Chesapeake Probe Finds No Intentional CEO Misconduct

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Chesapeake Energy Corp said on Wednesday its internal probe of the financial dealings of outgoing chief executive Aubrey McClendon found no "intentional" wrongdoing.

Chesapeake

Chesapeake Energy Corp said on Wednesday its internal probe of the financial dealings of outgoing chief executive Aubrey McClendon found no "intentional" wrongdoing.

The company did not say how it had reached its conclusions and did not release a full report of its investigation. Despite Chesapeake's internal findings, state and federal investigations of the company continue.

The U.S. Securities and Exchange Commission is also examining McClendon's financial transactions, while the Department of Justice and the attorney general in Michigan are investigating whether Chesapeake may have violated antitrust laws.

"Simply finding no intentional misconduct doesn't necessarily mean that nothing problematic occurred," said Charles Elson, director of the Weinberg Center for Corporate Governance at the University of Delaware. "Board investigations are only part of the process. I would not say this is the final word."

A series of Reuters investigations last year triggered civil and criminal probes into the second-largest U.S. producer of natural gas. Big shareholders took control of the board in June after McClendon was stripped of the chairmanship of the company he co-founded in 1989.

Last month, Chesapeake said McClendon was stepping down as CEO. McClendon cited philosophical differences with the board as the reason for his departure. He will leave on April 1.

Last June, Reuters reported that Chesapeake had plotted with Encana Corp, its top competitor, to suppress land prices in the Collingwood shale formation in northern Michigan.

A Reuters investigation last April found McClendon had arranged to personally borrow more than $1 billion from EIG Global Energy Partners, a firm that is a big investor in Chesapeake.

The loans, arranged through McClendon's personal shell companies, were secured by his interest in Chesapeake wells. Under a controversial program called the Founders Well Participation Program (FWPP), McClendon is allowed to take up to a 2.5 percent stake in every well Chesapeake drills.

More than a million pages of documents were collected and reviewed and more than 50 interviews were conducted, the company said, without providing specifics.

"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 in a news release.

Shares of Chesapeake, which is due to report fourth-quarter earnings on Thursday, were up 0.4 percent at $20.44 on Wednesday morning on the New York Stock Exchange.

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