The Discreet Charm of the Boliburguésia

In the 1972 movie The Discreet Charm of the Bourgeoisie, director Luis Buñuel mordantly depicted a “decaying European aristocracy” incapable of coming to terms with its own deep-seated moral corruption and hypocrisy.  Though critically acclaimed in its time, that film would likely be banned today in Venezuela, where the Boliburguesía — an elite of individuals who amassed substantial wealth and influence during the Chávez and Maduro presidencies, largely through bribery of government officials — have been integral to Venezuela’s kleptocracy.

Since 2017, a series of prosecutions by the U.S. Department of Justice in the Southern District of Florida has begun to dislodge key members of the Boliburguésia and their support network, and to expose the scope and scale of corruption and money laundering in Venezuela:

  • Alejandro Andrade:
    • On December 19, 2017, Alejandro Andrade Cedeno, the former Venezuelan National Treasurer, agreed to plead guilty to conspiracy to commit money laundering, to forfeiture, and to cooperate with the U.S. Government. Andrade faces a maximum sentence of ten years’ imprisonment.  In addition, as part of his plea agreement, Andrade “agreed to a forfeiture money judgment of $1 billion and forfeiture of all assets involved in the corrupt scheme, including real estate, vehicles, horses, watches, aircraft and bank accounts.”  Andrade’s European-imported sport horses alone reportedly “range in value from hundreds of thousands to millions of dollars.”
    • In his factual proffer, Andrade acknowledged that from 2007 to 2011, he “agreed to accept bribes from co-conspirators in exchange for selecting them to carry out the U.S. dollar to bolivar exchange process with the [Venezuelan National Treasury], which allowed those co-conspirators to obtain substantial profits on the exchange transactions.” Andrade received bribes from this arrangement as late as November 2017.
    • In connection with his plea, Andrade admitted that he received more than $1 billion in bribes from Raul Gorrin Belisario, a Venezuelan billionaire and owner of the Globovision news network, and other co-conspirators in exchange for using his position as Venezuelan National Treasurer for the bolivar exchange transactions described above.
  • Gabriel Arturo Jimenez Aray:
    • On March 20, 2018, Gabriel Arturo Jimenez Aray, the former owner of the Dominican Republic bank Banco Peravia, agreed to plead guilty to conspiracy to commit money laundering, to forfeiture, and to cooperate with the U.S. Government. Jiminez faces a maximum sentence of ten years’ imprisonment.
    • In connection with his guilty plea, Jimenez “admitted that, as part of the scheme, he conspired with Gorrin and others to acquire Banco Peravia, through which he helped launder bribe money and scheme proceeds.” Gorrin also allegedly partnered with Jimenez to acquire Banco Peravia ”to launder bribes paid to Venezuelan officials and proceeds of the scheme.”
  • Matthias Krull:
    • On October 29, 2018, Matthias Krull, the former managing director and vice chairman of Julius Baer, was sentenced to ten years’ imprisonment and a $600,000 forfeiture after pleading guilty to conspiracy to launder money. In connection with his plea, Krull, who had initially been arrested on July 25, 2018, admitted that he attracted Venezuelan clients to his bank and that the money-laundering conspiracy began in December 2014
      • “with a currency exchange scheme that was designed to embezzle around $600 million from [Venezuelan state-owned oil company Petróleos de Venezuela, S.A. (PDVSA)], obtained through bribery and fraud and the conspirators’ efforts to launder a portion of the proceeds of that scheme. By May 2015, the conspiracy had doubled in amount to $1.2 billion embezzled from PDVSA.”
    • Krull also admitted that he joined the conspiracy to launder $1.2 billion worth of funds embezzled from PDVSA, and that he and other members of the conspiracy used Miami real estate and sophisticated false-investment schemes to conceal the fact that the $1.2 billion was embezzled from PDVSA. He further admitted “that surrounding and supporting these false-investment laundering schemes are complicit money managers, brokerage firms, banks and real estate investment firms in the United States and elsewhere, operating as a network of professional money launderers.”  As a previous DTG post noted, Krull reportedly is cooperating with U.S. authorities.
  • Gustavo Adolfo Hernandez Frieri:
    • Gustavo Adolfo Hernandez Frieri, a Colombian national and naturalized U.S. citizen, reportedly faces extradition from Italy to the United States, after being arrested in Sicily on July 25, 2018. At that time, Frieri was charged, with Matthias Krull and six other individuals (who were at large at that time), with conspiracy to commit money laundering.
  • Raul Gorrin Belisario:
    • On November 20, 2018, the Department of Justice announced the unsealing of an indictment charging Gorrin for his role in a billion-dollar currency exchange and money laundering scheme. The indictment included one count of conspiracy to violate the Foreign Corrupt Practices Act (FCPA), one count of conspiracy to commit money laundering, and nine counts of money laundering.
    • The allegations against Gorrin involve both Andrade and Jiminez. Gorrin allegedly
      • “paid millions of dollars in bribes to two high-level Venezuelan officials, including Andrade, to secure the rights to conduct foreign currency exchange transactions at favorable rates for the Venezuelan government. In addition to wiring money to and for the officials, Gorrin allegedly purchased and paid expenses for them related to private jets, yachts, homes, champion horses, high-end watches and a fashion line.  To conceal the bribe payments, Gorrin made payments through multiple shell companies.  Gorrin allegedly partnered with Jimenez to acquire Banco Peravia . . . to launder bribes paid to Venezuelan officials and proceeds of the scheme.”

