Report finds “no evidence” SQM bribed officials
Published: Monday, 21 December 2015
Law firm reports under-documented payments but highlights lack of accuracy in company’s books.
An investigation into the activities of Chilean lithium
producer Sociadad de Quimica y Minera SA (SQM) by US law firm
Shearman and Sterling LLP found no evidence that the company
was engaged in the bribery of public officials.
The report identified a number of payments authorised by the
miner’s former CEO, Patricio Contesse, which SQM
had not sufficiently documented, said that the
company’s books did not accurately reflect a
number of transactions and found the company’s
internal controls to be insufficient.
Contesse was sacked by the board in March this year amid
allegations of payments made to Chilean politicians. He was
replaced by Patricio de Solminihac.
Shearman and Sterling was commissioned by SQM in February
this year to look into its potential liabilities under the US
Foreign Corrupt Practices Act (FCPA).
Specifically, the terms of reference were to consider
whether it had made any payment defined as corrupt for FCPA
purposes and whether it had breached the accounting provisions
of the act.
According to a statement released by SQM in mid-December the
key findings of the report included that "payments were
identified that had been authorised by (…) Contesse, for
which the company did not find sufficient supporting
documentation". It added that "no evidence" was found
demonstrating that payments were made "in order to induce a
public official to act or refrain from acting in order to
assist SQM obtain economic benefits".
The third and fourth findings related to a cost centre
managed by Contesse. The report concluded that "the
company’s books did not accurately reflect
transactions that have been questioned" (though they were
"below the materiality threshold" defined by SQM’s
external auditors) and that "SQM’s internal
controls were not sufficient to supervise the expenses made by
the cost centre".
SQM highlighted that it has already undertaken a number of
measures to strengthen its corporate governance and internal
controls, including dismissing Contesse; filing corrected tax
returns with the Chilean internal revenue service; creating a
corporate governance committee; separating and strengthening
its internal audit and compliance departments; hiring audit
firm KPMG to review its payment process controls; improving
these controls; and reformulating its code of ethics.
An ad-hoc committee, formed by the miner in February to look
into allegations that had been made, commissioned the inquiry.
It received its findings in December following nine months of
Chilean law firm Grupo Vial / Serrano Abogados and
international forensic services group FTI Consulting, Inc.
assisted Shearman and Sterling in the process.
SQM reported in late September that Contesse was suing it
for almost $6m on a number of claims relating to his