SQM, Santiago, has reversed an earlier decision to name former controller Julio Ponce, 72, as an adviser to the company (GM June 8, p. 1). The decision was announced in a statement from Chairman Alberto Salas on June 22 citing “public differences of opinion.” It was unclear whether Ponce’s brother, Eugenio, would also lose his post as an adviser.
SQM shares jumped as much as 3.7 percent in Santiago trading, according to Bloomberg, recovering some of the ground lost since June 5, when the appointment was reported.
Julio Ponce controlled SQM through holding companies and a pact with Japan’s Kowa. However, he gave up control earlier this year following an agreement with Chilean authorities to put an end to a four-year dispute over mining rights. As part of the deal, the company agreed to governance changes, including that no Ponce family member occupied a seat on the board. But the accord said nothing about an advising role.
The SQM decision to appoint Julio and Eugenio Ponce prompted inquiries by government agencies and regulators, as well as calls for a parliamentary investigation, according to Bloomberg, which reported that Communist Party youth staged a protest in front of the company’s headquarters in Santiago holding signs featuring Julio Ponce behind bars. Lawmakers from the left-leaning PPD party sent a request to President Sebastian Pinera, asking him to expropriate SQM and nationalize lithium.
Julio Ponce, the former son-in-law of Chilean dictator Augusto Pinochet, was fined about $70 million in 2014 by Chile’s securities regulator for illegal trading of shares in his holding companies. A court later reduced the fine to a maximum of $3.3 million. A year later, CEO Patricio Contesse left SQM following revelations of his involvement in illegal financing of political parties, in a case that is still under investigation. Contesse’s son is now a board member.