Home » Financial » Chesapeake Hired Lawyer With Stealth Record in CEO Probes

Chesapeake Hired Lawyer With Stealth Record in CEO Probes

The warn Chesapeake Energy Corp.’s (CHK)
audit cabinet hired to examine probable conflicts of
interest in a arch executive’s loans has a record of managing
probes with smallest broadside about himself or his client.

Craig Weinstock, a Houston-based profession with Locke Lord
LLP, has rubbed some-more than a dozen inner investigations of
alleged corporate impropriety given 2002, including one for a
company run by Chesapeake’s lead executive Merrill A. “Pete” Miller Jr., a member of a examination committee, a chairman familiar
with Weinstock’s work said.

The U.S. Securities and Exchange Commission began an
investigation after a association disclosed some-more than $800 million
in loans done to a arch executive, with some involving
company financiers. Weinstock tends to solve such matters with
little fanfare, gripping his possess purpose a tip in many cases,
according to a opposition Houston lawyer.

“He pronounced his reports are submitted to a supervision or
the board, and no one hears of it,” pronounced Lance Lubel, a
Houston-based plaintiffs’ warn who has litigated cases against

Weinstock, 54, has rubbed inner reviews for other oil
and gas companies, such as Nabors Industries (NBR) Ltd., according to
Lubel. The Vanderbilt University law connoisseur represented Nabors
in a 2006-2007 examine of allegations that a oil-drilling
company might have backdated batch options for executives,
according to a chairman informed with Weinstock’s work.

The SEC announced in May 2007 that it had finished a review
of Nabors’s stock-option practices yet penalizing the
company, according to a regulatory filing. Laura Doerre, a
spokeswoman for a Hamilton, Bermuda-based appetite company,
declined to criticism on Weinstock’s work.

‘Real Quiet’

Lubel pronounced Weinstock, a local of Queens, New York, is
known in Houston authorised circles as a workaholic who has carved
out a niche doing inner reviews for oil and gas companies.

“He’s a vast guy, yet genuine quiet,” Lubel said. “He does
not have a repute as a gunslinger.”

“He strikes me as a man who does this kind of work in a
quietly efficient manner,” Steven Roberts, a Houston-based
lawyer who represents appetite companies, such as Transocean Ltd.,
and has litigated opposite Weinstock in a past. “He’s not
flashy and doesn’t find out a spotlight.”

Chesapeake announced in May that a examination cabinet had
hired outward warn to examine loans done to Chief Executive
Officer Aubrey McClendon, a natural-gas company’s founder.
Reuters had reported that he’d borrowed as most as $1.1 billion
over several years opposite his personal stakes in association wells,
including from a organisation that does business with Chesapeake.
McClendon pronounced in Apr that as of Dec. 31 he had $846 million
in superb loans tied to a company’s well-participation

Shares Dropped

Oklahoma City-based Chesapeake’s shares have forsaken about
16 percent this year amid descending gas prices and growing
investor distrust of directors’ messy slip of McClendon. The
energy path-finder is confronting an estimated $22 billion cash-flow
shortfall by a finish of 2013 after natural-gas prices overwhelmed a
decade low progressing this year. Chesapeake concluded to sell pipeline
assets for some-more than $4 billion this month and is in talks to
raise billions some-more by divesting oil and gas prospects.

Chesapeake officials have pronounced McClendon will step down as
chairman once a deputy is chosen. Earlier this month, the
company concluded to reinstate roughly half a house underneath pressure
from a dual largest shareholders, billionaire Carl Icahn and
Southeastern Asset Management Inc.

Miller, a arch executive of Houston-based National
Oilwell Varco (NOV) Inc., has remained as lead outward executive on
Chesapeake’s board. He endorsed that his colleagues hire
Weinstock to hoop a McClendon loan probe, a chairman said.

Weinstock’s Mission

The house asked Weinstock to examination McClendon’s dealings
with lenders with that a natural-gas association does business,
including EIG Global Energy Partners LLC, a private-equity firm
that organised a $1 billion credit line for a CEO.

