McClendon’s legacy

1 March 2013 By Christopher Swann

The watchdog has launched an investigation into the gas company’s disgraced CEO Aubrey McClendon. Shareholders suing the company will welcome the news. But Chesapeake’s directors should have set up a more impartial inquiry themselves. That oversight could prove costly.

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In its annual 10-K filing with the Securities and Exchange Commission, Chesapeake Energy said on March 1 that the SEC was investigating the company and Chief Executive Aubrey McClendon and had issued subpoenas for information and testimony.
The company said it was advised by the SEC in December that an informal inquiry, launched by the regulator in May, was now continuing as an investigation.
Regulators in the SEC’s Fort Worth office have been looking into a controversial program that grants McClendon a stake of up to 2.5 percent in every well that Chesapeake drills.
McClendon is stepping down on April 1 following a tumultuous year during which the company he founded faced a governance crisis and a liquidity crunch.
A Reuters investigation published in April 2012 found that McClendon had arranged to personally borrow more than $1 billion from a major investor in Chesapeake, EIG Global Energy Partners, secured by his interest in Chesapeake gas and oil wells.
The Department of Justice is investigating whether Chesapeake violated antitrust laws in connection with the purchase and lease of oil and gas rights in Michigan.

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