Billionaire raider Carl Icahn isn’t the only one who shook up Chesapeake Energy’s high-living CEO Aubrey McClendon at the firm’s annual meeting last week.
It was bad enough that Icahn, with the power of his new 7.6 percent stake in the natural gas and oil company, had forced Chesapeake to replace four board members and rework its corporate accountability procedures.
It was worse that both the Securities and Exchange Commission and the Internal Revenue Service are probing McClendon’s undisclosed $200 million hedge fund and his trading in natural gas securities while serving as the CEO of natural gas giant Chesapeake Energy.
But then a shareholder at the Oklahoma City annual meeting turned a spotlight on modern corporate ethics by grilling the ruthless McClendon on his decision to give the anti-energy Sierra Club $26 million to fund a “Beyond Coal” attack against the coal industry.
It was almost like the plot of a bad gangster movie about a for-profit hiring a nonprofit to make a hit on a competing for-profit.
The secret cash-for-conflict connection started in 2007 and ended in 2010, but nobody had confronted McClendon face to face for his outrageous predatory relationship until last week. The shareholder was also president of the nonprofit National Center for Public Policy Research, David Ridenour, a widely known conservative leader.
Speaking from his organization’s Capitol Hill headquarters, Ridenour said, “I asked Mr. McClendon if in retrospect it was a mistake to provide this funding, and he said, ‘We’re in a market share struggle with coal, and because of that campaign, 150 new coal plants were stopped. That demand will go to natural gas.’ ”
“It was like he was bragging,” Ridenour fumed. “Aubrey McClendon told his investors, ‘I have no regrets about working with the Sierra Club. Coal is dirty. I think it was a good investment.’ As far as I’m concerned, Mr. McClendon, the oil and gas wildcatter had metaphorically drilled a hole in the coal economy and kicked all the workers in it, as if his proudest product was unemployment.”
Ridenour continued, “But Mr. McClendon largely ignored my next question, ‘By funding Beyond Coal, did you not unnecessarily pick a fight with another fossil fuel industry that now will have every incentive to fund Beyond Natural Gas?’ ”
Ridenour thought it would be darkly amusing if the coal industry did turn out to be funding Beyond Natural Gas, and did have a stipulation in its grant contract limiting the use of the gift to fighting Mr. McClendon’s industry.
Ridenour challenged the Sierra Club, “So we call upon it to fully disclose who is underwriting Beyond Natural Gas.” The Sierra Club, like all tax exempt 501(c)(4) environmental groups, is not required to publicly disclose any information about its contributors.
Sierra Club Executive Director Michael Brune said Chesapeake’s funding came “mostly” from Aubrey McClendon but has said nothing about funders of the attack against natural gas.
Ridenour still hopes to find out what Chesapeake’s grants to the Sierra Club were spent for, and beyond that wants to make environmental groups know that people are watching for corporate donations to nonprofits that might be paying for predatory attacks against competitors.
America’s tradition of honest charitable contributions should remain honest and not degenerate into charity abuse.
Ridenour concluded, “As a representative of a Chesapeake shareholder and an employee of another shareholder, I’m not thrilled that Mr. McClendon gave money to an activist group dedicated to the company’s destruction, but I’m even less happy as an American.
“Energy independence is important to national security, and low-cost energy is important to American jobs and prosperity. We shouldn’t be fighting things that are good for us.”
Examiner Columnist Ron Arnold is executive vice president of the Center for the Defense of Free Enterprise.
