Did Reuters Break the Law with Latest Chesapeake Story?

Another week, another “cut” at Chesapeake Energy and its flamboyant CEO Aubrey McClendon. Death by a thousand cuts will work, as long as in the end it’s death, right? And that’s exactly what the mainstream media is clamoring for.

A new hit piece by Reuters attempts to smear McClendon and in the process snags Canadian company Encana. The article, published yesterday, tries to portray McClendon and the president of Encana USA, Jeff Wojahn, as colluding to divvy up Michigan state oil and gas leases auctioned in 2010. It was an attempt to suppress prices and control the outcome of the auction, according to Reuters, and if that indeed happened, it would be a violation of federal and state laws.

Reuters reviewed un-sourced emails and other documents in their investigation. The article begins thus:

Under the direction of CEO Aubrey McClendon, Chesapeake Energy Corp. plotted with its top competitor to suppress land prices in one of America’s most promising oil and gas plays, a Reuters investigation has found.

In emails between Chesapeake and Encana Corp, Canada’s largest natural gas company, the rivals repeatedly discussed how to avoid bidding against each other in a public land auction in Michigan two years ago and in at least nine prospective deals with private land owners here.

In one email, dated June 16, 2010, McClendon told a Chesapeake deputy that it was time “to smoke a peace pipe” with Encana “if we are bidding each other up.” The Chesapeake vice president responded that he had contacted Encana “to discuss how they want to handle the entities we are both working to avoid us bidding each other up in the interim.” McClendon replied: “Thanks.”

That exchange – and at least a dozen other emails reviewed by Reuters – could provide evidence that the two companies violated federal and state laws by seeking to keep land prices down, antitrust lawyers said.

“The famous phrase is a ‘smoking gun.’ That’s a smoking H-bomb,” said Harry First, a former antitrust lawyer for the Department of Justice. “When the talk is explicitly about getting together to avoid bidding each other up, it’s a red flag for collusion, bid-rigging, market allocation.”*

MDN wonders: How the heck did Reuters get access to private emails (i.e. private property)? Did they (gasp) break the law in doing so? Was it a “whistle blower” that illegally sent them a copy of said emails? Something to ponder. We thought if you break the law in order to keep the law that kind of defeats the purpose of having laws.

*Reuters (Jun 25, 2012) – Special Report: Chesapeake and rival plotted to suppress land prices

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