Here’s how Reuters, without directly saying so, gets to the worst-case implications these kind of ill-disclosed transactions brings to mind:
In the past, major Wall Street banks formed separate companies - or special purpose vehicles, just as McClendon has - to allow select employees to borrow from the employer and make investments. The WorldCom accounting scandal was, in part, fueled by more than $1 billion in loans taken out by former chief executive Bernard Ebbers that were secured by his shares of company stock. And energy giant Enron used off-balance-sheet entities to hide debt from investors.
If I’ve got a quibble with the piece, it’s with how it’s set up. When you’ve got a really good investigation, you should give be able to come up with a better lede than this:
Aubrey K. McClendon is one of the most successful energy entrepreneurs of recent decades. But he hasn’t always proved popular with shareholders of the company he co-founded, Chesapeake Energy Corp., the second-largest natural gas producer in the United States.
Contrast that with the lede of the Journal’s follow today, which gets right to the crux of the matter:
Firms controlled by Aubrey McClendon, the high-profile founder and chief executive of Chesapeake Energy Corp., CHK -0.33% were in debt to a private equity group for as much as $1.4 billion while Chesapeake was negotiating with the same firm to sell it hundreds of millions of dollars of assets.
And Reuters doesn’t get to McClendon’s undisclosed dealings with the private-equity investor until the eleventh paragraph of its piece.
Fortunately, it didn’t dampen the impact of this story, which overall is just excellent.