The former CEO of Chesapeake Energy who was also a major backers of the Sierra Club was indicted by a federal grand jury Tuesday on conspiracy charges to rig oil prices in Oklahoma.
The indictment alleges Aubrey McClendon, CEO of Chesapeake Energy, colluded with another unnamed oil company to keep oil and gas bid prices at rock bottom levels during a 6-year period — from 2007 to 2012 — as a means of pushing competitors out of the market.
The oil pioneer faces 10 years in prison and a $1 million fine if the court finds him in violation of the Sherman Act, a federal antitrust statute, the Justice Department said Tuesday. McClendon, and other unnamed subjects, decided ahead of time the winners of the oil and gas leases up for bid, according to the Justice Department.
“The charge that has been filed against me today is wrong and unprecedented,” McClendon said in a statement. “All my life I have worked to create jobs in Oklahoma, grow its economy, and to provide abundant and affordable energy to all Americans. I am proud of my track record in this industry, and I will fight to prove my innocence and to clear my name.”
As CEO of Chesapeake Energy, McClendon paid the Sierra Club $25 million to help fund the group’s Beyond Coal campaign, according to a report published by TIME Magazine in 2012. The company’s donations trickled into the Sierra Club’s coffers from 2007 to 2010, a time frame corresponding with the new oil bid allegations leveled against McClendon.
Beyond Coal’s main objective, according to its website, is “to replace dirty coal with clean energy by mobilizing grassroots activists in local communities to advocate for the retirement of old and outdated coal plants.” The campaign also claims it is vital that the U.S. shutter “the nation’s more than 500 coal plants by 2020.”
The revelation at the time roiled many of Sierra Club’s top brass. Some executives suggested the donations affect the group’s ability to maintain its independence from the energy industry.
“The chapter groups and volunteers depend on the Club to have their back as they fight pollution from any industry, and we need to be unrestrained in our advocacy,” Michael Brune, the Sierra Club’s executive director since 2010, told TIME reporter Bryan Walsh.
McClendon, with Sierra Club’s former executive director Carl Pope in tow, traveled about the country in 2009 promoting the benefits of natural gas and hydraulic fracking.
“Use renewables as much as we can. Natural gas is the next-cleanest fuel, then we have oil and then we have coal, ” Pope told energy magazine Oil & Gas Investor.
He added: “We’re trying to make sure that we innovatively and creatively use whatever fuel we burn (and) that we rely primarily on the fuels that are the cleanest … And, among the fossil fuels, natural gas is at the top.”
Brune eventually took over for Pope and promptly turned his back on second donation from Chesapeake totaling $30 million.
“The size and secrecy of surrounding CHK’s [Chesapeake] gifts has prevented us from having an open and candid relationship with our supporters. It’s vital that we act with integrity,” Brune stated in a 2010 memo to the Sierra Club faithful.
Chesapeake, under McClendon’s tutelage, became the biggest natural gas producer in the country, and used lease agreements as a tool to gain access to drilling rights.
The Justice Department claimed the price fixing, bid rigging and anti-competitive investigations against McClendon are the first of a kind for the natural gas industry.
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