Goldman confirms buying Venezuela bonds after opposition cries foul

The leader of Venezuela's National Assembly, Julio Borges, has said that a future government may not pay the $2.8 billion in bonds that US financial giant Goldman Sachs (GS) purchased recently from the South American country's central bank.

"By giving $900 million to a dictatorship, they are funding a systematic human rights violator, they are funding immorality and for Maduro to stay in power while he keeps killing people", said Eduardo Lugo, 23, a Venezuelan attending college in NY and a leader of the protest.

"Goldman Sachs's financial lifeline to the regime will serve to strengthen the brutal repression unleashed against the hundreds of thousands of Venezuelans peacefully protesting for political change in the country", Julio Borges, head of Venezuela's opposition-controlled congress, said in a public letter to the bank's chief executive, Lloyd Blankfein.

Goldman Sachs Group Inc (NYSE:GS) is taking flak for buying bonds from Venezuela.

In a statement, the bank acknowledged it purchased the bonds, but said they were purchased through the secondary market and not directly from the Venezuelan government. The transaction also comes as Venezuela's oil industry is crippled amid hyperinflation and a crisis so deep that people scramble to get food and medicine supplies.

"It is apparent Goldman Sachs decided to make a quick buck off the suffering of the Venezuelan people", he wrote.

With Venezuela's inefficient state-led economic model struggling under lower oil prices, Maduro's unpopular government has become ever more dependent on financial deals or asset sales to bring in coveted foreign exchange.

Many economists say the only way to improve the country's situation is to scrap price and currency control systems that have hobbled the private sector.

Venezuela's National Assembly was to debate later on Tuesday whether to formally ask the U.S. Congress to investigate the Goldman deal, opposition representatives told Reuters. This had it paying roughly $865 million for the bonds, which are set to mature in 2022.

"The intermediaries are in Europe", said the source at Goldman.

  • Zachary Reyes