CARACAS/NEW YORK (Reuters/IFR) - Goldman Sachs Group Inc’s statement that it never transacted directly with the government of Venezuelan President Nicolas Maduro when it bought $2.8 billion of bonds for pennies on the dollar was dismissed by the country’s opposition on Tuesday as an effort to “put lipstick on this pig.”

Goldman, in a statement late Monday confirming the purchase, said its asset-management arm acquired the bonds "on the secondary market from a broker and did not interact with the Venezuelan government." (A look into Venezuela's economic crisis here)

The New York-based investment bank came under fire from Venezuelan politicians and protesters in New York opposed to Maduro, who said the deal provided the cash-strapped government hundreds of millions of dollars in badly-needed hard currency. The deal, first reported by the Wall Street Journal, made Goldman complicit in alleged human rights abuses under the government, they said.

“As hard as it may try, Goldman Sachs ... cannot put lipstick on this pig of a deal for Venezuelans,” the head of the opposition-led congress Julio Borges said.

Goldman Sachs did not respond to an email requesting comment on Borges’ statement. In its original statement, Goldman had said: “We recognize that the situation is complex and evolving and that Venezuela is in crisis. We agree that life there has to get better, and we made the investment in part because we believe it will.”

The opposition-led National Assembly later on Tuesday voted to ask the U.S. Congress to investigate the deal, which they called immoral, opaque, and hypocritical given the socialist government’s anti-Wall Street rhetoric.

Goldman shares fell nearly 2 percent on Tuesday and were the biggest drag on the Dow Jones Industrial Average, which fell 0.24 percent.

“31 CENTS ON THE DOLLAR”

With Venezuela’s inefficient state-led economic model struggling under lower oil prices, Maduro’s unpopular government has become ever more dependent on financial deals or asset sales to bring in coveted foreign exchange. Venezuela’s international reserves rose by $749 million on Thursday and Friday, reaching around $10.86 billion, according to the central bank.

In New York, about two dozen protesters chanting “Shame on you Goldman Sachs” picketed outside of Goldman’s headquarters in lower Manhattan on Tuesday afternoon.

“By giving $900 million to a dictatorship, they are funding a systematic human rights violator, they are funding immorality and for Maduro to stay in power while he keeps killing people,” said Eduardo Lugo, 23, a Venezuelan attending college in New York and a leader of the protest.

Another protest was planned for Miami, home to a large community of Venezuelans who have fled the country’s economy crisis, on Thursday.

In Venezuela, Maduro’s critics have for two months staged street protests, which have left nearly 60 people dead, to demand he hold early elections. Maduro says the protests are a violent effort to overthrow his government, and insists the country is the victim of an “economic war” supported by Washington.

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Meanwhile, emerging market bond market participants familiar with Venezuelan debt said there was no effective secondary market for the bonds in question, which were first issued by the state-owned oil company PDVSA [PDVSA.UL.] in 2014 and held entirely by the country’s central bank until recently.

Goldman paid 31 cents on the dollar for the bonds, which mature in October 2022, Borges’ letter said. At that price, the bonds would yield more than 40 percent compared with their stated coupon of 6 percent.

Goldman acquired the bonds from Dinosaur Financial Group, two sources familiar with deal told Reuters.

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A person answering the phone at Dinosaur’s New York office said the firm had no comment on the matter.

Opposition lawmakers said they wanted to investigate intermediaries in the deal.

“We’re going to put a magnifying glass on this financial middleman. This small company called Dinosaur, who is behind it, what power does it have?” said lawmaker Carlos Valero before the vote.

One U.S. broker deeply involved in trading Venezuelan securities told Thomson Reuters IFR that fair value for the bonds should be around 44 cents to 46 cents on the dollar, based on where other bonds issued by PDVSA and the Venezuelan government were trading on Tuesday.

The broker said he did not expect the bonds to trade unless Goldman chose to sell them. At $2.8 billion of face value, the firm now owns the vast majority of that series of bonds originally issued by PDVSA, which totaled around $3 billion.

Most Venezuelan bond prices were up in Tuesday trading.