Tuesday, May 1, 2012
Read it in the Rolling Stone. Fracker Aubrey McClendon Booted From Chesapeake Board
The facts of the loan itself were bad enough, but the way the Chesapeake’s PR dweebs handled it – at first they said the board was "fully aware" of the loan and approved it, then the next day reversed themselves – just made the whole deal more rancid. Chesapeake is a publicly-held company, with a market cap of about $12 billion.
The company’s stock tanked by 10 percent or so, vaporizing more than a billion dollars of shareholder value. The Internal Revenue Service is investigating the loan, as is the Security and Exchange Commission. No less than three shareholders filed lawsuits. You just know Chesapeake’s lawyers are going to be dealing with fallout from this for years. And who knows what other sweet nuggets of impropriety investigators might unearth along the way?
As I learned a few months ago while reporting for Rolling Stone, the Chesapeake is really a land-acquisition company disguised as a natural gas producer, and one that is leveraged up the wazoo.
If I were a Chesapeake shareholder, I’d have lots of questions – like, if the company is playing games with financial disclosure, what kind of foolery are they up to with disclosure about, say, the chemicals they are pumping underground during fracking operations, or what they are doing with the hundreds of millions of gallons of toxic flowback water they dispose of every year?
Enron with drilling rigs.