Just over a year ago, cash-strapped Venezuela quietly conducted a little-noticed gold-for-cash swap with Citigroup as part of which Maduro converted part of his nation’s gold reserves into at least $1 billion in cash through a swap with Citibank.

As Reuters reported then, the deal would make more foreign currency available to President Nicolas Maduro’s socialist government as the OPEC nation struggles with soaring consumer prices, chronic shortages and a shrinking economy worsened by low oil prices. Needless to say, the socialist country’s economic situation is orders of magnitude worse now.

According to El Nacional, “the deal was for $1 billion and was struck with Citibank, which is owned by Citigroup.”

As Reuters further added:

“former central bank director Jose Guerra and economist Asdrubal Oliveros of Caracas-based consultancy Ecoanalitica said in separate interviews that the operation had been carried out.  A source at the central bank told Reuters last month it would provide 1.4 million troy ounces of gold in exchange for cash. Venezuela would have to pay interest on the funds, but the bank would most likely be able to maintain the gold as part of its foreign currency reserves.”

On paper yes – very much as any comparable gold leasing operation conducted by sovereign nations with central banks – but the actual physical gold would be transferred to an unknown vault of Citi’s choosing where it would become an asset controlled by the bailed out US bank.

We note this peculiar gold swap case because something curious took place overnight. On the same day that Venezuela announced it would seize a local Kimberly-Clark factory after the US consumer-products giant announced it would shutter its Venezuela operations after years of “grappling with soaring inflation and a shortage of hard currency and raw materials”, Venezuela’s President Nicolas Maduro said on Monday that Citibank planned to shut his government’s foreign currency accounts within a month, denouncing the move by one of its main foreign financial intermediaries as part of a “blockade.”

Among the many reasons why the sudden departure is surprising is that due to strict currency controls in place since 2003, the government relies on Citibank for foreign currency transactions, meaning that suddenly Venezuela’s financial “blockade” is indeed about to get worse.

“With no warning, Citibank says that in 30 days it will close the Central Bank and the Bank of Venezuela’s accounts,” Maduro said in a speech, adding that the government used the U.S. bank for transactions in the United States and globally.

In typical bluster, Maduro added: “Do you think they’re going to stop us with a financial blockade? No, gentlemen. Noone stops Venezuela.”

What Maduro did not mention is that among the central bank accounts closed by Citi will be at least one, rather prominent, gold swap launched just over a year earlier.

Reuters adds that Citibank, could not immediately be reached for comment about the purported measure against Venezuela’s monetary authority and the Bank of Venezuela which is the biggest state retail bank.

With the OPEC nation’s economy immersed in crisis, various foreign companies have been pulling out or reducing operations. However, few of them held over $1 billion in Venezuela gold as hostage.

So during his next address, perhaps someone inquire Maduro if as part of its “blockade” Citi also absconded with a substantial portion of the country’s gold reserves, and if so, which other banks have comparable “swap” arranagements with the insolvent nation?

Meanwhile, Hugo Chavez, who spent the last years of his life repatriating Venezuela’s gold is spinning in his grave.