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Encana rejects allegation it colluded in Michigan land deals

Encana chairman David O'Brien

Jim Ross/The Globe and Mail

Encana Corp., under investigation by U.S. federal and state authorities over allegations it colluded in acquiring land in Michigan, is denying its involvement in such activities.

In a statement released Wednesday afternoon, the company acknowledged it continues to face legal scrutiny but said external counsel it hired found no wrongdoing.

"Based on the results of the investigation, the board has concluded that Encana did not engage in such conduct," the company said in the statement.

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"We hope that the results of this thorough and independent investigation will help to assure our shareholders, staff and the public that they can continue to place their confidence in Encana," company chair David O'Brien said in the statement.

The internal investigation comes amid scrutiny by outside agencies. Encana said it has been subpoenaed by the Antitrust Division of the U.S. Department of Justice, and is also the subject of a "civil investigatory demand" by the Michigan Attorney General.

A lengthy report by the Reuters news agency this year used internal e-mails, as well as records from Michigan land sales, to allege that Encana and competitor Chesapeake Energy Corp. joined forces to dramatically drive down the price of land in Michigan.

In e-mails allegedly between Chesapeake and Encana, the rivals appear to be repeatedly discussing how to avoid bidding against each other in a public land auction two years ago and in at least nine prospective deals with private land owners there.

In one e-mail, dated June 16, 2010, Chesapeake chief executive officer Aubrey McClendon allegedly told a Chesapeake deputy that it was time "to smoke a peace pipe" with Encana "if we are bidding each other up."

A Chesapeake vice-president allegedly responded that he had contacted Encana "to discuss how they want to handle the entities," and said "we are both working to avoid us bidding each other up in the interim." Mr. McClendon replied: "Thanks."

Other e-mails indicated that Randy Eresman, Encana's chief executive officer, knew that at least one of his deputies was in contact with Chesapeake regarding discussions of land sales.

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None of the allegations has been proven, and Encana declined to say how the alleged e-mail statements could be construed as acceptable.

"We unfortunately are unable to share more specific details or information regarding the investigation" while the federal and state inquiries are underway, spokesman Jay Averill said in an e-mail. He added: "It is important to note that this was a rigorous and independent review that took 11 weeks to complete."

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About the Author
Asia Bureau Chief

Nathan VanderKlippe is the Asia correspondent for The Globe and Mail. He was previously a print and television correspondent in Western Canada based in Calgary, Vancouver and Yellowknife, where he covered the energy industry, aboriginal issues and Canada’s north.He is the recipient of a National Magazine Award and a Best in Business award from the Society of American Business Editors and Writers. More

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