Friday, April 20, 2012

Reuters Gets a Columbia Journalism Review Mention for Their Chesapeake Energy Story (CHK)

From the CJR's The Audit blog:
Excellent Reuters Probe Uncovers a CEO’s Billion-Dollar Loans
Reuters has a fantastic piece of enterprise reporting on natural gas giant Chesapeake Energy, reporting on serious conflicts of interest in investments by its founder and CEO Aubrey McClendon.
Yesterday, the report helped send Chesapeake shares down 10 percent at one point.
The Pittsburgh Post-Gazette broke the news last month that McClendon was borrowing against his share of Chesapeake mineral-rights leases.

Reuters advances the story considerably, reporting that those loans total more than a billion dollars—as much as or more than McClendon is worth—and that they come from a private-equity fund that does business with Chesapeake.

The Reuters piece sent Chesapeake shares plunging yesterday. At one point the stock was off 10 percent before settling down 6 percent. When a news story sends a $15 billion company’s stock down that much on a day when its peers aren’t moving much, it’s a very big story.

The snippy reaction of Chesapeake’s lawyers and flacks is another tell that Reuters is on to something. Chesapeake posted the questions Reuters sent over, as well as its answers. Here’s a compilation of the first sentence of Chesapeake’s responses:
The question is improper on a number of levels…

This quote is duplicative of question number 1 and suffers from the same defects…
This quote is duplicative of questions 1 and 2 and suffers from the same defects, if not more so…
Not only does this question make vague and ambiguous allegations that Mr. McClendon might do something wrong without specifying what that might be, it ends up contradicting the central thesis of every one of your questions by asserting either that Mr. McClendon does not have any debt or that his lenders don’t charge interest…
This question is duplicative and has previously been answered…
Etc. It’s worth posting the full text of the first Reuters question and Chesapeake answer just to show how arrogant Chesapeake is...MORE
Couldn't have said it better myself:
UPDATED--Chesapeake's CEO Took $1.1 Billion in Unreported Loans (CHK)
 ...Real investigative journalism from Reuters:
Chesapeake General Counsel: "Whatcha Lookin' At?" (CHK)

See also:
Honey, I Pledged the Kids as Collateral: "Visualizing Chesapeake's Aubrey McClendon "Rehypothecation" Scheme... And The China Trail" (CHK)

As Shares Hit Three Year Low, "Chesapeake Energy says shareholders are insulated from CEO’s personal financial commitments" (CHK)