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Chesapeake internal probe finds no evidence of intentional wrongdoing

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An internal probe of Chesapeake Energy found no evidence of intentional misconduct on behalf of its CEO, nor did it violate anti-trust laws, the company's board of directors announced Wednesday.

The board of directors said they have reviewed co-founder and CEO Aubrey McClendon's financial arrangements between himself and companies that also do business with Chesapeake. McClendon has already agreed to step down from the company on April 1.

"I am extremely proud of what we have built over the last quarter of a century, and I am confident that Chesapeake is in a great position to continue to grow and achieve great success in the future as it realizes the full value of its outstanding assets," McClendon said at the time. "While I have certain philosophical differences with the new Board, I look forward to working collaboratively with the company and the Board to provide a smooth transition to new leadership for the company."

According to the release, among the transactions reviewed were the 2008-12 financing arrangements between EIG Global Energy Partners and affiliates of McClendon regarding financing of his participation in the Founders Well Participation Program, as well as the preferred stock investments by EIG in CHK Utica LLC and CHK Cleveland-Tonkawa LLC. The review, the board states, "did not reveal any improper benefit to Mr. McClendon or increased cost to the company" due to his financial arrangements.

The review by the board's audit committee involved more than 50 interviews and millions of pages of documents.

"Based on the documents reviewed and interviews conducted, no intentional misconduct by Mr. McClendon or any of the company's management was found by the Board concerning these relationships and/or these transactions and issues," the release stated.

Under the Founder Well Participation, McClendon was given the right to invest up to 2.5 percent working interest in new wells drilled by Chesapeake. Chesapeake was put under pressure when analysts became wary of the company's financial structure.

Media reports revealed McClendon borrowed up to $1.1 billion from EIG Global Energy Partners, a private-equity firm involved with the company. Chesapeake had not disclosed the loans. EIG also is an investor in Chesapeake.

Analysts criticized the conflicts of interests of the scenario among EIG, Chesapeake and McClendon soon after it was reported.

 The company also announced that Chesapeake had not find evidence it violated antitrust laws in buying Michigan oil and gas rights in 2010.