By Andrew Snyder The events that unfolded in front of us last year were amazing.
Twelve months later… we’re even more fascinated.
You may remember that on March 1, 2016, Aubrey McClendon was charged with fixing the oil markets in his favor. He faced a heap of trouble and jail time if convicted.
It didn’t matter, though.
He died in a fiery car crash the next day.
In the months since, the police ruled the death of the co-founder of oil and gas giant Chesapeake Energy (NYSE: CHK) an accident. The charges against him, of course, were dropped.
We’d think the story would end there.
We’d be wrong.
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In the days after McClendon’s death, I penned a controversial piece. I asked whether the man was a capitalist’s hero or a villain.
It’s a topic we ponder often.
We praised the man for taking risk:
Those who knew the founder and former CEO of Chesapeake Energy would agree he was a tremendous risk taker. He was one of the wildest of wildcatters.
What’s incredible, though, is how exorbitantly our capitalist system rewarded him for his good decisions and how efficiently it punished him for his bad ones.
The underlying rule of the capitalist system – and therefore wealth building – is that you will be richly rewarded for giving folks a product or service they want and are willing to pay for.
McClendon did it in spades.
And we cursed him for taking risk:
When Chesapeake’s shares fell significantly in the maelstrom of the times, it forced an impossible margin call for the highly leveraged McClendon. He lost most of his stake in the company.
Worse, Carl Icahn’s forceful activist hand eventually pushed the “daredevil” McClendon out of his job.
In all, the crisis cost the king of natural gas some $559 million. His reputation was permanently spoiled.
But now we’re seeing just how committed the man was to building a company and fueling an industry that, in turn, fuels the world.
As lawyers dig into McClendon’s massive estate, they’re learning just how entangled the man’s personal and corporate lives became.
Earlier this week, we pondered whether the rich got that way by luck or skill. Of course, we believe hard work and good luck should share an entry in the dictionary, but not everybody agrees.
Digging through McClendon’s assets and obligations, though, naysayers would have a tough time arguing the man didn’t deserve a spot among the oh-so-tortured One-Percenter Club.
Unlike so many corporate crooks who have found their names in the headlines, McClendon didn’t rely on other people’s money for his success. He didn’t take a dollar from Peter to pay Paul, while skimming a few cents off the top.
No, he borrowed from Aubrey to… hopefully… pay Aubrey.
For example, estate lawyers discovered that when McClendon died, he was on the hook at several big banks to the tune of $465 million for a loan he personally took to launch a variety of energy ventures.
And to get those sorts of loans, the man used his own assets as collateral. In fact, auctioneers recently sold $8.4 million of his wine collection to pay down a loan from …read more
Source:: Investment You
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