Home / Business / Former Chesapeake CEO McClendon charged with bid-rigging of land leases

Former Chesapeake CEO McClendon charged with bid-rigging of land leases

ATLANTA/WASHINGTON Aubrey McClendon, former arch executive officer of Chesapeake Energy Corp (CHK.N) and a fable in a U.S. appetite industry, was charged on Tuesday with conspiring to supply bids to buy oil and healthy gas leases in Oklahoma, a Justice Department said.

The complaint follows a scarcely four-year sovereign antitrust examine that began after a 2012 Reuters review found that Chesapeake had discussed with a opposition how to conceal land franchise prices in Michigan during a shale-drilling boom. Although a Michigan box was subsequently closed, investigators unclosed justification of purported bid-rigging in Oklahoma. (reut.rs/1TPxUVy)

In further to a sovereign probe, a Michigan profession ubiquitous brought rapist charges opposite Chesapeake, that a association staid in 2015 by similar to compensate $25 million into a remuneration account for land owners.

The Justice Department complaint paves a approach for what might be one of a highest-profile rapist antitrust cases opposite a obvious U.S. CEO in decades, and could bearing McClendon, a argumentative figure whose assertive leasing strategy are mythological in a appetite industry, into a highest-stakes authorised conflict of a decades-long career.

Oklahoma-based McClendon is a shale drilling preacher who was once among a top paid U.S. CEOs. He co-founded Chesapeake with associate Oklahoma oilman Tom Ward in 1989. In 2013, McClendon stepped down from a helm of Chesapeake amid a liquidity break and corporate governance concerns. Ward left Chesapeake in 2006 and founded aspirant SandRidge Energy Inc (SDOC.PK) a same year.

McClendon, who is now with American Energy Partners (AEP), was charged with one count of swindling to supply bids, a defilement of a Sherman Antitrust Act, a Justice Department said.

“The assign that has been filed opposite me currently is wrong and unprecedented,” McClendon pronounced in statement. “I have been singled out as a usually chairman in a oil and gas attention in over 110 years given a Sherman Act became law to have been indicted of this crime in propinquity to corner behest on leasehold.”

Chesapeake itself is doubtful to face rapist prosecution, a association said.

“Chesapeake has been actively auxiliary for some time with a rapist antitrust review by a Department of Justice per past land leasing practices,” pronounced Chesapeake Energy orator Gordon Pennoyer. “Chesapeake does not design to face rapist charge or fines relating to this matter.”

Chesapeake shares declined 3.6 percent in after-hours trade to $2.66

The seven-page complaint alleges that McClendon set adult a swindling of dual appetite companies that concluded not to bid opposite any other in purchasing oil and healthy gas leases in northwest Oklahoma from 2007 to 2012. The complaint did not name possibly company.

The complaint comes during a time when appetite executives opposite America are already confronting substantial distress. Oil and gas companies like Chesapeake, SandRidge, and McClendon’s new try AEP, have struggled as a cost of oil plummeted by 70 percent given late 2014.

Both Chesapeake and SandRidge, once storied firms in Oklahoma’s oil industry, have recently intent restructuring experts as they hasten to compensate off billions in debt and equivocate intensity bankruptcy. Chesapeake’s batch cost has tumbled some-more than 80 percent in a final year. SandRidge was delisted from a New York Stock Exchange in January, and sealed Tuesday during 4 cents per share.

Much of a companies’ debt was accrued in a duration from 2007 by 2012 when McClendon was allegedly intent in an antitrust conspiracy, a time when Chesapeake was gnawing adult millions of acres of land leases national to enhance a shale drilling.

McClendon has also been inextricable in a lawsuit with Chesapeake that purported that he took supportive association information from his former association to build his new business.

The Justice Department pronounced that McClendon’s complaint was a initial box in an ongoing sovereign antitrust review into cost fixing, bid paraphernalia and other anti-competitive control in a oil and healthy gas industry.

“His actions put association increase forward of a interests of leaseholders entitled to rival bids for oil and gas rights on their land. Executives who abuse their positions as leaders of vital companies to classify rapist activity contingency be hold accountable for their actions,” pronounced Assistant Attorney General Bill Baer, conduct of Justice Department’s Antitrust Division.

Chesapeake, SandRidge, and McClendon had formerly disclosed in bonds filings that they were being investigated by a Justice Department’s Antitrust Division.

(Reporting by Brian Grow in Atlanta and Diane Bartz in Washington; Additional stating by Joshua Schneyer in New York; Editing by Lisa Shumaker)

Article source: http://www.reuters.com/article/us-usa-crime-mcclendon-idUSKCN0W35Y7