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Chesapeake Energy panel: No intentional misconduct by CEO Aubrey McClendon

Chesapeake Energy Corp. has found no evidence of misconduct by CEO Aubrey McClendon after a board panel reviewed his personal finances.
BY JAY F. MARKS Modified: February 20, 2013 at 9:09 pm •  Published: February 20, 2013
/articleid/3757340/1/pictures/1958806">Photo - A Chesapeake drilling rig near Bessie is shown.  AP Photo
A Chesapeake drilling rig near Bessie is shown. AP Photo

McClendon, who will step down as CEO this spring, had been under fire for nearly a year since Reuters reported in April he had secured more than $1 billion in loans against his stake in company wells.

Some of the financing involved a private equity firm that had invested in Chesapeake.

The company's board said its audit committee, led by director Burns Hargis, and its independent counsel reviewed “millions” of pages of documents and interviewed more than 50 people.

“The review of the financing arrangements did not reveal any improper benefit to Mr. McClendon or increased cost to the company as a result of the overlap in the financial relationships,” the company said Wednesday in a news release.

The review covered McClendon's financing of his expenses under the Founder Well Participation Program, which allows him to invest in each well Chesapeake drills, and the activities of a hedge fund that had been operated inside the company.

“Based on the documents reviewed and interviews conducted, no intentional misconduct by Mr. McClendon or any of the company's management was found by the board concerning these relationships and/or these transactions and issues,” the company said.

McClendon will leave Chesapeake on April 1, but the board has said its review was not the reason for his departure.

The company also announced the board has concluded Chesapeake did not violate antitrust laws in connection with its acquisition of oil and natural gas rights in Michigan in 2010.

Reuters reported in June that Chesapeake and Encana plotted to limit land prices in Michigan's Collingwood Shale.

Chesapeake said it has provided documents about its leasing activities to the Justice Department based on a subpoena it received in June, and a thorough review by outside counsel led to its conclusion that it did not violate any antitrust laws.

Encana concluded in September that it did not collude with Chesapeake in the Michigan land sale.

CONTRIBUTING: Adam Wilmoth and Paul Monies, Business Writers

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