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The Chesapeake Energy (NYSE:CHK) chief executive is in more trouble after documents emerged that he directed the company to plot with its main rival, Encana (NYSE:ECA), to keep land prices down in Michigan. Aubrey McClendon is already under fire for allegedly taking improper personal loans, and was removed from the chairmanship of the company after investigations into the allegations started.
According to a new Reuters investigation, officials from Chesapeake and Encana, Canada’s largest natural gas company, discussed how to avoid bidding against each other in at least nine public land auctions in Michigan two years ago. According to email evidence, McClendon told a company vice president it was time “to smoke a peace pipe” with Encana “if we are bidding each other up.” The deputy said that he was in touch with Encana “to discuss how they want to handle the entities we are both working to avoid us bidding each other up in the interim.”
Other emails also suggest the companies violated federal and state laws. Price-fixing between competitors is illegal in the U.S. under the Sherman Antitrust Act.
Chesapeake and Encana deny the allegations, and in statements to Reuters, said the two only discussed forming a joint venture in Michigan, but decided against it. Chesapeake said there had been discussions about “forming an ‘area of mutual interest’ joint venture” in Michigan, but that “no such agreement was reached between the parties. He added that Encana and Chesapeake did not make any joint bids. Encana also said that it “discussed, but did not go forward with, a joint venture with Chesapeake Energy,” and added that it would start an internal investigation.
The U.S. Securities and Exchange Commission and the Internal Revenue Service are investigating McClendon after he was reported to have accepted $1.3 billion in personal loans from a firm that also finances Chesapeake.
Shares of Chesapeake Energy (NYSE:CHK) closed over 8% at $17.03 per share Monday.
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