U.S. Sanctions Venezuelan Gold Company for Supporting Maduro

(Bloomberg) -- The U.S. Treasury on Tuesday imposed sanctions on Venezuela’s Minerven state gold mining company which it says illicitly props up the regime of President Nicolas Maduro.

Minerven, whose full name is Compania General de Mineria de Venezuela CA, and its president, Adrian Antonio Perdomo Mata, are now designated under the Office of Foreign Assets Control, or OFAC, the Treasury Department said. The company’s property and assets in the U.S. are blocked and all U.S. citizens are barred from dealing with them. Anyone doing business with them could also face U.S. actions.

This is the sixth round of sanctions since January by the U.S., which is seeking to wrest power and the military’s loyalty away from Maduro and toward interim President Juan Guaido. Persuading the military has been a central challenge in the two months since Guaido, with U.S. backing, declared himself interim leader.

“The regime has apportioned responsibility for oversight of gold extraction to select military officers who take their cut,” Marshall Billingslea, assistant secretary for terrorist financing at Treasury, said in an interview. “As oil production has plummeted, they have turned to gold trade as a final frontier for their kleptocratic activities. The money Maduro has generated is used to purchase loyalty. Outside of buying loyalty, he certainly doesn’t command respect.”

Sanctions Coordination

The sanctions are being coordinated with European and Latin American allies and are especially directed at China, Russia and Turkey, Maduro’s key allies, officials said. There has been a spike in Venezuelan gold shipments to Africa, especially Uganda, where it’s co-mingled with metal from Congo, they said.

Minerven is the sole state gold processor in Venezuela and Treasury said it buys the gold from miners and melts it into bars. The military transports the bars to air bases outside Caracas and then to the Central Bank of Venezuela.

Treasury says that since 2016 the Maduro regime has purchased the equivalent of hundreds of millions of dollars’ worth of gold from small, independent miners, paying them in nearly worthless local currency, the bolivar. That allows the government to use the gold as a financial lifeline abroad, it says, while despoiling the environment.

“The illegitimate Maduro regime is pillaging the wealth of Venezuela while imperiling indigenous people by encroaching on protected areas and causing deforestation and habitat loss,” Treasury Secretary Steven Mnuchin said in a statement announcing the sanctions.

“Treasury is targeting gold processor Minerven and its president for propping up the inner circle of the corrupt Maduro regime,” Mnuchin said. “We will aggressively pursue those involved with Maduro’s reckless illicit gold trade which is contributing to this financial, humanitarian, and environmental crisis.”

Seeking Votes

Billingslea, in the interview, said the gold trade was also being used to provide food boxes sold at cut rates to very poor Venezuelans in a bid to buy votes and fealty.

Turkey’s role in the gold trade has drawn special concern from Treasury with Billingslea visiting Ankara to talk to government officials and business leaders about it.

Minerven is at the center of Maduro’s quest to seize the profits from a network of once clandestine gold mines spread across 70,000 square miles of Venezuela, from Colombia to Guyana, known as the Arco Minero del Orinoco.

By 2016, as official gold output plummeted from neglect and mismanagement, Maduro ordered Minerven to serve as the state-controlled buyer of gold. He ordered the armed forces to compel miners and the gangs that controlled them to comply, leading to bloody clashes that have since killed dozens.

Officially, the Venezuelan central bank buys gold from brokers, ore milling operations and registered miner groups, known as mining brigades. Minerven’s work has frequently been elevated to presidential theater, with its gold bars sometimes presented to Maduro himself in nationally-televised ceremonies.

Last year, Maduro overhauled Minerven once again, naming a new president -- Perdomo Mata -- with a long history of working on sensitive and lucrative government contracts. Maduro also put Minerven at the center of a push to raise cash by selling gold in Turkey. In August, Maduro created a joint gold venture called Mibiturven, between Minerven and a little-known Turkish company Marilyns Proje Yatirim SA.

Billingslea said that another element of the gold trade that worries the U.S. is the role of Colombian terrorist groups in it. He added that the environmental damage caused by the dumping of contaminants will last generations.

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