On January 21, 2021, the US District Court for the District of Columbia dismissed a January 2017 Information against Chilean chemicals and mining company Sociedad Química y Minera de Chile (SQM), bringing an end to the Company’s January 2017 deferred prosecution agreement with the US Department of Justice. The dismissal followed a November 10, 2020 motion by the DOJ stating that SQM had “fully met its obligations under the DPA.”
SQM’s January 2017 DPA concerned allegations that it had violated the accounting provisions of the US Foreign Corrupt Practices Act. These allegations related to payments made out of a discretionary fund maintained by SQM’s Office of the Chief Executive. Between 2008 and 2015, an unnamed SQM executive made approximately $14.75 million in payments from this fund to benefit Chilean politicians, political candidates, and individuals connected with them. These payments were made through contributions to charitable foundations and political campaigns associated with these individuals, and through fictitious contracts with vendors connected to them. SQM made the payments without conducting proper diligence on the third parties, and falsely recorded certain of the payments in its books and records. High-level SQM executives had become aware of the payments by at 2014, after an SQM internal audit identified six of the payments as “high risk” and recommended that SQM terminate active contracts with the relevant vendors and include additional compliance steps on similar contracts in the future. Despite these audit findings (which were summarized for the Company’s Board of Directors), SQM made “no adequate changes” to its internal controls, and these payments continued for an additional six months.
Under the DPA, SQM agreed to pay a $15.5 million criminal fine, implement an enhanced compliance program, engage an independent compliance monitor for two years, and cooperate with the DOJ’s ongoing investigation. SQM received a 25% downward departure from the sentencing guidelines as a result of its cooperation and remediation (it did not self-report). SQM also agreed to an administrative resolution with the SEC for the same misconduct, under which SQM paid an additional $15 million civil penalty.