SQM to pay $30m fine to US over political payments

By Myles McCormick
Published: Thursday, 23 February 2017

The US-listed Chilean lithium and iodine producer will pay a fine of over $30m as it bids to settle a political payments enquiry with the US authorities.

Sociedad de Quimica y Minera SA (SQM), a major producer of lithium, iodine and potash, will pay fines amounting to over $30m as it bids to settle a long running investigation by the US authorities into a political payments scandal.

The US Department of Justice (DoJ) and Securities and Exchange Commission (SEC) will receive penalty payments of $15m and roughly $15.5m, respectively, "in relation to the investigations by such agencies of facts related to payments to providers and entities that were tied to persons with political exposure between 2008 and 2015", SQM outlined in a letter to the Chilean Superintendent of Securities and Insurance (SVS), dated 13 January and signed by the company chairman, Eugenio Ponce.

SQM Rail
SQM will pay a fine of over $30m to settle a long running stand-off with the US authorities. (Source: David Gubler)
The fact that SQM’s shares are traded publicly in the US, via the New York Stock Exchange (NYSE), makes it subject to US legislation.

As part of a long-running scandal in Chile, SQM has been accused of making payments to politicians in order to receive favourable treatment in legislation.

Through a deferred prosecution agreement (DPA), SQM has agreed that the DoJ will file charges alleging a "failure to implement effective internal accounting systems and internal accounting controls" and "failure to maintain accurate books and records."

The deferred nature of the agreement means that the DoJ will not to pursue the charges against the company for a three year period and will drop them subsequently, provided SQM pays the fine and accepts external monitoring of its compliance programme for two years.

An internal investigation conducted by SQM mitigated the punishment, giving it a certain amount of "cooperation credit", Ponce noted.

This investigation found no evidence that the company was engaged in the bribery of public officials.

The SEC imposed similar terms to the DoJ and took account of "corrective measures" taken by the company, including the dismissal of its former CEO, Patricio Contesse, and the creation of a corporate governance committee.

A spokesperson for SQM declined to comment on the matter when contacted by IM.