Goldman Sachs Accused of Financing Dictatorship in Venezuela

On Monday, the president of the Venezuelan Congress that is run by the opposition party accuses Goldman Sachs the investment bank on Wall Street of aiding and abetting the dictatorial regime of the country, after a report show the investment bank had purchased $2.8 billion worth of bonds from the South American country.

Over the weekend, a report in the Wall Street Journal said that Goldman has paid 31 cents on the U.S. dollar for the bonds issued by PDVSA the state owned oil company that mature during 2022 or approximately $865 million while citing five people that were familiar with the bonds’ transaction.

The accusation comes as opposition protests of two months against current President Nicolas Maduro have resulted in 60 deaths and the collapse of the socialist economy in the country that has left millions struggling just to eat.

The president of the Venezuelan Congress Julio Borges wrote in a letter to Lloyd Blankfein the Goldman Sachs president that the banks’  financial lifeline for the regime will help to strengthen its brutal repression that it has unleased against Venezuelans that have peacefully protested for the country to have political change.

The letter stated that Borges was dismayed by the decision of Goldman Sachs to purchase the bonds given the nature of the Maduro administration, an unwillingness to carry out democratic elections and systematically violating human rights.

The letter added that the Venezuelan Congress will be opening an investigation into the Goldman transaction and he will make a recommendation to any future government that is democratically elected not to recognize or to pay the bonds.

The Information Ministry in Venezuela, which accepts queries on the behalf of its Finance Ministry, did not make a response to requests for comments.

The central bank in Venezuela did not sell the bonds directly to Goldman as the bonds were sold by an intermediary, said an industry source. A source at Goldman said the intermediaries were in Europe.

With the inefficient economic model in Venezuela struggling under a drop in the price of oil, the unpopular government led by Maduro has become more and more dependent upon asset sales or financial deals to bring in much needed foreign exchange.

On Thursday of last week, the international reserves for Venezuela rose $749 million to reach over $10.86 billion but that is down over 50% from three years ago.

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