Andrade is scheduled to be sentenced on November 27, and Jiminez on November 29.  Given Krull’s  ten-year sentence as a presumptive cooperator, it should not be surprising if both Andrade and Jiminez also receive ten-year sentences and continue their cooperation in the hope of receiving a sentence reduction.  Now that they have, so to speak, cleared the first hurdle, it remain to be seen whether Gorrin and other co-conspirators will follow their lead or refuse the jump and face a more perilous landing.

Office of the Comptroller of the Currency Imposes $100 Million Civil Money Penalty Against Capital One for BSA/AML Program Deficiencies

On October 23, the U.S. Department of the Treasury’s Office of the Comptroller of the Currency announced that it had assessed a $100 million civil money penalty against Capital One, N.A., and Capital One Bank (USA), N.A. (collectively “Capital One”) for deficiencies in Capital One’s Bank Secrecy Act (BSA)/Anti-Money Laundering (AML) program.  The penalty stems from a 2015 Consent Order between the OCC and Capital One.

The 2015 Consent Order included the OCC’s findings that Capital One (1) had deficiencies in its BSA/AML compliance program and (2) “failed to adopt and implement a compliance program that adequately covers the required BSA/AML program elements due to an inadequate system of internal controls and ineffective independent testing, and the Bank failed to file all necessary Suspicious Activity Reports (‘SARs’) related to suspicious customer activity.”  In particular, it found that some of the critical deficiencies in Capital One’s BSA/AML compliance program included:

  • Lack of an enterprise-wide BSA/AML risk assessment.
  • Systemic deficiencies in the bank’s transaction monitoring systems, risk management, and quality assurance programs for its remote deposit capture services.
  • Systemic deficiencies in the bank’s customer due diligence (CDD) processes and failure to have CDD and enhanced due diligence (EDD) policies and processes specific to Correspondent Banking.
  • Lack of a process by which BSA/AML control decisions are escalated to Risk Management.

The 2015 Consent Order also required Capital One to submit to the OCC’s Examiner-in-Charge an action plan that contains a complete description of the actions that are necessary and appropriate to achieve compliance with specified Articles in the Consent Order.  Those provisions included:

  • A comprehensive BSA/AML risk assessment (Article IV);
  • Policies and procedures for gathering CDD and EDD information (Article V);
  • Policies and procedures to provide for BSA compliance and for the appropriate identification and monitoring of high-risk transactions (Article V)I;
  • A management information system assessment (Article VII);
  • Appropriate risk-based controls over the usage and monitoring of the Remote Deposit Capture product by money service businesses or other “high-risk” customers (Article VIII);
  • An effective program to audit the Bank’s BSA/AML compliance program (Article IX);
  • A specialized BSA training program (Article X);
  • A written program of policies and procedures to ensure the timely and appropriate review and disposition of suspicious activity alerts, and the timely filing of SARs (Article XI); and
  • An action plan to conduct a look-back review of account and transaction activity (Article XII).

It further required the Action Plan to specify timelines for completion of each of those provisions.

The OCC’s 2018 Consent Order, after reciting the key requirements of the 2015 Consent Order, stated that the bank “failed to timely achieve compliance with the 2015 Consent Order (from July 1, 2016 to July 6, 2017) in violation of the Order.”  It further stated that after the issuance of the 2015 Consent Order, Capital One “failed to file additional SARs in violation of [federal regulations] and initiated wire transfer transactions which contained inadequate or incomplete information in violation of [federal regulations].”  It also acknowledged that Capital One “has undertaken corrective action, and is committed to taking all necessary and appropriate steps to remedy the deficiencies identified by the OCC, and to enhance the Bank’s BSA/AML compliance program.”

