Source: https://uk.reuters.com/article/us-venezuela-gold/venezuela-gold-holdings-in-bank-of-england-soar-on-deutsche-deal-sources-idUKKCN1PF1Z8

By: Om Nagle

DISCLAIMER: The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of the KCL Latin American Society or El Cortao.

Even before the COVID-19 pandemic, thousands of people in Venezuela were already suffering the ravaging effects of armed violence caused by years of political and economic instability. Official statistics indicate that, to date, Venezuela has had just over 110,000 confirmed cases of COVID-19 and about 880 total deaths. However, these government provided statistics are more a reflection of the country’s testing capabilities than of the true number of cases. The Nicolás Maduro led regime has largely limited testing to a few government-operated institutions which have medical supplies imported from partner nations like Iran and China. It is therefore unsurprising that Venezuela ranks as having the worst testing capacity in Latin America, only being able to perform about 264 tests a week with significant errors and delays in obtaining the results. The pandemic has therefore only served to make matters worse for Venezuelans who already have scarce access to food, water, and healthcare.

Venezuela’s current problems have certainly not been caused solely by COVID-19. Rather, the pandemic has exacerbated an unprecedented humanitarian and economic crisis caused by years of corruption, mismanagement and failed government policies. Recurrent droughts and severe international sanctions have worsened pre-existing food security and fuel shortage problems, adding pressure on the crippling private sector and overburdened humanitarian NGOs. The Maduro government, in light of these stricter sanctions and a desperate need for funds to battle the pandemic, looked abroad to liquidate its assets stored with the Bank of England. Their attempt to secure the 31 tonnes of gold-bullion have been met with significant challenges. The Maduro-led government has claimed that proceeds from the gold will be used to contribute funds to the United Nations Development Fund to help combat the COVID-19 pandemic. But his opponent, Juan Guaidó, believes there is very little merit to these claims and that the funds obtained would be used to further corruption. The litigation between the two highly contested Presidents of Venezuela has resulted in the money being held inside British Vaults far away from where it is truly needed: in Venezuela – to alleviate the suffering of the Venezuelan people.

This article will aim to impartially highlight and analyse the controversial questions raised by the UK Courts in the case of “Maduro Board” of the Central Bank of Venezuela V. “Guaidó Board” of the Central Bank of Venezuela [2020]

Since April of 2013, Nicolás Maduro has held the office of the President of Venezuela. December 2015 saw the dispute over the election of the deputies to the National Assembly for the state of Amazonas. The Supreme Tribunal of Justice of Venezuela (STJ), the country’s utmost constitutional court, granted provisional relief suspending the implementation of the election of the four deputies. However, the victorious opposition decided to swear-in the deputies anyway. As a result, the STJ issued a judgement on the 1st of August 2016, declaring all decisions taken by the National Assembly “null and void for so long as it was constituted in breach of the judgments and orders of the STJ”. In May 2017, a rival legislature was established on Maduro’s initiative called the National Constituent Assembly (NCA).

The presidential election of 2018 witnessed Maduro claiming victory again. A month later, he appointed Mr. C. José Ortega as the president of the NCA and of the Central Bank of Venezuela (BCV). In retaliation, the National Assembly declared the appointment unconstitutional. The STJ, following its 2016 judgement, declared the National Assembly’s resolution unconstitutional.

January 2019 saw Maduro being sworn-in for a second term as the President of Venezuela. However, the National Assembly and its President, Juan Guaidó, announced, relying upon Article 233 of the Venezuelan Constitution, that Maduro had usurped the office of the President and that Guaidó was the Interim President of Venezuela. Several countries, such as the United States, Colombia, Members of the EU and the UK gave the Maduro-led government 8 days to call elections. After failing to call elections, the Foreign Secretary to the UK reaffirmed the recognition of Juan Guaidó as an interim President “in charge of the transition back to democracy”. Furthermore, the Minister of State for Europe and the Americas justified the UK government’s recognition of Guaidó, based on the National Assembly’s consistency with following the rules set out in the Venezuelan Constitution. Additionally, he highlighted the exceptional nature of the refugee crisis whereby 3.6 million Venezuelans had fled the country in pursuit of a life away from a regime which was “holding onto power though electoral malpractice and harsh repression of dissent” and had been referred to the International Criminal Court by six countries for its human rights abuses.

