Venezuela’s opposition gets boost in Citgo fight

Venezuelan leader Nicolás Maduro’s efforts to regain control of Citgo Petroleum were set back after a Delaware judge denied Maduro’s authority to appoint the leadership of the Houston refiner.

Since February, Citgo, a subsidiary of Venezuela’s national oil company PDVSA, has been run by a board of directors backed by Venezuelan opposition leader Juan Guaidó, who is recognized by the Trump administration and dozens of other countries as Venezuela’s interim president. The president of Venezuela has the legal authority to appoint a board of directors for PDVSA and its subsidiaries.

Late Friday, the Delaware judge presiding over the case — Kathaleen McCormick — ruled that the Trump administration’s recognition of Guaidó as the legitimate leader of Venezuela gives his government legal authority to appoint Citgo’s board of directors. McCormick, however, stopped short of confirming the board members individually, giving the Maduro-backed team 10 days to file a challenge in the process. If lawyers for Madurobacked board cannot show the Guaidó board was improperly appointed, McCormick could issue a ruling confirming its members by next week.

Citgo is considered Venezuela’s most prized foreign asset and a linchpin in either Maduro’s efforts to further consolidate control in the economically ravaged South American country or Guaidó’s plan to rebuild the country if the Maduro government falls.

Guaidó’s board took control of Citgo in February, ousting direc

tors and executives loyal to Maduro. The Maduro board in June filed suit in Delaware, where Citgo was incorporated, to regain control of the company.

Citgo lauded McCormick’s ruling.

“We are grateful that the court has rejected the Maduro regime’s efforts to use the U.S. judiciary to advance their anti-democratic objectives,” a Citgo spokesperson said.

The Maduro board’s legal team could not be reached for comment Monday. The judge’s ruling is expected to be finalized

in 10 days, but then Maduro’s side would have 30 days to appeal the case.

McCormick’s decision is in line with precedent set by U.S. courts that have historically deferred to the executive branch in similar cases, legal analysts say.

“It’s pretty solid law. The executive branch chooses who it recognized as the legitimate government and courts don’t enter into the realm of foreign policy,” said Russ Dallen, legal and financial analysts with Caracas Capital Markets, a New York-based research analysis firm focused on Venezuelan capital markets.

The ruling is a victory for the fifth-largest U.S. oil refiner at a time when Venezuela’s creditors are moving closer to satisfy billions of dollars in debt by seizing Citgo’s assets. A recent federal appeals court ruling said a defunct Canadian mining firm owed $1.4 billion by Venezuela may seize shares of Citgo, potentially opening the door for other creditors to make claims against Citgo. The court last week granted Venezuela and Citgo an extra 45 days to appeal the ruling.

Citgo’s fate could ultimately depend on whether the Trump administration intervenes to preserve the company for the Guaidó government. Citgo employs about 800 in Houston and 3,400 nationally.