CARACAS, April 13 (Reuters) - Gold Reserve Inc has served banks in Luxembourg with the equivalent of writs of garnishment relating to around $700 million in interest payments on Venezuelan bonds and funds, as part of its growing push to collect an arbitration award from the South American country.
“These banks were chosen because they are designated as paying agents or transfer agents in listing memoranda relating to various bonds issued by Venezuela and listed on the Luxembourg Stock Exchange,” the Toronto-listed gold mining company said in a statement on Monday.
“So far, the banks have denied holding funds for the account of Venezuela, which appears to contradict the information contained in the listing memoranda. As a result, the Company intends to have the issue determined by the appropriate court or judge having jurisdiction in Luxembourg over such matters.”
The fresh push by Gold Reserve Inc to collect its arbitration award is likely to worry cash-strapped Venezuela, which is struggling to foot hefty bond payments as well as major arbitration awards.
Targeting banks could also unnerve Venezuelan bondholders amid worries over the OPEC country’s debt servicing.
Venezuela’s government did not immediately reply to requests for comment. It was not clear when a Luxembourg court might decide on the issue.
The World Bank’s International Centre for Settlement of Investment Disputes (ICSID) tribunal last year determined Venezuela must pay the miner around $740.3 million for terminating its Las Brisas gold concession in 2009.
The award, which bears interest of Libor plus 2 percent, now stands at around $750 million, U.S.-based Gold Reserve said in its statement.
A tribunal in Luxemburg last October granted the company’s request the award be made enforceable in the tiny Grand Duchy, allowing the company to take action against Venezuela’s assets.
Venezuela has appealed the decision, according to Gold Reserve, which said the arguments would be heard on May 21.
“Luxembourg is another stepping stone in our plan to systematically and methodically enforce our collection rights under the Award,” Gold Reserve’s president, Doug Belanger, said in a statement.
“While our preference is to reach an amicable agreement with Venezuela, we will continue to look for jurisdictions where we have reasons to believe that there are assets against which the Award can be enforced.” (Reporting by Alexandra Ulmer; Editing by Leslie Adler)