Meanwhile, the National Assembly passed the Transition Statute with the aim of “restoring the full force and effect of the Venezuelan Constitution”. It was signed bearing the seal of Guaidó as the President of Venezuela. Using the legal backing provided by the Transition Statute, Guaidó appointed a Special Attorney General, Mr. Jose I. Hernandez, and an ad hoc board of the BCV to defend the “interests of decentralized entities abroad”. The STJ passed judgements holding the Transition Statute, appointment of the special attorney general, andthe creation of the ad hoc board of the BCV as unconstitutional, null and void.

The Bank of England holds gold reserves valued at about US $1.95 billion for the Banco Central De Venezuela (BCV). Consequently, a gold-swap contract with Deutsche Bank obligates them to pay the BCV a sum of about US $120 million. Currently, the sums are held by court appointed receivers. When the Maduro Board requested access to the gold, the Bank of England rejected their request owing to non-recognition of the Maduro-led government by the United Kingdom. This led to the current litigation at hand, wherein the courts have to decide upon two preliminary issues: firstly, which of the two boards is entitled to give instructions on behalf of the BCV concerning the assets held with the Bank of England and, secondly, who holds the office of the president of Venezuela.

Initially, the Guaidó Board was successful in securing positive consideration through a judgement in its favour. Wherein the court held that, owing to the UK Foreign Ministry’s statements about the recognition of Juan Guaidó as the interim president of Venezuela, the Maduro Board of the BCV wouldn’t be entitled to give instructions in relation to the assets. This was appealed by the lawyers representing the Maduro-led government who argued that, although the UK recognised Guaidó as the interim-president, they in practice continued diplomatic relations with the Maduro-led government through the Ambassador of Venezuela to the UK in London and the UK’s Ambassador to Venezuela in Caracas. While considering this aspect of the appeal, the UK High Court passed its judgement that diplomatic relations were irrelevant considering the UK recognised Juan Guaidó as the President, and it is the President of Venezuela that appoints the board of the BCV. They reaffirmed that “there is no room for recognition of Mr Guaidó as de jure President and of Mr Maduro as de factoPresident”, the “one-voice” principle would dictate that the UK Government no longer recognises Maduro as President of Venezuela in any capacity.

In reference to the second preliminary issue, the court took into consideration the arguments presented by the Maduro Board as well as the Guaidó Board but reaffirmed that, at this stage, it was not in the UK High Court’s jurisdiction or capacity to pass judgement on the issue of the office of the president of Venezuela. The court in its concluding statements directed the litigating parties to dispute the matter in the Commercial Court. The Special Attorney appointed by Guaidó formally informed the International Centre for Settlement of Investment Disputes (ICSID) to set aside any arbitration requests from the Maduro Board, as the Guaidó board is the sole controller of the BCV, thus limiting any chances of this dispute being resolved without judicial proceedings in the UK. Unfortunately, as the litigation between the two offices of presidents in Venezuela gets expensive, complicated and drawn-out, the people of Venezuela have to ultimately bear the cost.

Om Nagle is a second-year law student at SOAS, University of London. He is interested in the intersection of law, international affairs and public policy.

Works Cited

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*Photo taken by the author: A Blurred Sunset in Caracas*

By: Andrés Vargas Arévalo

On October 3rd, 2019, I decided to take a leap of faith; I would turn a short voyage to Caracas into a one-way trip. I had been living in Mexico City for the previous fourteen months and, as my mother used to say each time we vacationed outside Venezuela: “I would return with double the eagerness that I had had when I left”.

Mexico City and Caracas have much in common: they are chaotic and perhaps unfriendly. I see them as chiral, as though they were mirror images, yet different, and sinister. Mexico City was handed to me in the same way I was handed Caracas: without a choice. Each city came with its own implications, pains, and gains. Yet the only thing I wanted whilst living in Mexico City was to be back home, in my brutalist, concrete jungle. Now that I am living in Caracas, I sometimes miss Mexico City and the good memories I have of it, but I have always had one - and only one - place which I call home.

