SQM faces US lawsuit over Chile tax charges

OREANDA-NEWS. March 23, 2015. Shareholders of Chilean fertilizer producer SQM have filed a class action lawsuit against the company and three of its current and former officers, seeking damages for a sharp drop in the company's market value.

The complaint, filed by US law firm Pomerantz, alleges that SQM violated US federal securities law by making false or misleading statements about its business, that the company illicitly funneled money to electoral campaigns for the conservative Independent Democratic Union (UDI) and lacked sufficient internal controls over financial reporting.

As a result SQM's financial statements were false between 4 March 2014 and 17 March 2015, according to the suit.

The complaint, filed in the US District Court in the Southern District of New York, noted that SQM's stock price fell from \\$26.17/share on 25 February, 2015 to \\$18.65/share by 18 March on "extremely heavy" trade volume, as reports of the corruption scandal surfaced. On 16 March chief executive Patricio Contesse was removed from his post, followed by the resignation of three PotashCorp-appointed board members. PotashCorp owns 32pc of SQM.

The suit includes shareholders who acquired SQM stock on the New York stock exchange between 4 March 2014 and 17 March 2015. The law firm estimates that shareholders meeting the plaintiff criteria could number into the thousands.

The suit names as defendants Contesse and his successor Patricio de Solminihac, who previously served as chief operating officer, and chief financial officer Ricardo Ramos.

Pomerantz in March was also appointed lead counsel in a similar class-action suit against Brazil's state-controlled Petrobras, which is at the center of massive corruption scandal that has eroded the company?s share value.

Another US law firm, Peiffer Rosca Wolf, said this week it is preparing a potential class-action suit against SQM on behalf of shareholders.

Chile?s tax authority SII today delivered SQM accounting records from 2009-14 to the national prosecutor?s office, which is seeking to investigate.

Politicians from the opposition UDI and ruling left-of-center coalition, known as the New Majority, are under scrutiny for allegedly benefiting from the scheme.

SQM had delivered the accounting records to the SII on 16 March, after rebuffing the prosecutor?s request for the records.

The high-profile case has called into question the integrity of the SII and Chile?s constitutional court (TC), which ruled this week to suspend the investigation.

The US securities regulator SEC declined on comment on whether it has opened an investigation into SQM.

SQM could not be reached for comment.