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FCPA Blog Daily News

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Tuesday
Sep252018

Former Chile mining executive settles FCPA offenses 

The former CEO of a Chile-based chemical and mining company agreed Tuesday to pay $125,000 to resolve civil charges that he violated the Foreign Corrupt Practices Act.

Patricio Contesse González caused Sociedad Química y Minera de Chile, S.A. or SQM "to make nearly $15 million in improper payments to Chilean political figures and others connected to them," the SEC said.

Last year SQM paid $30 million to settle civil and criminal FCPA charges. The company paid a criminal penalty to the DOJ of nearly $15.5 million and a civil penalty to the SEC of $15 million.

The SEC settled with the former CEO Tuesday through an internal administrative order (pdf) and didn't go to court.

Contesse, a Chilean citizen, agreed to the settlement without admitting or denying the SEC's findings in the SEC’s order.

The SEC said he "directed and authorized" the bribes "through a discretionary CEO account." He used fake deals to hide the bribes. Third parties posed as vendors to SQM and submitted phony invoices.

Contesse directed false accounting entries in SQM’s books and records, the SEC said, lied to SQM’s independent auditor, and signed false certifications in SQM’s SEC filings.

SQM’s securities have been listed on the NYSE since 1993.

Contesse was SQM’s CEO from 1990 to 2015. Starting in 2008, SQM paid nearly $15 million "to Chilean politicians, political candidates, and individuals and entities connected to them," the SEC said.

For example, SQM made "improper monthly payments" to the son of a Chilean political party official for five years.

"Contesse told the head of Internal Audit that the contract with PEP’s [politically exposed person's] son had been completed, so no further payments would occur."

But the head of Internal Audit found out the payments were still being made and told SQM’s treasury department to stop them.

"Those payments ceased," the SEC said, "but almost immediately thereafter Contesse redirected the PEP payments to the PEP’s aide."

In a statement Tuesday, Charles Cain, chief of the SEC enforcement division's FCPA unit, said: “Corporate culture starts at the top, and when misconduct is directed by the highest level of management it is critical that they are held accountable for their conduct.”

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