Deep in the vaults: the Bank of England’s £1.4bn Venezuelan gold conundrum

Nicolás Maduro’s seizure by US reopens question of who controls country’s reserves held in the UK

Deep under London’s streets, thousands of miles from Caracas, Nicolás Maduro’s seizure by the US has reopened a multibillion-dollar question: who controls Venezuela’s gold reserves at the Bank of England?

After the ousting of Maduro, global attention has largely focused on the South American country’s vast oil wealth – believed to be the largest reserves of any nation in the world. However, Venezuela also has significant gold holdings – including bullion worth at least $1.95bn (£1.4bn) frozen in Britain.

For years the gold bars have been the subject of a tussle in the London courts, entangling the Bank and the UK government in Venezuelan politics and a geopolitical battle that is now taking a fresh twist.

Venezuela has about 31 tonnes of gold held in the vaults of Threadneedle Street, equivalent to about 15% of its total foreign currency reserves. UK court documents put the value in 2020 at about $1.95bn. However, the gold price has more than doubled since, meaning the bars are probably worth considerably more.

Held in London since the 1980s, the practice of governments storing bullion in Britain is not unusual: the Bank keeps about 400,000 bars on behalf of governments and institutions worldwide, as the second-largest global storage hub after the New York Federal Reserve.

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Venezuela has about 31 tonnes of gold held in the vaults of Threadneedle Street. Photograph: David Levenson/Alamy

Since 2018, however, Caracas has been blocked from repatriating the gold amid pressure on Maduro, after the disputed outcome of Venezuela’s presidential elections that year – including Donald Trump imposing US sanctions during his first term in the White House.

Britain, along with dozens of other countries, did not recognise Maduro as the country’s legitimate leader. Opposition figures at the time urged the Bank not to hand over the money, arguing his administration would either steal the gold or use it to finance his dictatorial government.

A memoir by Trump’s former national security adviser John Bolton also later revealed that the UK Foreign Office agreed to block the gold transfer at the request of the US.

In 2020, Venezuela sued in the London courts to recover the gold, and the Maduro government argued it needed money for its pandemic response. However, the then opposition leader, Juan Guaidó, also claimed control – with an ensuing legal battle complicated after the UK government formally recognised Guaidó as interim head of state.

Despite multiple twists, and with Guaidó no longer recognised, the legal case remains unresolved.

Venezuela’s interim leader after Maduro’s deposition, Delcy Rodríguez, has previously struck a defiant tone – labelling the Bank’s refusal to release the gold bars as “blatant piracy” during her time as Maduro’s vice-president.

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Venezuela’s interim president, Delcy Rodríguez, has previously described the Bank of England’s refusal to release the gold bars as ‘blatant piracy’. Photograph: Leonardo Fernández Viloria/Reuters

In 2020, she was involved in a scandal in Spain that became known as “Delcygate” involving the alleged sale of $68m of gold bars, after a surreptitious flight to Madrid to meet Spain’s transport minister despite an EU travel ban.

While Rodriguez has taken a conciliatory stance since Maduro’s capture, offering to work with the US, Yvette Cooper, the UK foreign secretary, told MPs in the Commons on Monday that Britain continued not to officially recognise the Venezuelan administration because it was “important that we have the pressure in place to have a transition to a democracy”.

“Obviously there are independent decisions for the Bank of England to take but our principles are about maintaining and pursuing the stability and the transition to a democracy and that is what is guiding our approach to recognition,” Cooper said.

The immobilisation of sovereign reserves is not isolated to Venezuela, yet is becoming increasingly contentious amid fractious geopolitical conditions – with more countries seeking to repatriate their overseas holdings. Analysts believe this is one of the driving factors behind gold’s recent rally – amid growing international mistrust of the US under Trump and a breakdown of the rules-based global order.

After Vladimir Putin’s 2022 full-scale invasion of Ukraine, western governments led by the US – including the UK and the EU – froze about $300bn in Russian central bank assets. Most were held at Euroclear in Brussels, leading to pressure on the Belgian government from Moscow last month.

The first case of international sanctions on central bank assets is thought to be the 1918 Soviet confiscation of gold shipped to Moscow by Romania during the first world war. Axis powers during the second world war also had their assets targeted by Washington. Others include North Korea and Egypt in the 1950s, and Vietnam, Cambodia and Iran in the 1970s.

The Bank of England declined to comment.

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