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SQM shares soar, as controversial chairman steps aside

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Shares in SQM soared on news of a board reshuffle which removed a controversial chairman, while seeing major shareholder PotashCorp appear to strengthen its grip on Chilean potash miner.

A new eight-member board will be voted on by shareholders on Friday. Julio Ponce, who has chaired the group since 1987, and is a major shareholder is not up for re-election.

Mr Ponce, formerly the son-in-law of ex-Chilean dictator Augusto Pinochet, has seen calls for his resignation after an insider trading investigation last year, which saw him fined, and this year from a scandal over illicit campaign financing.

Shares in SQM plunged to a six-year low last month, when three representatives of Canada's PotashCorp stepped down from the Chilean group's board, over a failure to comply with an investigation into financial irregularities.

Potash Corp, which has a 32% stake in SQM, said that it was unable to make the company comply with regulators.

SQM subsequently announced that it had located $11m that might have been misdirected by its former chief executive, Patricio Contesse, who was fired for failure to co-operate with investigations last month.

Payments scandal

SQM is facing investigation over illegal payments to political parties, with most of the money going to UPM, the party of right-wing dictator Augusto Pinochet.

The scandal, which has rocked Chilean media, has already seen the head of UPM resign, while the owners of financial firm Banco Penta have been charged with bribery and tax evasion over similar

Mr Ponce, Pinochet's son in law, bought his stake in SQM in the 1980s, when the Pinochet-led government privatised the company.

The reshuffle has also unseated the son of former head Mr Contesse from his position on the board.

Shares soar

The proposed board consists four members nominated by Mr Ponce - three current board members as well as Dieter Linneberg, a Chilean academic specialising in corporate governance.

PotashCorp, which previously had filled two of its SQM board positions with two Chilean representatives, this time proposed taking all three from the Canadian group itself.

They include Joanne Boyes, specialist in matters including complex accounting and internal controls compliance, and Robert Kirkpatrick, the deputy general counsel at PotashCorp, where he is responsible for securities regulatory compliance, and a member of the corporate governance committee.

Shares in SQM closed up 9.2% at $21.74 in New York – taking to 45% their rebound from the six-year low reached on March 18.

The extent of the share price rise prompted an inquiry by the Santiago stock exchange, but SQM said that the "only information that we have published, that could explain the variation in the share price" was the release of the proposed board candidates.

By Agrimoney.com

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