My memories started to resurface as the plane began its landing at Simon Bolivar International Airport. It was the first time in years that I was landing at night given that my mother thought it would be better to return using daylight flights for security reasons. To my delight, it wasn't the case this time and I would now be able to see lights that I could only recall as fragments of my childhood days when I’d go back and forth between Caracas and La Guaira on weekends. As my uncle drove up to Caracas, I was greeted by the magnific Caracas-La Guaira highway, a testament to the former glory years of the 1950s. On each side of the highway, the lights of the barrios took me back to my childhood since I used to fall asleep to them.

I was hungry, I had had a long layover in Bogota before departing for Caracas and the flight had not accepted international cards to pay for meals. My uncle took me to a hot dog stand called ‘Joao’ in Las Mercedes, where I used to eat every week with my high school and college friends after a night of partying. It was a sad moment because I haven't seen many of those friends in years, and I knew that life takes turns and perhaps I won’t see them in what remains of my life. Caracas has given me everything and has taken a lot from me, but I still love her.

Just after getting home, I decided to surprise one of my best friends, Mort. As he entered my house, I jumped on him and started to laugh. He took me on a ride to one of the most sacred places for a Venezuelan patriot: the house where El Libertador was born, which is now bordered by cafes. There was a certain joy in the streets that night, with lights which were strange to me. You had to be crazy to go out after sunset to the center of Caracas due to the fear of getting mugged, but I didn'tfeel any fear whilst drinking a frappuccino almost at midnight.

We drove back to Las Mercedes to eat arepas and get a couple of drinks. Pilsner beer was something I’d missed while in Mexico City; negritas, as we call them, have a unique taste (In Venezuela the word ‘negro’ isn’t racist, it is actually used as a synonym for friend and as an affectionate nickname). I was surprised to learn that a nation in which it used to be illegal to have dollars, or any other foreign currency, now uses them as its main currency and that foreign credit cards could now also be used. Even using a credit card seemed surprising; previously it had been a nightmare to use one because the card terminals never worked.

Caracas wasn't the ghost town that I had left behind on July 27th, 2018. Somehow, she had come back to life. I still had friends left, my first alma mater was still standing and there were still opportunities left to grow up in the former land of opportunities; opportunities to rejoice, to mourn, to go out and to face the world.

Some may argue that I'm short-sighted, which as a matter of fact I am. There is still an unimaginable misery in Venezuela that shocks everyone, with news of the elderly and the young dying alone of starvation. The witches - as we call the policemen - roam in the shadows waiting for an unlucky soul to snatch. This is still the capital of the Animal Farm, ruled with an iron fist by our very own Napoleon. But it would be an insult to me, to my family, and to all hardworking Venezuelans lie to you saying that we are hopeless. We have stood up to tyranny many times before and we have always won; from Carabobo to Boyaca, from Junin to Ayacucho, and to our very own streets, we have fought and won. It's only a matter of time before we win again.

Even in the darkness of the pandemic and of the economic ruin, we still wake up to work for a better life, just like the millions of wartime refugees of long ago who spent weeks walking towards ports to board ships, seeing no daylight until they had reached the ports of a land of grace called Venezuela.

I see you, Venezuela, each day as I go out to work; I see your fear dwarfed by your immense ambition for a better life and your courageous struggle for happiness. I see you, delivery guy, I see you, entrepreneur; old and young, I see you all. You are the true lights that stand up to the darkness, and the guiding star to a new dawn.

You are the heart of Caracas. Soon the carcasses of the buildings that lay dormant will rise, and we will become again the city of the eternal spring, the branch of the heavens, the home that so many have missed.

Andres Vargas Arevalo is a second-year student of Chemical Engineering at Universidad Metropolitana. Born and raised in Caracas who has lived in Canada, Mexico and Spain. A passionate entrepreneur and founder of @TuMetroCondon.

Venezuela: Its Gold Held In Britain's Vaults

Caracas: Land of Legends, of Great Warriors and My Home