Reuters — Shares in Chilean fertilizer group SQM plunged Wednesday after three board representatives from Saskatchewan’s PotashCorp resigned in protest at its handling of an illicit payments scandal that has shaken the Chilean establishment.
SQM vice-chairman Wayne Brownlee, the chief financial officer at PotashCorp, and two directors stepped down late Tuesday after clashing with the rest of the board over whether and how far it should collaborate with a probe by Chilean authorities.
A quarter of the value of the US$6 billion company was wiped out as investors feared what would come next for SQM, which has rights to huge nitrate and lithium reserves in Chile.
The development is the latest twist in a campaign financing saga that has dominated headlines in recent weeks in Chile, traditionally seen as having less corruption than other Latin American countries.
Authorities are investigating whether money from SQM and other companies was siphoned to fund electoral campaigns, principally for the right-wing UDI, a party with links to the 1973-1990 Augusto Pinochet dictatorship.
SQM’s chairman and controller is Julio Ponce, Pinochet’s former son-in-law, who built his stake after the dictator began selling assets in the 1980s.
PotashCorp, the world’s largest fertilizer company by market value, owns an approximate 32 per cent stake in the dual-share structure of SQM, although it has flagged that it may not keep that indefinitely.
“PotashCorp and its SQM board representatives have demanded an exhaustive, transparent and independent investigation,” the Saskatoon-based company said in a statement.
“SQM’s board has not authorized a review which meets the standards we expect.”
PotashCorp spokesman Randy Burton said Wednesday the company has made no decision on whether to sell its SQM stake.
Earlier this week SQM fired its CEO and said it would comply with demands from the government’s internal revenue service to hand over tax information.
But PotashCorp said requests from its representatives that SQM fully co-operate were rejected.
“There’s a debate on the board and with management on what (information) and how much and when they should reveal,” Burton said.
PotashCorp, which heard about the allegations in early January, wanted an independent committee to have free rein to look into them, he said.
He said it was too soon to know if PotashCorp would rejoin SQM’s board under certain conditions but said those seats remain available to Potash. Its stake entitles it to three of the eight voting seats.
— Rosalba O’Brien and Rod Nickel are Reuters correspondents based in Santiago and Winnipeg respectively.