Citigroup bankers have been holding talks with U.S. Treasury officials to figure out how to handle a gold deal they had arranged with Nicolas Maduro’s regime in Venezuela, people familiar with the matter said.
The deal -- a $1.1 billion swaps contract backed by gold held by the Venezuelan central bank -- was struck before the U.S. stepped up sanctions on Maduro’s government.
But it’s due to expire early next month and Citigroup bankers are seeking to make sure they avoid making a move now that would violate the sanctions, according to Senator Marco Rubio and other U.S. and Venezuelan officials familiar with the matter.
“The one thing, no banker, global or financial institution is going to do is run the risk of secondary sanctions,” Rubio, who’s been helping drive the U.S. push to oust Maduro, said in a telephone interview late Wednesday. “The sale of gold is another revenue source that the Maduro regime is using and I know for a fact that Citibank has had multiple meetings with Treasury seeking guidance, trying to figure out how to avoid exposure.”
Daniel Diaz, a spokesman for Citigroup, declined to comment as did a Treasury spokesman, who cited department policy on refraining from talking about individual cases.
The four-year swaps contract -- which handed Venezuela a loan in exchange for putting the gold up as collateral -- matures on March 11. Because the cash-strapped Maduro regime is unlikely to come up with the money it had received in the deal, Citigroup could wind up getting the gold. Allies of Juan Guaido, the legislator who’s trying to take power from Maduro with the help of the U.S. and other countries, are lobbying the bank to not take possession of it as part of their effort to safeguard the nation’s dwindling assets.
“Citi hasn’t responded publicly, but they understand the situation and are willing to collaborate and we’re asking them not to execute the guarantee,” said Angel Alvarado, who’s a member of the National Assembly’s finance commission. “We’re waiting to see what mechanisms will be used. The strategy is to protect assets.”
Under the contract’s current terms, if Venezuela does not pay next month, Citi would keep the gold and only pay the central bank the difference in value since the metal’s price has increased since it was signed in 2015. In the meantime, the gold would remain inside the Bank of England’s vaults, according to one person familiar.
Even if the Maduro government was able to come up with the cash, the Bank of England recently denied his regime’s request to withdraw $1.2 billion worth of gold stored there. While the bank acts independently from the state, U.S. officials including Secretary of State Michael Pompeo and National Security Adviser John Bolton, have lobbied their U.K. counterparts to help cut off the regime from its overseas assets.
Maduro blew through more than 40 percent of Venezuela’s gold reserves last year to firms in the United Arab Emirates and Turkey in a desperate bid to fund government programs and pay some creditors. Pressure from Guaido and the U.S. derailed his administration’s plans to ship more gold to buyers in the UAE this month and the Trump administration warned against dealing in Venezuelan gold or risk sanctions.
Another topic of conversation between Citigroup and Treasury officials has been about local Venezuelan bank accounts that were either serving government entities, companies or officials, according to people with knowledge of the matter.
Citigroup, which has been in Venezuela since 1917, serves top multinational companies and affluent clients, according to its website.
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