Corporate Malfeasance Pokes the Eye of Libertarians
A Reuters probe found that under the brilliant leadership of its CEO, Aubrey McClendon, Chesapeake plotted with its top competitor, Canada's Encana Corp., to avoid bidding against each other, thereby suppressing the prices of land they wished to lease.
Even without this alleged bid-rigging scheme -- reminiscent of the kind of games the Mafia used to play in the New York construction industry -- Chesapeake Energy would be one hell of a company. It is one of the leading practitioners of the earth-defiling horror known as hydrofracking, in which toxic chemicals are injected into the bedrock, from whence they have been known to poison groundwater and play havoc with the environment.
The entire fracking business has been likened to a giant Ponzi scheme, so it's far from clear if the rural vastness of the Marcellus Shale region, the current target of the frackers' greed, is the only one to be ravished by the frackers. Investors in fracking companies like Chesapeake may well join the long list of victims. As a kind of icing on the cake, McClendon, when not pouring money into far-right causes, was taking $1.3 billion in loans from a company that did business with Chesapeake, and stepped down as chairman of the company (though not as CEO) after that was revealed.
It's not clear yet if President Obama's Justice Department, which has been timid in its prosecution of corporate crime, will go after that sweetheart or anyone else at Chesapeake. But to free-market purists the retribution has already set in. In the wake of the Reuters article on the bidding scheme, which ran Monday morning, Chesapeake Energy shares immediately plummeted 8.5%, and continued their decline on Tuesday.
The market, in other words, reacted as the market is supposed to do in such situations, and cut into the overall market capitalization of Chesapeake by a little over $1 billion. To which one can only add, as counterpoint, a hearty "big deal."