Note: The 2018 Consent Order gives little guidance about the extent to which the OCC deemed Capital One to have “failed to achieve timely compliance with the OCC’s 2015 order, as required,” other than the post-2015 Consent Order failure to file additional SARs and initiation of wire transfer transactions containing inadequate or incomplete information.  Even so, it takes little reading between the lines to surmise that the OCC had little patience with Capital One’s failure to achieve sufficient BSA/AML compliance after 2015 – the more so because Capital One committed to an action plan with specified deadlines for completion of its key requirements.

That theme — regulatory impatience with regulated financial institutions’ failure to meet previously agreed commitments on key financial-crimes compliance programs — has already manifested itself this year in the Federal Reserve Board’s February 2018 actions vis-à-vis Wells Fargo, and is likely to continue into 2019 and beyond with other leading financial institutions.  (Brief disclaimer: I was a Senior Vice President with Wells Fargo, heading Anti-Bribery & Corruption Governance, until July 2018.  I had no involvement in the issues that led to the Federal Reserve’s February 2018 actions.)

U.S. Antitrust Division Obtains Third Guilty Plea in Investigation of Online Public Foreclosure Auctions

On November 9, the U.S. Department of Justice announced that a third real estate investor, Avi Stern, had pleaded guilty to bid-rigging charges in connection with an ongoing investigation by the Department’s Antitrust Division and the FBI into bid-rigging in online public foreclosure auctions in Florida.  On November 2, 2017, a federal grand jury in the Southern District of Florida had indicted Stern and two other real estate investors for conspiring to rig bids during online auctions in Palm Beach County, Florida, from at least January 2012 until June 2015, to obtain foreclosed properties at suppressed prices.  Stern was the last of the three investors to plead guilty in the case.

The Department stated that the primary purpose of the bid-rigging conspiracy

was to suppress and restrain competition in order to obtain selected real estate offered at online foreclosure auctions at non-competitive prices.  When real estate properties are sold at these auctions, the proceeds are used to pay off the mortgage and other debt attached to the property, with any remaining proceeds available to the homeowner.  According to court documents, the conspiracy artificially lowered the price paid at auction for such homes.

The Department also reported that over the past several years, the Antitrust Division and its law enforcement partners had obtained convictions of more than 100 individuals for rigging public mortgage foreclosure auctions in six different states, including Florida.

What made this case noteworthy — according to November 15 public remarks by Assistant Attorney General for the Antitrust Division Makan Delrahim — is that “[t]his case is unlike the Division’s prior foreclosure auction prosecutions because the auction occurred online rather than in-person, and the collusion occurred primarily by text message rather than in-person.”  Assistant Attorney General Delrahim also provided a number of details regarding the case that were not included in the Department’s release concerning Stern:

  • Timing: The conspiracy “took place in the aftermath of the financial crisis, which affected the housing market nationwide and the Florida real estate market in particular.”
  • Methods: “Co-conspirators texted each other to coordinate their bidding and facilitate the conspiracy to obtain foreclosed homes at suppressed prices. Most commonly, bidders would agree to stop bidding or to refrain from bidding at their co-conspirators’ request.  In some instances, they lowered bids for each other’s benefit. After learning of the investigation, one of the defendants used and encouraged other co-conspirators to use a text messaging application to continue colluding.  He believed that law enforcement would be unable to read or trace any messages sent through the application.”
  • Initiation of Investigation: The Antitrust Division “began an investigation into possible collusion in online foreclosure auctions in Palm Beach County, Florida after receiving an anonymous citizen complaint that included a link to a YouTube video detailing the collusion.”

Note: This third plea appears to conclude the Antitrust Division’s prosecution of this individual case, and the Antitrust Division appears to have successfully resolved most of the bid-rigging cases it has charged to date for other foreclosure auctions.

Assistant Attorney General Delrahim’s comment about the defendants’ use of text messaging to continue their collusion in this case provides an interesting counterpoint to the Department’s Corporate Enforcement Policy.  In listing various criteria for an effective corporate compliance program, that Policy specifically included “prohibiting the improper destruction or deletion of business records, including prohibiting employees from using software that generates but does not appropriately retain business records or communications.”

