As controversy swirls, Chesapeake picks Webb as lawyer
(Reuters) - Chesapeake Energy Corp has hired James Webb as its legal counsel as it tries to recover from damaging reports about controversial land deals in Michigan and personal loans taken out by its chief executive.
Webb, who has worked on a contract basis for Chesapeake for the past four months, will be its top lawyer, the second-largest U.S. natural gas producer said in a statement Friday.
He replaces Henry Hood, who held the position from April 2006 through June 2012 and will remain a senior vice president, overseeing Chesapeake's land and regulatory departments.
Shares of Chesapeake were down slightly at $19.43 in late morning trading on Friday. So far this year, the stock has lost about 13 percent of its value.
A trial lawyer, Webb defended Chesapeake CEO Aubrey McClendon and other owners of the Seattle Supersonics basketball team in 2008, when officials of Seattle, Washington sued them - unsuccessfully - over a plan to move the team from Seattle to Oklahoma City. The team moved and its name changed to Oklahoma City Thunder.
A Reuters report in June showed Chesapeake and Encana Corp had colluded in 2010 to avoid bidding against each other in Michigan land deals.
That report triggered an investigation by the U.S. Department of Justice into possible criminal antitrust violations.
The company has also come under intense scrutiny after Reuters reported in April that McClendon had borrowed as much as $1.1 billion over the last three years by pledging his stake in the company's oil and natural gas wells as collateral.
Hood had defended McClendon and Chesapeake after initial reports of the loans, saying there was no conflict of interest and that company's board of directors was "fully aware of the existence of Mr. McClendon's financing transactions."
Hood was later rebuked by the board, which said in its own statement that it had only been "generally aware" of McClendon's deals and "did not review, approve or have knowledge of the specific transactions."
Webb has worked for 17 years at the Oklahoma law firm McAfee & Taft.