Former Chesapeake CEO McClendon Indicted On Conspiracy Charges
By Brian Grow and Diane Bartz
ATLANTA/WASHINGTON, March 1 (Reuters) - Aubrey McClendon, former chief executive officer of Chesapeake Energy Corp , was charged on Tuesday with conspiring to rig bids to buy oil and natural gas leases in Oklahoma, the Justice Department said.
The indictment follows a nearly four-year federal antitrust probe into land-leasing during a shale-drilling boom. The probe began after a 2012 Reuters investigation found that Chesapeake had discussed with a rival how to suppress land lease prices in Michigan. The story sparked a federal antitrust investigation in that state, which was closed but led to evidence of alleged bid-rigging in Oklahoma. (http://reut.rs/1TPxUVy)
The Justice Department indictment paves the way for what may be one of the highest-profile criminal antitrust cases against a well-known U.S. CEO in decades, and could thrust McClendon, a controversial figure whose aggressive leasing tactics are legendary in the energy industry, into the highest-stakes legal battle of a decades-long career.
Oklahoma-based McClendon is a shale drilling evangelist who was once among the highest paid U.S. CEOs. He co-founded Chesapeake with fellow Oklahoma oilman Tom Ward in 1989. In 2013, McClendon stepped down from the helm of Chesapeake amid a liquidity crunch and corporate governance concerns. Ward left Chesapeake in 2006 and founded competitor SandRidge Energy Inc the same year.
McClendon, who is now with American Energy Partners, did not immediately respond to telephone calls or an email seeking comment.
Chesapeake itself is unlikely to face criminal prosecution, the company said.
"Chesapeake has been actively cooperating for some time with a criminal antitrust investigation by the Department of Justice regarding past land leasing practices," said Chesapeake Energy spokesman Gordon Pennoyer. "Chesapeake does not expect to face criminal prosecution or fines relating to this matter."
The seven-page indictment alleges that McClendon set up a conspiracy of two energy companies which agreed not to bid against each other in purchasing oil and natural gas leases in northwest Oklahoma from 2007 to 2012. The indictment did not name either company.
In 2012, Reuters reported that Chesapeake discussed fixing land-lease prices with a competitor in Michigan. That story led the state's attorney general to press criminal charges against Chesapeake. In 2015, the company settled charges of antitrust, fraud and racketeering violations by agreeing to pay $25 million into a compensation fund for land owners.
Chesapeake, SandRidge, and McClendon had previously disclosed in securities filings that they were being investigated by the Justice Department's Antitrust Division.
(Reporting by Brian Grow in Atlanta and Diane Bartz in Washington; Editing by Lisa Shumaker)
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