The leadership crisis in Venezuela could lead to an odd legal situation in the U.S. — a Delaware judge may be asked to decide who is the legitimate president of the South American country, according to a Bloomberg commentary. The issue could arise in the U.S. because of the power struggle over Citgo Petroleum Corp., the Houston-based refiner owned by Venezuela oil giant Petroleos de Venezuela SA. Last week, Juan Guaido, the U.S.-backed head of Venezuela’s National Assembly, named new directors to Citgo and PDVSA, a critical part of his strategy to seize oil assets and oust the regime headed by autocrat Nicolas Maduro, who remains in control of the military and other key parts of the government. While the old directors remain in place, at least on paper, Citgo’s new board is certainly acting as the legitimate one. It met on Thursday in a formal session and is expected to name a new chief executive officer. If, as is likely, Maduro challenges those moves, the legal questions would move to the U.S., where Citgo owns three refineries and more than 40 terminals. Central to the issue is who is the true president of Venezuela — Maduro or Guaido — as seen by U.S. courts. PDVSA is state-owned and Citgo is its largest asset, sending much-needed cash back to Caracas before U.S. sanctions kicked in. Citgo’s parent, PDV Holding Inc., is incorporated in Delaware. Under Delaware law, Citgo is controlled by the refiner’s current board, which was appointed by Maduro. To have Delaware recognize Guaido’s new board members, his lawyers must deliver to Citgo’s registered agent what’s known as a corporate consent. It would formally add his board nominees and remove Maduro’s. And it would be issued by Guaido under the claim that he is Venezuela’s legitimate leader. That’s the key. The president of Venezuela is the controlling shareholder of PDVSA and PDV Holding. Delaware law gives controlling shareholders wide latitude in deciding who occupies board seats and managerial positions.
