Venezuela: Goldman Sachs protest

A key Venezuelan opposition leader is accusing Wall Street investment bank Goldman Sachs of "aiding and abetting the country's dictatorial regime" by purchasing its government-issued bonds.

Goldman's purchase of securities, also known as "Hunger Bonds" because of the country's extreme poverty, were for $2.8 billion in bonds from the state-run oil company PDVSA for only $865 million.

Goldman's deal comes amid rising unrest in Venezuela, as people protest President Nicolas Maduro's regime.

In a statement, Goldman Sachs acknowledged it purchased the bonds, but said they were bought in the secondary market and not directly from the Venezuelan government.

With crude prices remaining largely stagnant, and PDVSA royalties accounting for a majority of Venezuela's income, the US$2.8 billion dollar bond deal that the opposition is opposing is a much needed economic boost for the country experiencing an ongoing recession.

Staying on top of Venezuela's debt will nearly certainly be the ruling party's priority, she said, though the influx of hard currency into the central bank could also fund imports and ease pressure on the state oil company, which has struggled to maintain production. The opposition - burned by talks that went nowhere in the past - has said it will continue to protest until the government calls general elections and releases political prisoners.

Venezuela has a financing requirement of $17 billion in 2017 with its Central Bank holding a reserves of just $10 billion.

Goldman, in a statement Monday, said it bought the securities, which are held in funds and accounts it manages on behalf of clients, from a broker and didn't interact with the Venezuelan government. The country is in the middle of a humanitarian and economic crisis, and critics have described the purchase as a show of support for President Nicolás Maduro.

Dany Bahar, fellow at Brookings Institution, said the bonds purchased by Goldman are "vastly undervalued". One of the sources - who was from Goldman Sachs - said that the intermediaries were in Europe. "We agree that life there has to get better, and we made the investment in part because we believe it will", the company said.

"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", Eduardo Lugo, 23, a Venezuelan attending college in NY and a leader of the protest, told Reuters.

Bloomberg Markets speculates that Goldman's bond buy will become public-relations fuel for the Venezuelan "Hunger Bonds" movement, which has thus far enjoyed limited success at persuading worldwide investors to boycott the Maduro regime.

He challenged the parliament to help "find a peaceful solution to this crisis" and said he would ask its leaders to consider imposing sanctions against select Venezuelan officials, as the United States has done.

Videgaray said he hoped that a Wednesday meeting in Washington, D.C., of foreign ministers from members of the Organization of American States could yield a resolution calling for elections in Venezuela, a restoration of the national assembly's powers, and release of political prisoners.

"It is apparent Goldman Sachs chose to make a quick buck off the suffering of the Venezuelan people", Borges wrote the company in a letter.

The LWF statement said the Lutheran assembly requests "the government to facilitate the receipt of contributions from overseas, especially medicines and food".

  • Leroy Wright