That requirement — which was based on the Department’s concern that criminals could use certain ephemeral messaging applications to coordinate their actions and count on the messages’ disappearance before law enforcement could access those messages — prompted extensive criticism in the legal community.  Assistant Attorney General Delrahim’s comment indicates that in the Palm Beach County bid-rigging case, federal authorities were somehow able to obtain one or more text messages that were apparently probative of the defendants’ collusion.  That fact lends ammunition to both sides in the debate over the Corporate Enforcement Policy: law enforcement can point to this case as proof that corporate criminals will seek to use ephemeral messaging, while defense attorneys will take note of the fact that the authorities were able to obtain such messaging.  Neither position will resolve the larger debate in any event.

Data Protection: An Ethical Bricolage for the European Union?

On October 24, Giovanni Buttarelli, European Data Protection Supervisor (EDPS), gave the opening address of the Public Session of the 40th Edition of the International Conference of Data Protection and Privacy Commissioners in Brussels.  Because Buttarelli’s address ranged widely across numerous aspects of data protection, it is important for people and companies affected by the General Data Protection Regulation (GDPR) to get a sense of his thinking about the current and possible future states of data protection regulation by the European Union (EU).

In keeping with the theme of the session, “Debating Ethics,” Buttarelli stated at the outset that the conference “is not a privacy or data protection conference,” but rather “a conference about the human values which underpin privacy and data protection.”  He asserted “that we are now living through a new generational shift in the respect for privacy, . . . towards establishing a sustainable ethics for a digitized society.” That shift, in his view, is driven “by the globalization of the economy,” “socio-technological forces,” “digitization of almost everything in the economy, politics, and government,” and “[a]bove all . . . by the prospect of human decision making, responsibility and accountability being delegated to machines.”

Buttarelli then stated that “[i]n today’s digital sphere, there is no . . . ethical consensus” – either in Europe or at a global level – but that “we urgently need one” because “digital technologies and data flows are already intensely global.”  “To cultivate a sustainable digital ethics,” he maintained,

we need to look, objectively, at how those technologies have affected people in good ways and bad[.]  We need a critical understanding of the ethics informing decisions by companies, governments and regulators whenever they develop and deploy new technologies. Technology is still, for now, predominantly designed and deployed by humans, for purposes defined by humans.  But we are fast approaching a period where design, deployment and control of new technologies and technological processes are delegated to machines.

Buttarelli warned that “we are fast approaching a period where design, deployment and control of new technologies and technological processes are delegated to machines.”  As illustrations of that point, he cited five “case studies”:

  1. “[K]iller drones.”
  2. “[A]lgorithmic decision-making in criminal sentencing,” which “submits individuals to life-changing decisions based on opaque criteria with little or no due process.”
  3. “[T]he role of social media whose unaccountable algorithmic decision-making has been weaponized by bad actors in ethnic conflict zones, with at times appalling human consequences, notably in Myanmar.”
  4. Blockchain technologies, which “if its current rate of growth continues, . . . will generate as much carbon emissions worldwide as the whole of the United States.”
  5. “[R]ights for robots,” including consideration of “the ‘robotised humans’ of today.”

Buttarelli stated that these and other practices “call into question basic notions of human dignity.” In his view, “[t]hose responsible for these phenomena may be well-intentioned,” but “their ethics are deeply questionable.”  He maintained that

we are witnessing a state of cognitive dissonance on a global scale.  We need to ask whether our moral compass been suspended in the drive for scale and innovation. At this tipping point for our digital society, it is time to develop a clear and sustainable moral code.

While Buttarelli did not define what such a moral code would look like, he noted that “the European legislator [sic] did not think about ethics when it drafted the GDPR.”  He immediately added that his statement

is not a criticism of the GDPR.  It is a reality check on the limitations of any law, even a comprehensive one. Laws establish the minimum standard.  Best practices are assumed to go beyond the minimum standard. So for me, compliance with the law is not enough. . . . From my perspective, ethics come before, during and after the law.  It informs how laws are drafted, interpreted and revised.  It fills the gaps where the law appears to be silent.  Ethics is the basis for challenging laws.

Finally, Buttarelli explained why data protection authorities should be involved in the debate over a moral code for information.  He informed the Conference that “[a]ccording to the results of our consultation, 86% of respondents believe authorities should play a role in the governance of digital ethics.”  He briefly commended privacy professionals for developing a range of compliance tools, but stated that “self-regulation alone is not the solution. For  us as data protection authorities, I believe that ethics is among             our most pressing strategic challenges. We have to be able to understand technology, and to articulate a coherent ethical framework.”  He added that “the more personal data processing affects the collective interest, the less we can look to the GDPR for answers.  Perhaps ethics will fill that void.”

