June 6, 2018 / 6:51 PM / 5 months ago

SQM pick of ex-Chairman Ponce as adviser 'imprudent' - Chile finance minister

(Reuters) - Chile’s finance minister on Wednesday described as “imprudent” the appointment by lithium miner SQM of its former Chairman Julio Ponce as a strategic adviser, in light of an agreement with the state that he distance himself from the firm.

Chile's Finance Minister Felipe Larrain speaks during an interview with Reuters at the OECD headquarters in Paris, France, May 31, 2018. REUTERS/Philippe Wojazer

SQM (SQM_pb.SN), the world’s biggest exporter of lithium carbonate, confirmed on Tuesday that it had retained Ponce’s services, along with those of his brother Eugenio.

The move has sparked criticism from politicians from both the governing coalition and opposition, as well as the business community.

Finance Minister Felipe Larrain said that the contract drawn up between SQM and the government to end a royalties dispute would have to be checked to determine if the appointment of Ponce as adviser was compliant.

“It’s a complex situation and seems to be an imprudent move,” he told journalists at a news conference on Wednesday. “We need to check whether it’s a violation of the contract or the spirit of the contract from the government’s point of view. We will protect the interests of the Chilean state.”

Ponce, a former son-in-law of late Chilean dictator Augusto Pinochet, is a controversial figure in Chile. He has held power at SQM since it was privatised under Pinochet in the 1980s and is still the largest shareholder. In 2014, he was fined for market manipulation.

The firm’s current president, Alberto Salas, said in a statement on Tuesday that the board took the unanimous decision to appoint Ponce and his brother after an “exhaustive analysis” and because of the pair’s “extensive business experience and technical know-how.”

State development agency Corfo, which oversees Chile’s lithium leases, earlier this year inked a deal with SQM that increased the miner’s quota of the highly prized metal in the Salar de Atacama, but stipulated that Ponce remove himself and his family from decision-making at the firm.

Corfo on Wednesday said an external law firm it hired had reviewed the contract, as well as emails sent during the negotiations, and found that the ban did not apply to “advisors.”

“The spirit of the parties was to not broaden the prohibition to the role of the advisor,” Corfo said in a statement.

“We will exert strict oversight to make sure that SQM’s decision to hire Julio Ponce Lerou and Eugenio Ponce Lerou as advisors does not mean that they participate in decision-making.”

Reporting by Antonio de la Jara; Writing by Aislinn Laing, Editing by Rosalba O'Brien and Lisa Shumaker

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