Sustained Outrage

Doth Chesapeake protest too much?

Remember how Chesapeake Energy folks complained (is whined too strong a word?) about the 2007 Roane County Circuit Court jury award of about $404 million in compensation and penalties?

In the class-action “Tawney case,” people who sold natural gas to Chesapeake and its predecessors — Triana Energy, NiSource Inc. and Columbia Natural Resources — alleged they were cheated out of some of their royalty payments, and the jury agreed.

Chesapeake CEO Aubrey McClendon, in his parting shot at the state last month, said the W.Va. Supreme Court’s refusal to hear an appeal of the Tawney case had a lot to do with the company’s decisions to cancel plans to build a $40 million regional headquarters in Charleston and, ultimately, eliminate 215 valuable jobs here.

You might logically conclude Chesapeake was forced to fork over $404 million to its gas lease-holders and their lawyers. You would be wrong.

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mbowling2.JPGCross Lanes computer exec Martin R. Bowling was an expert at creating “buzz” and promoting people — including himself — on the Internet.

So when news broke earlier this week that Bowling, chief technical officer at Comar Inc. and Vec3,  had been sentenced to three years in state prison on computer fraud charges, many people who knew Bowling just figured it was part of some elaborate hoax he concocted.

Bowling’s supporters called and e-mailed the Gazette yesterday, questioning — and insisting, in some cases — that the Bowling story was a hoax.

Well, we’re here to tell — and show — you this wasn’t a hoax. Here are the documents filed in Bowling’s criminal case file in Kanawha County Circuit Court (thanks to Gazette reporter Ken Ward Jr. for scanning and uploading them.)

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Cheating Chesapeake shareholders?

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We had a mention in Gazette Business Editor Eric Eyre’s story on the loss of 215 Chesapeake Energy jobs in Charleston of a class-action lawsuit against the company,CEO Aubrey McClendon (above), its officers and directors on behalf of Chesapeake’s shareholders.

Over at the West Virginia Business Litigation blog, Jeffrey V. Mehalic has posted a copy of the lawsuit, which Mehalic reports “alleges various securities laws violations that have caused Chesapeake’s stock to drop 80% from its offering price in July 2008.”

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Highway robbery?

barrel.jpgWhile working on today’s column, I learned from the governor’s office about an alarming federal audit of charges by engineering firms that are paid with federal highway money.  After a number of states complained of the fees they were charged, the feds looked at the charges of 41 design and engineering firms out of 3,580. Here’s a taste of the findings:

“We found that indirect cost rate claims from 21, of our sample of 41, D&E firms included unallowable costs — some expressly unallowable — totaling about $15.7 million. Of that amount, state DOT contracts were charged about $5.5 million, of which about $4.4 million — the Federal share — was reimbursed with Federal-aid funds. Examples of unallowable costs we found were:

$301,667 for 45 automobile leases — 5 of which were luxury class including Mercedes, BMW, and Lexus — with no documented business purpose.

$280,609 in executive compensation in excess of the Federal statutory cap.

$247,685 for items such as social dinners with clients; dining club memberships; outings to professional and college sporting events; theme and holiday parties; and trips to Atlantic City, a city zoo, and a county expo fair.

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Chesapeake profits as it loses

mcclendon-299x400.jpgChesapeake Energy Corp. and its executives haven’t been making many friends lately in West Virginia after announcing last week their plan to turn their Eastern Division regional headquarters in Charleston into a field office and eliminate 215 of 255 jobs here.

And don’t forget CEO Aubrey McClendon’s parting shot at the state judicial system. McClendon blasted the state Supreme Court for failing overturn a $405 million Roane County court award to royalty owners, rather than blame his company’s calculated business decision to take on that risk when it bought Columbia Natural Resources four years ago.

McClendon said the job cuts were inevitable once the company decided not to build a $40 million headquarters near Yeager Airport.

Last year was not particularly kind to Chesapeake, or to energy companies in general, as natural gas prices plummeted. Chesapeake’s stock price fell from a high of $74 last summer to its current level of around $14 — a drop of more than 80 percent.

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Deja vu all over again…

Kudos to Erica Peterson over at West Virginia Public Broadcasting, for pointing out that two state lawmakers — Senate Finance Chairman Walt Helmick, D-Pocahontas, and new House Majority Leader Brent Boggs, D-Braxton — gave identical speeches on Wednesday promoting the oil and gas industry.

Ironically, Chesapeake Energy announced the next day that it was eliminating more than 200 Charleston-area jobs. And the day after that, NiSource said it was cutting 170 jobs in West Virginia, as Gazette business editor Eric Eyre reported.

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Wrongway McClendon?

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Chesapeake Energy CEO Aubrey McClendon is blaming his company’s elimination of 215 Charleston jobs on the big oil and gas leasing rip-off verdict against his company.

Two years ago, when the Roane County, W.Va., jury came out with its verdict, McClendon was quick to attack the state’s legal system. He fumed about it in a Jan. 28, 2007, email to Gov. Joe Manchin, which the Gazette obtained under the state Freedom of Information Act.

But it looks like McClendon needed a geography lesson:

Governor Manchin: please read these attached press releases and let me know if you are able to visit with me tomorrow about this ridiculous outcome … 

It took a jury in Sloane County all of 3 hours on a Saturday afternoon to render what I am told is now West Virginia’s largest punitive verdict ever.

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