March 25, 2015 / 4:50 PM / 5 years ago

UPDATE 1-SQM says uncovers $11 mln in questionable payments linked to ex-CEO

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SANTIAGO, March 25 (Reuters) - Chilean fertilizer company SQM, enmeshed in a tax and illicit campaign financing scandal, said on Wednesday it has identified about $11 million in questionable payments from the office of its recently fired chief executive officer.

On March 20 SQM identified to the internal revenue service about $11 million in payments between 2009 and 2014 from the office of its former CEO “that may not meet the requirement to count as tax expenses under the Chilean tax code because of insufficient supporting documentation,” said new CEO Patricio de Solminihac said.

Invoices related to the payments were given to authorities, he said on a call with investors on Wednesday.

Authorities in Chile are investigating whether money from SQM and other companies was siphoned to fund electoral campaigns, principally for UDI, a right-wing party that has links to the 1973-1990 Augusto Pinochet dictatorship.

The owners of financial firm Banco Penta have already been charged with bribery and tax evasion, and the head of UDI has resigned.

The scandal has dominated headlines in Chile in recent weeks and prompted President Michelle Bachelet to announce a corruption crackdown.

But CEO de Solminihac said on Wednesday he did not believe the company’s mining concessions, which include rights to some of the world’s largest nitrates and lithium reserves in northern Chile, would be affected.

He said SQM was also conducting an internal probe and fired Patricio Contesse, the former chief executive and company veteran, on March 16 for “failure to cooperate.”

To protest the board’s handling of the situation, three directors that represented Potash Corp, which owns 32 percent of SQM, resigned on March 17, sending SQM shares sliding.

SQM said it is planning to re-elect the eight-member board at its annual general meeting on April 24. Its chairman is Pinochet’s former son-in-law, Julio Ponce. (Reporting by Rosalba O’Brien and Anthony Esposito; Editing by Jeffrey Benkoe)

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