Chilean chemical company pays $30.5 million for FCPA violations
Tuesday, January 17, 2017 at 8:18AM
Richard L. Cassin in Chile, Disgorgement, SQM, U.S. Sentencing Guidelines

Sociedad Química y Minera de Chile SA agreed Friday to pay $30.5 million to resolve criminal and civil Foreign Corrupt Practices Act charges that it bribed Chilean politicians to influence government policies and plans.

SQM paid a criminal penalty to the DOJ of nearly $15.5 million. It paid a civil penalty to the SEC of $15 million.

Between 2008 and 2015, SQM paid vendors nearly $15 million -- "despite having no evidence any goods or services were actually received," according to the company's admissions Friday.

The "vendors" were people or organizations connected to Chilean officials. The company falsified its books and records to conceal the payments, logging them as consulting and professional services SQM never received. 

SQM also made donations to dozens of foundations controlled by Chilean politicians or closely tied to them. For example, it funneled $630,000 to foundations run by an official with influence over the government’s mining plans, a key segment of SQM’s business.

The SEC said "virtually all of the improper payments to [Politically Exposed Persons] were directed and authorized by a senior SQM executive."

SQM fired the executive after local tax authorities raised the issue and news organizations reported it.

The DOJ and SEC said SQM "knowingly failed" to put in place proper controls to stop payments illegal under Chilean law. In one case, the executive restarted payments to the relative of a Chilean official just a month after the company had stopped them.

The SEC settled the case with an internal administrative order (pdf) and didn't go to court. The agency imposed the $15 million penalty but didn't designate any amount as disgorgement, a typical remedy in FCPA enforcement actions.

The DOJ filed a two-count criminal information Friday in federal court in the District of Columbia charging SQM with failing to implement internal controls and falsifying its books and records.

SQM entered into a three-year deferred prosecution agreement with the DOJ, imposing the $15.5 million criminal penalty and requiring an independent corporate compliance monitor for two years. The DPA requires SQM to self report during the third year.

SQM didn't voluntarily disclose the FCPA violations, the DOJ said. It cooperated with the DOJ "after news of Chilean prosecutors’ investigation of the company surfaced in media reports." 

The DOJ said it gave SQM a 25 percent reduction off the low end of the U.S. Sentencing Guidelines fine range because of its "full cooperation and substantial and ongoing remediation."

Sociedad Química y Minera de Chile SA trades on the NYSE under the symbol SQM. Revenues last year were about $1.8 billion. The Santiago-based company has nearly 5,000 employees. It produces plant nutrients, iodine, lithium, and industrial chemicals from mines and plants in the Atacama Desert, west of the Andes mountains.

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Richard L. Cassin is the publisher and editor of the FCPA Blog.

Article originally appeared on The FCPA Blog (http://www.fcpablog.com/).
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