* * *

For those who pay attention to transnational data-protection issues, there should be no surprise at Buttarelli’s focus on this topic.  Since the publication of the EDPS Strategy 2015-2019, one of the EDPS’s stated priorities has been “to assess an ethical dimension beyond the application of data protection rules; we want to encourage a better informed conversation on what big data and the internet of things will mean for our digital rights.”  In his Opinion of September 11, 2015, Buttarelli went further in urging that the concept of human dignity – which Article 1 of the European Union’s Charter of Fundamental Rights proclaimed “is inviolable” and “must be respected and protected” — “should be at the heart of a new digital ethics.”  To help define that “new digital ethics,” he promised to establish an EU data protection ethics board, which has now taken place.

Because Buttarelli’s address at the conference was so discursive, it is difficult to parse the text of his address and determine the extent to which he intended certain remarks merely to provoke discussion and exchanges of ideas, and other remarks to promote a potential regulatory agenda for EU data protection regulators.  Other recent comments by Buttarelli indicate that at the least, he is purposefully laying the groundwork for the latter.

In an October 3 interview with TechCrunch, Buttarelli raised a question relating to what TechCrunch termed “privacy hostile business models,” and indicated his doubt that the GDPR alone “will be remedy enough to fix all privacy hostile business models.”  To that end, TechCrunch commented, he “is actively pushing to accelerate innovation and debate around data ethics — to support efforts to steer markets and business models in, well, a more humanitarian direction.”  Not surprisingly, Sir Tim Berners-Lee, who “has been increasingly strident in his criticism of how commercial interests have come to dominate the Internet by exploiting people’s personal data,” was a key speaker at the Brussels Conference.  In addition, Buttarelli stated that “the legal framework” can be of help in addressing “a lot of inequality in the tech world,” but that it “will not give all the relevant answers to identify what is legally and technically feasible but morally untenable.”

Buttarelli also stated in the TechCrunch interview that in May 2019, on the anniversary of the GDPR’s coming into force, “he will publish a manifesto for a next-generation framework that envisages active collaboration between Europe’s privacy overseers and antitrust regulators.“  As it is unlikely that a comprehensive EU-wide ethical or moral code can be drafted and approved by that time, Buttarelli cannot help but infuse that privacy-antitrust framework manifesto with certain moral and ethical requirements of his and EDPS officials’ choosing, rather than requirements developed through extensive public consultation and gradual development of consensus.

Such a course of action should be deeply concerning for the commercial sector as well as the general public.  Although law can have a moral force, U.S. Supreme Court Justice Oliver Wendell Holmes, Jr., wrote that there also can be “a confusion between morality and law, which sometimes rises to the height of conscious theory, and more often and indeed constantly is making trouble in detail without reaching the point of consciousness.”

Buttarelli’s call for “a clear and sustainable moral code” and professed desire for “a coherent ethical framework” may sound laudable at first.  But it is not at all clear that there can be such a thing as a single “coherent ethical framework” for information in the digital age.  Each of the topics that Buttarelli briefly mentioned – blockchain, drone technology, robotic “rights”, and the use of algorithms in sentencing and social media – certainly involve ethical and moral issues that deserve thoughtful discussion.  It is highly improbable, however, that a single ethical framework exists, or can be devised, that can be applied to such widely varied issues in a coherent and consistent manner.

Since that framework does not now exist, as Buttarelli himself would have to concede, the true significance of Buttarelli’s address is that it offers an ethical bricolage of ethics- and morality-related ideas, notions, and sentiments, from which data-protection authorities can pick and choose freely as they seek to justify further expansion of their authority.  For that reason, interested observers – which should include any and all persons who could be affected by future expansion of EDPS-driven regulation – should closely watch the EDPS’s actions in the next several months and be prepared to challenge future regulatory proposals that lack ethical and policy coherence.  Justice Holmes’s warning about “those who think it advantageous to get as much ethics into the law as they can” can be just as applicable to regulators as it is to legislators.

Bank of England Refuses to Repatriate Gold to Venezuela After United States Imposes New Sanctions

In the theory of general relativity, increasing pressure increases gravitational pull.  Recent events involving the United States, Venezuela, and the United Kingdom have nicely demonstrated that a similar effect can occur in the field of economic sanctions.

