Goldman Vilified by Venezuelan Opposition Over Alleged Bond Deal

The president of Venezuela's opposition-led Congress blasted Goldman for financing "dictatorship" under President Nicholas Maduro after Goldman bought $2.8 billion in bonds issued by state oil company PDVSA at a steep discount.

Opposition leaders immediately accused the bank of getting in bed with a deeply unpopular administration that has been the target of two months of near-daily protests.

Julio Borges, the opposition lawmaker who heads the National Assembly, wrote a letter of protest to Lloyd C. Blankfein, the chief executive of Goldman, accusing the Wall Street firm of looking to make a "quick buck off the suffering of the Venezuelan people".

Which is all to say that when Goldman Sachs bought $2.8 billion in state-issued Venezuelan bonds on the secondary market last week, the bank's calculations rested on facts, not feelings.

The letter adds that Congress will open an investigation into the transaction and that he will recommend "to any future democratic government of Venezuela not to recognize or pay these bonds". "The problem is that there are only $3 billion of these bonds - so either at least one of the stories is incorrect, or the Venezuela Central Bank recalled the Fintech repo early, or Venezuela and PDVSA made more than $3 billion of this bond".

But going back to the original question, what sort of obligation does Goldman Sachs or any other investment capital outfit have to be "socially responsible" in their global dealings?

Goldman's it's-not-us-it's-you message makes sense from the lofty vantage point of the bond investor.

The broker said he did not expect the bonds to trade unless Goldman chose to sell them.

Canada, Mexico, Panama, Peru and the United States put forward a declaration calling for an immediate end to the violence, for political prisoners to be freed and respect for human rights and the rule of law.

Venezuelan opposition leader Henrique Capriles was among those tear-gassed by soldiers who were trying to control the protest that blocked a highway.

The declaration also included a demand that the Venezuelan government shelve plans for the creation of a citizens' assembly to rewrite the constitution.

The Mexican foreign minister said "the situation in Venezuela is extremely serious" and explained that he would expect the "international community to show interest".

“It's very serious that money is given to a corrupt, repressive dictatorship and an worldwide bank gets off unscathed, ” lawmaker Carlos Valero, a member of the Venezuelan congress's finance commission, said as the bill was passed. Maduro's opposition says the process outlined by Maduro for selecting the assembly is created to skew it in his favor by stacking the assembly with his supporters. "We agree that life there has to get better, and we made the investment in part because we believe it will", the Wall Street bank affirmed.

  • Zachary Reyes