Here’s Why Chesapeake’s CEO Can Retire in Peace
An internal investigation prompted by a series of exposing articles published by Reuters has left Chesapeake Energy (NYSE:CHK) Chief Executive Officer and President Aubrey K. McClendon in the clear. The oil and gas company’s Board of Directors announced on Wednesday that they determined McClendon was guilty of no intentional misconduct in regards to several suspicious business transactions.
Last June, the publication reported that Chesapeake Energy had conspired with Encana Corporation (NYSE:ECA), the company’s main rival, to suppress land prices in Michigan’s Collingwood shale formation. The incident prompted investigations by both the state of Michigan and the U.S. Department of Justice. Beginning in early August, the government began examining whether the two companies had criminally violated U.S. antitrust regulations. Emails exchanged between executives at Encana and Chesapeake showed that the companies had repeatedly discussed how to avoid bidding against each other in public land auctions in Michigan.
While the Justice Department and Michigan officials are still looking into the matter, the Oklahoma City, Oklahoma-based company concluded its probe into the antitrust violation with the assessment that Chesapeake did not breach any regulations in the acquisition of oil and gas rights in Michigan in 2010. In a press release, the board asserted that an independent counsel had conducted a “thorough review” of “millions of pages of documents” to come to that decision.
In addition, an investigation conducted by the publication last April discovered that McClendon had also personally borrowed more than $1 billion from a big Chesapeake investor, EIG Global Energy Partners. The loans were arranged through the executive’s personal shell companies and secured by his interest in Chesapeake wells. Thanks to a controversial program known as the Founders Well Participation Program, McClendon was allowed to take up to a 2.5 percent stake in each well Chesapeake drilled…