In further to EIG, McClendon has also gotten personal
financing over a years, possibly as an particular or by one
of a companies he controls, from Goldman Sachs (GS) Group Inc.,
Wells Fargo Co. (WFC), Bank of America Corp. (BAC), Wachovia Corp. and
Mitsubishi UFJ Financial Group Inc.’s Union Bank, all of which
have supposing financing to Chesapeake, according to federal
court and county skill annals and bonds filings.

Investors have sued Chesapeake, doubt whether
McClendon’s loans, performed to cover his costs in a well
program, combined conflicts of seductiveness and spoiled a company.

Miller endorsed employing Weinstock since a warn has
been doing a sovereign examine into allegations of sanctions
violations involving Miller’s National Oilwell Varco, a drilling
equipment maker, and a Ameron International Corp. unit, the
person said. The probe’s concentration is exchange involving Iran, the
person said.


National Oilwell Varco pronounced in a Feb regulatory filing
that they had perceived grand jury subpoenas and inquiries from
federal agencies, including a U.S. Justice Department and the
U.S. Treasury’s Office of Foreign Assets Control about their
“compliance with trade trade laws and regulations.”

The association pronounced it had “conducted a possess examination of this
matter” yet fixing Weinstock or his organisation or observant that the
matter concerned a Iranian operations. It pronounced it was
“negotiating a intensity fortitude with a agencies.”

National Oilwell Varco acquired Pasadena, California-based
Ameron final year in a $772 million transaction. Weinstock’s law
firm represented a drilling-supply association in a deal,
according to a American Lawyer Magazine, a trade publication.

Iran Probe

Ameron officials pronounced in a 2011 SEC filing that Treasury
Department lawyers had asked a siren builder in 2008 for
information “regarding exchange involving Iran.” Ameron
also pronounced it “conducted an inner exploration and continues to
cooperate fully” with sovereign officials probing a Iranian
dealings. Weinstock wasn’t identified in a filing as leading
that review.

Miller, a connoisseur of a U.S. Military Academy during West
Point who became National Oilwell’s tip executive in May 2001,
didn’t lapse calls for criticism on Weinstock’s work for National
Oilwell and Ameron or Chesapeake’s employing of Weinstock.

Jim Gipson, a Chesapeake spokesman, declined Jun 14 to
discuss Weinstock’s employing or a lawyer’s work for a natural-
gas driller.

Weinstock has an eccentric strain that might surprise
clients, pronounced David Warden, a Houston-based obvious litigator who
has served on a three-person settlement house with a Locke
Lord partner in 2010. Warden pronounced he couldn’t plead the
specifics of a private arbitration, yet it focused on a
dispute “involving a vast oil and gas company.”

Arbitration Panel

Two members of a row were comparison by a parties to
the arbitration, and those dual designees tapped a third
member, Warden said. Weinstock was named by one of the

“In some instances, lawyers feel they have to act as
advocates for their clients even yet they are ostensible to be
arbiters of a dispute,” Warden said.

“Craig showed positively no bias to possibly side,”
Warden said. The row came adult with a 70-page preference that
didn’t greatfully possibly association that submitted their claims to
arbitration, he said.

The obvious litigator pronounced Weinstock will impartially
investigate McClendon’s exchange with lenders and give directors
a extensive examination of either his well-participation loans
created any conflicts for a association or a tip executive.

“I consider he’ll take a proceed that he’ll investigate
and let a chips tumble where they may,” Warden said. “That’s
the kind of man he is.”

One of a investors’ lawsuits is Deborah G. Mallow IRA
SEP Investment Plan v. McClendon, 12-cv-436, U.S. District
Court, Western District of Oklahoma (Oklahoma City).

To hit a reporters on this story:
Jef Feeley in Wilmington at
Zachary R. Mider in New York at
Laurel Brubaker Calkins in Houston at
laurel@calkins.us.com ;

To hit a editor obliged for this story:
Michael Hytha during mhytha@bloomberg.net

More From Bloomberg

Source: Article Source

Filed under Financial and tagged , , , , , .

Leave a Reply