How Alleged Illicit Gold Trade Feeds the Chavista Regime

Scheme hollows treasury for Venezuelans, future generations
March 7, 2021 Updated: March 10, 2021

Commentary

A newly published investigation reports that Venezuelan dictator Nicolás Maduro and his cabinet allegedly received around $1 billion in 2020 by illicitly trading gold reserves.

According to the interim government’s commissioner for foreign affairs, the ruse has evaded international sanctions by using Russia as a middleman and refineries in Mali. The final transactions are then allegedly conducted with Noor Capital of the United Arab Emirates.

If true, as long as this scheme continues, sanctions that date to the Obama and Donald Trump administrations will remain defanged. Further, the Chavista regime under Maduro—as it continues the late Hugo Chávez’s mission—is digging Venezuela’s financial hole deeper and making a revival even more difficult for future generations.

Julio Borges, who represents the democratic opposition’s shadow government under Juan Guaidó, released the report in Washington on March 3. His belief is that the gold scheme goes back to 2014, but his $1 billion estimate is solely for last year. Borges presented his findings to U.S. Treasury officials and the Senate Committee on Foreign Relations, and called on the United States to further the investigation and punish a handful of chief culprits.

“The Maduro regime has been able to survive, thanks to the network of unscrupulous individuals and companies around the world who usually, with the support of their national governments, help to finance Venezuelan repression and distress,” he said.

The End of the Line?

Venezuela’s status as the most promising Latin American economy is now a distant, fading memory. However, even amid the profound humanitarian crisis, there have been glimmers of hope for brighter days and the dictatorship’s fall.

One such glimmer was Guaidó’s 2019 claim that he was the acting president, followed by recognition from major institutions such as the European Union. Sen. Marco Rubio (R-Fla.), at the time, backed Guaidó and tweeted: “Now is the moment to take to the streets in support of your legitimate constitutional government.”

One could interpret the alleged costly, complicated gold trades as a sign that the regime is struggling and living on borrowed time. Burning through gold reserves isn’t the act of a regime in command. Consider that the Bank of England holds almost $2 billion worth of Venezuelan gold and so far refuses to budge for the illegitimate regime. The precise weight left in Caracas is difficult to decipher, but it appears to be no more than 86 metric tons, so worth less than $5 billion.

A lack of liquidity doesn’t, however, guarantee a letup or a regime change. Rogue nations such as China, Cuba, and Iran are crawling all over the country. The same goes for organized crime and terrorists such as FARC and the National Liberation Army, both from Colombia. These allies want continuity for the regime that owes them, and the situation could get even uglier as the partners cling to power.

Mounting Evidence

According to Borges, the investigation took one year, drew primarily on military sources, and identified the United Arab Emirates as the core of the operation. Noor Capital, along with other Emirati financial institutions, is alleged to be a pivotal intermediary in funding and facilitating the scheme.

These activities were already somewhat of an open secret. In 2019, Carlos Vecchio, Guaidó’s interim ambassador to the United States, explained that the Maduro regime was exchanging gold for euros. He noted the flow of euros into Venezuela had noticeably increased since the United States imposed sanctions.

As detailed in the report, the operation allegedly starts in Moscow, where a Boeing 757-200 owned by Eurofei leaves for the Bamako Senou International Airport in Mali. This firm has previously worked with Russian President Vladimir Putin. Simultaneously, an Emirati airplane full of euros flies to Bamako, Mali, where the transaction takes place.

Then, the Russian airplane departs for the Maiquetía International Airport, located about 21 kilometers (about 13 miles) west of downtown Caracas. In the middle of the night, officials take the cash and hide the gold in the next cargo for Bamako. Finally, the Emirati airplane returns to the United Arab Emirates carrying the hidden gold, closing the transaction.

Borges says this is the usual path of the gold reserves but not the only one. The Russian airplane sometimes has changed course, heading directly to the United Arab Emirates. According to the investigation, a portion of the gold has also gone to Libya and Switzerland.

Olivier Couriol, a French citizen who was the head of assets and fund management at Noor Capital, is allegedly a leading figure in the operation—a continuation of other alleged illicit activities he has led in Africa. Other Noor Capital staff are reportedly involved, including another French citizen in charge of tracking the gold reserves.

Borges concluded: “This week, I have provided plenty of evidence from our investigation to the United States Congress, the U.S. Office of Foreign Assets Control, and the U.S. Department of State, encouraging all of them to investigate those involved and take action.” All violators of sanctions “should be penalized for their actions.”

What This Finding Means

A Chavista regime’s attempt to avoid U.S. sanctions is no surprise. EU sanctions also expanded in late February to include additional members of the ruling United Socialist Party, garnering a swift expulsion of the EU ambassador.

In February 2018, Maduro created the petro, a digital currency for circumventing dollars, which was purportedly pegged to Venezuelan reserves of oil, gold, diamonds, and liquified natural gas. However, there was no transparency or clarity regarding the new petro’s monetary policy or reserve management. It fell flat, even for circumvention purposes.

With absolute power and fearing retribution, regime insiders will use whatever means they can to stave off their removal—à la Cuba. That includes finding workarounds for economic sanctions, and they have not only gold at their disposal. The regime is not called a narco-dictatorship for nothing, and drug trafficking continues to line insiders’ pockets.

InsightCrime notes that the Cartel of the Suns, dominated by military and political bullies, operates “with the blessing and protection of senior figures in the Venezuelan government.”

The sad fact is that sanctions have failed to remove the regime. Meanwhile, Venezuelan residents remain in misery. The Washington-based Center for Security Policy in 2018 called for arming and supporting a resistance force. While that would be a complicated and treacherous effort, Venezuela is becoming another Cuba, but with more money and violence.

Any escalated confrontation from the United States, military or otherwise, would best be done with support from elsewhere in Latin America. Thus far such willingness has failed to appear, no matter how bad the suffering gets. Latin American neighbors, with few exceptions, have stood idly by as radical socialists have plundered a nation.

Paz Gómez contributed to this article.

Fergus Hodgson is the founder and executive editor of Latin American intelligence publication Econ Americas. He is also the roving editor of Gold Newsletter and a research associate with the Frontier Centre for Public Policy.

Views expressed in this article are the opinions of the author and do not necessarily reflect the views of The Epoch Times.