Maduro-Appointed Board Sues in U.S. for Control of Citgo
Maduro-Appointed Board Sues in U.S. for Control of Citgo
(Bloomberg) -- The board appointed by Venezuela’s president, Nicolas Maduro, to oversee the nation’s state-owned oil company sued in Delaware to regain control of U.S.-based refiner Citgo Petroleum Corp.
The suit was filed Tuesday by the directors of Petroleos de Venezuela SA, or PDVSA, asking the Delaware Chancery Court to confirm that they control Citgo and two related companies. Citgo is PDVSA’s largest asset and a potential source of revenue for the country, which is in crisis and owes more than $150 billion to creditors.
Juan Guaido, president of Venezuela’s National Assembly, is recognized by the administration of U.S. President Donald Trump, along with more than 50 other countries, as the rightful leader of the once prosperous South American nation. In February he named a replacement board to control the refiner. Maduro continues in control of Venezuela’s government and military.
“PDVSA and its wholly owned subsidiaries are currently experiencing a crisis of leadership due to multiple parties asserting the right to name the board of directors controlling PDVSA and through PDVSA its subsidiaries,” the Maduro directors said in their complaint.
“This complaint is a frivolous effort to use the courts to litigate the foreign policy judgments of the president of the United States, and we are confident that the relief it requests will be denied,” Katherine Bosley, a spokeswoman for Citgo, said in a statement.
A handful of U.S. courts have recognized Guaido’s sole authority to represent Venezuela in U.S. courts. None have yet ruled on whether Guaido’s slate of directors legitimately controls PDVSA’s U.S. subsidiaries. In May, the Guaido directors approved a $71 million payment on PDVSA’s 2020 bonds, which are backed by shares in Citgo.
Guaido’s legal team is seeking to protect Citgo in U.S. courts, including against a claim by Canadian mining company Crystallex, which is trying to collect a $1.2 billion arbitration award by seizing shares of Citgo’s U.S. parent, PDV Holdings. That case is being considered by a federal appeals court in Philadelphia.
The boards case is Jimenez v. Palacios, 2019-0490, Delaware Chancery Court.
To contact the reporter on this story: Bob Van Voris in federal court in Manhattan at rvanvoris@bloomberg.net
To contact the editors responsible for this story: David Glovin at dglovin@bloomberg.net, Peter Jeffrey, Joe Schneider
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