Who does Britain recognise as president of Venezuela: disputed incumbent Nicolás Maduro or his western-backed rival, Juan Guaidó? And why is this question so important to the Bank of England?

Over the course of the next four days, the high court in London will have to decide.

In an extraordinary case that will have profound economic, political and social consequences for the impoverished South American country, the Banco Central de Venezuela (BCV) is seeking an order that would force the BoE to release $1bn of its gold.

The BCV, which has deposited about $1.8bn of gold with the BoE for safekeeping, now says it wants the lion’s share to be sold and the funds transferred directly to the UN development programme to combat the country’s Covid-19 pandemic.

But the BoE has questioned whether Venezuela’s current officials have the authority to make such a request.

Its refusal to grant the demand follows interventions by Guaidó, who has appointed his own alternative ad hoc BCV board of directors.

Lawyers acting for the ad hoc board insist it is not up to the BCV to decide how the money from the gold sell-off should be spent. That decision, they say, lies in the hands of the country’s legislature.

The BoE has been portrayed as a lackey of US foreign policy by the BCV’s lawyers in the run-up to the case.

“This is a humanitarian emergency,” said Sarosh Zaiwalla, who is representing the Venezuelan bank. “The Bank of England’s continued intransigence is putting lives at risk.”

He added: “Venezuela has been denied access to its resources during an international crisis. In effect, the nation’s gold reserves in the BoE are being held hostage to political factors dictated by the foreign policy of the United States and certain of its allies.”

But lawyers for Guaidó’s ad hoc committee question the haste with which the BCV is attempting to resolve the matter.

In a submission obtained by the Observer, they claim that “the most basic information such as whether the Maduro board has a buyer lined up for the gold has yet to be clarified. The timeframe to resolve the operational issues remains unclear.”

The BCV’s representatives will argue that the UK government has not formally recognised Guaidó as either head of state or head of the government in Venezuela.

However, in February 2019 the then foreign secretary, Jeremy Hunt, stated that the UK recognised Guaidó as a constitutional interim president.

Maduro still controls Venezuela’s ministries, courts and armed forces. Guaidó is backed by Washington and more than 50 other countries.

The high court ruling, expected before the end of July, could help determine who controls an estimated $5bn of Venezuelan funds frozen in foreign bank accounts.

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