On November 1, U.S. President Donald J. Trump, by Executive Order 13850, imposed new sanctions against Venezuela pertaining to the gold sector.  Subsection 1(a) of that order specifically prohibited defined persons

  • “(i) to operate in the gold sector of the Venezuelan economy or in any other sector of the Venezuelan economy as may be determined by the Secretary of the Treasury, in consultation with the Secretary of State;
  • “(ii) to be responsible for or complicit in, or to have directly or indirectly engaged in, any transaction or series of transactions involving deceptive practices or corruption and the Government of Venezuela or projects or programs administered by the Government of Venezuela, or to be an immediate adult family member of such a person;
  • “(iii) to have materially assisted, sponsored, or provided financial, material, or technological support for, or goods or services to or in support of, any activity or transaction described in subsection (a)(ii) of this section, or any person whose property and interests in property are blocked pursuant to this order; or
  • (iv) to be owned or controlled by, or to have acted or purported to act for or on behalf of, directly or indirectly, any person whose property and interests in property are blocked pursuant to this order.”

In connection with this intensification of pressure on the Venezuelan Government, the U.S. Office of Foreign Assets Control (OFAC) explained that the order “is designed to counter rampant corruption within the Government of Venezuela” and “provides a powerful tool to impose costs on those who unjustly benefit from dishonest or fraudulent conduct, illicit activity, and/or deceptive transactions within Venezuela’s gold sector or other identified sectors, or in relation to the Government of Venezuela or its projects or programs.”

Shortly thereafter, Reuters reported that the Venezuelan Government was seeking to repatriate about $550 million in gold bars, weighing 14 tons, “from the Bank of England because of fears it could be caught up in international sanctions on the country.”  According to the report, this effort predated the Executive Order, but had been “held up for nearly two months due to difficulty in obtaining insurance for the shipment, needed to move a large gold cargo.”  Gold holdings in the Venezuelan Central Bank declined by more than 50 percent, from 364 tons in 2014 to 160 tons in June 2018, as the expiration of swap operations with various global banks reportedly left those banks, including the Bank of England, continuing to hold Venezuelan gold that served as collateral for the funds lent to Venezuela.

The imposition of the new sanctions, however, apparently prompted the Bank of England to refuse to repatriate the gold to Venezuela.  According to The Times, “British officials are understood to have insisted that standard measures to prevent money-laundering be taken — including clarification of the Venezuelan government’s intentions for the gold.  There are concerns that [Venezuelan President Nicolás] Maduro may seize the gold, which is owned by the state, and sell it for personal gain.”

On its face, the Bank of England’s purported money-laundering argument makes little sense.  It is not unreasonable to think that the Bank of England would not have accepted the Venezuelan Government’s gold years ago if it believed that the gold represented the proceeds of any illegal activity.  That being the case, it would be difficult for the Bank of England now to assert that the repatriation of that same gold, without more, would constitute money laundering.  If Maduro Administration officials were later to divert the repatriated gold for their own benefit, or to sell the gold to raise hard currency and evade existing U.S. sanctions, those actions could constitute criminal violations.  In that event, subsequent transactions with the proceeds of those criminal violations could certainly constitute money laundering.  But predictions of likely future actions are not the same as current facts.

Nonetheless, the Bank of England’s best strategy at the moment, while Maduro contents himself with invective and promises to boost domestic gold production, is to refuse not only to repatriate the gold, but also to engage in any transactions with the gold.  If the Maduro Administration were to change its tactics and seek to sell the gold in the Bank’s possession to a foreign buyer, the Bank would have to assume that Venezuelan officials’ intent was the same, to avoid the U.S. gold sanctions.  Moreover, such transactions would involve the Bank of England even more directly in the Venezuelan Government’s evasion of those sanctions.

It would certainly be better for the Bank, from a legal and diplomatic standpoint, if the European Union (EU) were to expand on its recent extension of its existing sanctions on Venezuela and impose gold-related sanctions that paralleled the November 1 Executive Order’s terms.  Such action would, so to speak, increase international pressure on Venezuela and dramatically increase the Bank’s gravitational pull on the gold.   But as there are no indications yet that the EU is prepared to do so, the Bank must content itself for now with a notion familiar to theoretical physicists: that when pressure is balanced by gravitational pull, a system can reach equilibrium.  How long any system can maintain equilibrium, however, would be beyond the capacity of Einstein – let alone the Governor of the Bank – to predict in the abstract.