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Page added on February 12, 2019

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Who Will Get Citgo?

Business

A dispute over a $626,860 deposit at Wells Fargo & Co. during the Chinese Revolution offers a glimpse into who may eventually control Citgo Petroleum in the current Venezuelan power struggle.

Juan Guaido, the head of the National Assembly, is trying to wrest ownership of Houston-based Citgo away from the current Venezuelan regime led by the autocrat Nicolas Maduro. The move forms a key part of his strategy to topple Maduro and install an interim government that would call new elections. To obtain Citgo, Guaido has said he plans to name a new board of directors for both the state-owned oil company Petroleos de Venezuela and Citgo, its U.S. subsidiary.

That would produce a nightmarish legal situation: One company having two parallel boards of directors, each claiming to be the true management. And making it even more tortuous, Citgo is a U.S.-registered corporation but is owned, at least indirectly, by a foreign government. If that weren’t complicated enough, Citgo’s assets are eyed by a long list of Venezuela’s creditors including bondholders, Russia’s state-run oil company Rosneft, ConocoPhillips and defunct Canadian miner Crystallex.

So U.S. courts will likely be called upon to settle the matter.

Here’s where the decades-old dispute has striking similarity. The Bank of China found itself with two board of directors — one led by the communist Chinese who had taken over the mainland under Mao Zedong, the other controlled by directors previously appointed by the Nationalist government, which had retreated to Formosa, known today as Taiwan.

In late 1949, the bank’s old management attempted to transfer $626,860 of Chinese money out of what was then called Wells Fargo Bank & Union Trust Co. The U.S. bank refused, citing conflicting claims of corporate authority. The dispute ended up in a California district court.

Lawyers for the Taiwan directors argued that the Nationalist Government was the only government of China recognized by the U. S. For that reason, they said, the court should not recognize Bank of China’s new management.

Taiwan Wins

After waiting for the Chinese political situation to become clearer, the court ruled in favor of the Taiwan directors in early 1952, giving them control over the account. The opinion said it wasn’t up to the courts to decide which government best represents the Chinese state. That was a judgment left to the U.S. government.

“The Court should justly accept, as the representative of the Chinese State, that government which our executive deems best able to further the mutual interests of China and the United States,” the court ruled.

While other legal issues are likely to come into play — such as Citgo’s corporate structure and Venezuelan law — the opinion bodes well for Guaido, who the Trump administration has recognized as interim president in a bid to bolster his chances of toppling Maduro’s authoritarian regime.

“The court will defer to what the State Department says and I think the State Department in the U.S. has made it really clear who they think is the proper representative of the Venezuelan people,” said Mitu Gulati, a law professor at Duke University.

Removing Americans?

The legal battle is already starting to unfold. On Saturday, Reuters reported that PDVSA is taking steps to remove at least two American executives from Citgo’s board. A PDVSA spokesperson didn’t respond immediately to a request for comment.

If Guaido ultimately prevails, he may inherit a Citgo that would need to find new ways to thrive, especially if the daily operations of corporate parent PDVSA remain in Maduro’s hands in Caracas. With new U.S. sanctions banning the Maduro regime from receiving the money generated by oil exports to the U.S., the steady flow of crude that PDVSA sends to Citgo is already drying up, which has forced the refiner to search for alternative sources of oil.

RIGZONE



9 Comments on "Who Will Get Citgo?"

  1. shortonoil on Tue, 12th Feb 2019 12:05 pm 

    Everyone is still discussing Maduro’s government. In fact there is no Maduro government. Maduro and his generals are running the largest drug cartel on the plant. Just like the US government taking out Billy the Crack dealer down the street, it should also take out this organization. They ship $300 billion in cocaine to the US each year; cocaine which is then pan fried into crack cocaine that is destroying millions of American lives. One more mention of an illegal US regime change, and I am going to puke!

  2. Anonymouse on Tue, 12th Feb 2019 6:11 pm 

    You got any proof to back these assertions of yours, shortonbrainz? Not that they matter either way, since that is all they are, assertions aka, hot air.

    You sound more like the excpetionalturd aka delusional davy, than Shortonoil.

  3. makati1 on Tue, 12th Feb 2019 6:24 pm 

    Doesn’t anyone in DC realize that they are driving the rest of the world away from the US and US dollars? Don’t they realize that they are isolating America? Don’t they see that they are committing national suicide?

    Obviously not, but then, look at the collection of psychos inside the beltway that we call our government. It is obvious to those of us outside the ‘frog pot’ that, step by step, TRUMP is turning friends and allies into enemies by breaking treaties,ending trade deals, and by arresting foreign people illegally (kidnapping). The US is breaking every international law in its desperate attempt to remain in control. A losing plan that will be America’s downfall.

  4. twocats on Tue, 12th Feb 2019 7:58 pm 

    makati – once you’ve killed a couple hundred million over the course of centuries there really isn’t a reason to stop. the US is an Empire and will be one until it collapses.

    the US has interfered with the sovereignty of dozens of nations, including venezuela itself multiple times, so it really has learned the lesson that it doesn’t suffer consequences for its actions.

    Elliot Abrams himself is a bonafide war criminal with thousands of deaths to his name. Still breathing. Still doing crimes.

  5. Cloggie on Wed, 13th Feb 2019 12:01 am 

    Every day I get several mails like these:

    https://www.marinetraffic.com/en/ais/home/shipid:257828/zoom:10

    …because I registered for them. Every single ship movement represents 4-6 new offshore wind turbines that are being installed in the North Sea or Irish Sea.

    This one, the Aeolus, is currently working on Borssele I-V wind parks

    https://deepresource.wordpress.com/2018/12/27/1484-mw-borssele-to-become-the-largest-windfarm-in-the-world/

    This is the Aeolus, a ship that after an upgrade can install 10 MW machines, one per day.

  6. Che Toes on Wed, 13th Feb 2019 11:06 am 

    It’s good to balance the US-influenced media “news” with a contrarian source:

    https://venezuelanalysis.com/

    Personally I’m rooting for the US not getting it’s grubby paws on Venezuelan oil.

  7. Duncan Idaho on Wed, 13th Feb 2019 5:03 pm 

    Personally I’m rooting for the US not getting it’s grubby paws on Venezuelan oil.
    MSM had Maduro gone long ago.
    Obviously, they were wrong.
    Another source might be appropriate.

  8. makati1 on Wed, 13th Feb 2019 5:46 pm 

    Duncan, they said the same about Assad, and it has been, what, eight years? Russia stepped in that time, and Maduro has both China AND Russia this time. We shall see.

    https://www.bloomberg.com/news/articles/2019-02-10/venezuela-s-maduro-is-doomed-they-said-that-about-syria-s-assad

    The US has to go down before it destroys the world. I’m sorry if you are stuck there, but you can prepare. The people, in the 3rd world countries the Us invades, cannot.

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