela (BCV) has filed a claim against the Bank of England over its refusal to grant the Venezuelan central bank access to Venezuelan gold reserves to combat the spread of COVID-19.

The BCV wants to liquidate and transfer $1 billion of gold held by the Bank of England on its behalf to the United Nations Development Programme (UNDP), which is assisting the country as it prepares for an increase in COVID-19 cases.

The BCV agreed to allow the transfer to be made directly to the UN, but the Bank of England denied it access to the gold, prompting the claim, which was filed in the U.K.’s High Court on May 14.

Herbert Smith Freehills is advising the Bank of England, led by banking litigation partner Simon Clarke. Zaiwalla & Co, a U.K. firm specializing in litigation, is representing BCV with a team made up of London-based senior partner Sarosh Zaiwalla and partners Leigh Crestohl and Kartik Mittal.

The Bank of England has opted not to call on longtime adviser Freshfields Bruckhaus Deringer in this instance. The Magic Circle firm is the long-term lead counsel to the central bank and most recently advised on a COVID-19 corporate financing facility in March.

Freshfields and Herbert Smith declined to comment. The Bank of England did not respond to requests.

“With lives on the line, now is not the time to attempt to score political points,” Zaiwalla said. “The Bank of England has a moral imperative to allow Venezuela to sell the country’s gold to allow the UNDP to effectively assist the Venezuelan population in the fight against COVID-19.”

The U.S. and U.K. governments have imposed economic sanctions on Venezuela and have refused to recognize the government of President Nicolás Maduro.

Last year, the U.S. warned “bankers, brokers, traders and facilitators” not to deal in “gold, oil or other Venezuelan commodities stolen from the Venezuelan people by the Maduro mafia.”

Meanwhile, Venezuela is said to badly need hard currency to fight the COVID-19 health crisis and was relying on its gold reserves stored at the Bank of England to help.

The Bank of England is the second largest keeper of gold in the world, after the New York Federal Reserve.

Lisa Shuchman contributed to this story.

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