In re PATRICIO CONTESSE

 
 
 
 UNITED STATES OF AMERICA 
 Before the 
 SECURITIES AND EXCHANGE COMMISSION 
 
SECURITIES EXCHANGE ACT OF 1934 
Release No. 84280 / September 25, 2018 
 
ADMINISTRATIVE PROCEEDING 
File No. 3-18839 
 
 
In the Matter of 
 
PATRICIO CONTESSE 
GONZÁLEZ, 
 
Respondent. 
 
 
ORDER INSTITUTING CEASE-AND-
DESIST PROCEEDINGS, PURSUANT TO 
SECTION 21C OF THE SECURITIES 
EXCHANGE ACT OF 1934, MAKING 
FINDINGS, AND IMPOSING REMEDIAL 
SANCTIONS AND A CEASE-AND-DESIST 
ORDER 
 
 
I. 
 
 The Securities and Exchange Commission (“Commission”) deems it appropriate and in the 
public interest that public cease-and-desist proceedings be, and hereby are, instituted pursuant to 
Section 21C of the Securities Exchange Act of 1934 (“Exchange Act”), against Patricio Contesse 
González (“Contesse” or “Respondent”).   
 
II. 
 
 In anticipation of the institution of these proceedings, Respondent has submitted an Offer 
of Settlement (the “Offer”) which the Commission has determined to accept.  Solely for the 
purpose of these proceedings and any other proceedings brought by or on behalf of the 
Commission, or to which the Commission is a party, and without admitting or denying the findings 
herein, except as to the Commission’s jurisdiction over him and the subject matter of these 
proceedings, which are admitted, and except as provided herein in Section V, Respondent consents 
to the entry of this Order Instituting Cease-and-Desist Proceedings, Pursuant to Section 21C of the 
Securities Exchange Act of 1934, Making Findings, and Imposing Remedial Sanctions and a 
Cease-and-Desist Order (“Order”), as set forth below.   
 
III. 
  

 
 2 
 On the basis of this Order and Respondent’s Offer, the Commission finds
1
 that: 
  
Summary 
 
1. This matter concerns Respondent’s role in causing his employer, Sociedad Química 
y Minera de Chile, S.A. (“SQM”), to violate the books and records and internal accounting control 
provisions of the Foreign Corrupt Practices Act (“FCPA”), and his circumvention of internal 
accounting controls, falsification of SQM’s books and records, and misleading of SQM’s 
accountants.  While acting as SQM’s CEO, Respondent caused SQM to make approximately US 
$14.75 million in improper payments to Chilean politicians, political candidates, and individuals 
and entities connected to them (collectively, “politically exposed persons” or “PEPs”).  These 
improper payments were made over the course of seven years, from 2008 to 2015.  Respondent 
directed and authorized these improper payments to PEPs, based on contracts, invoices, and other 
false documents.  Most of the improper payments involved falsified documents submitted to SQM 
on behalf of third-party vendors associated with PEPs who posed as legitimate vendors to SQM 
(“third-party vendors”).  Those payments were not supported by documentation that services were 
actually provided to SQM.   
 
2. Respondent caused SQM’s violations of the FCPA.  Respondent personally caused 
fictitious contracts with the third-party vendors to be created, and approved the contracts, invoices 
and other documents, so that the improper payments would be inaccurately recorded as legitimate 
business expenses.  His conduct caused SQM’s books and records to inaccurately record the 
improper PEP payments as legitimate business expenses.  Respondent’s actions also caused 
SQM’s internal accounting controls violations.  As CEO, Respondent was responsible for SQM’s 
internal accounting controls, including controls that related to an account through which the 
improper payments were made (the “CEO Account”).  Those controls were deficient and contained 
material weaknesses.  Respondent circumvented those deficient controls to cause SQM to make the 
improper payments to the Chilean PEPs.   
 
3. By falsifying contracts and invoices and submitting documents Respondent knew to 
be false into SQM’s accounting system, and by failing to inform SQM’s accountants about those 
fictitious transactions, Respondent knowingly circumvented SQM’s internal accounting controls 
and violated rules that prohibit falsifying a public company’s books and records and omitting 
material facts to an accountant in connection with an audit.  
 
4. Respondent signed certifications which were filed with SQM’s Forms 20-F during 
the relevant period.  Respondent’s representations in those certifications were false, as described 
below. 
 
 
 
 
                                                 
1
  The findings herein are made pursuant to Respondent's Offer of Settlement and are not binding on any 
other person or entity in this or any other proceeding.  

 
 3 
Respondent 
 
5. Patricio Contesse González is a Chilean citizen and resident.  He was SQM’s 
Chief Executive Officer from at least 1990 to March 2015. 
 
Other Relevant Entity 
 
6. Sociedad Química y Minera de Chile, S.A., is a multinational mining and 
chemical company headquartered in Santiago, Chile.  SQM’s Series B shares, in the form of 
ADSs, have been listed on the NYSE since 1993 and are registered with the Commission 
pursuant to Section 12(b).  The company files periodic reports with the Commission as a foreign 
private issuer. 
 
Facts 
 
A. Background 
 
7. From at least 2008 to 2015, SQM provided discretionary funding to its office of 
the Chief Executive Officer through a designated account, the CEO Account.  This account was 
intended for, among other things, travel, publicity, and advisory services for the office of the 
Chief Executive Officer.  SQM’s funding of the CEO Account ranged from US $3.3 million in 
2008 to US $5.7 million in 2014.   
 
8. In late 2014 and early 2015, Chilean authorities initiated tax and criminal 
investigations of suspicious payments SQM made to Chilean PEPs.  In response to Chilean 
authorities’ requests for relevant documents, SQM’s board of directors (the “Board”) formed a 
committee to conduct an internal investigation.  On March 16, 2015, the Board terminated 
Contesse’s employment contract. 
  
9. On January 13, 2017, the Commission issued a settled order that SQM cease-and-
desist from violating the books and records and internal control provisions of the FCPA, pay a 
penalty of $15 million, and comply with certain undertakings.  Also, on January 13, 2017, the 
Department of Justice and SQM entered into a three-year deferred prosecution agreement (DPA).  
As part of the DPA, SQM admitted its willful and knowing failure to implement a sufficient 
system of internal accounting controls and to violations of the FCPA’s books and records 
provisions.  SQM agreed to pay a criminal fine of approximately $15 million and certain 
undertakings. 
 
B. Contesse Used the CEO Account to Effect Improper Payments to PEPs 
 
10. From at least 2008 through 2015, Contesse used the CEO Account to make 
payments to Chilean PEPs totaling at least $14.75 million.  These payments were made through 
third-party vendors. 
 

 
 4 
11. Documents supporting the payments included, among other things, fictitious 
contracts and invoices for nonexistent services initiated by Contesse.  For example, utilizing the 
CEO Account, Contesse caused SQM to do the following: 
 
a. SQM paid funds on an invoice for purported “financial services” submitted by a 
relative of a Chilean official.  In fact, that Chilean official’s relative had not 
provided any services to SQM but had submitted the invoice in order to provide 
support for a payment by SQM to a Chilean political campaign. 
 
b. SQM paid several invoices submitted by third-party entities connected to a Chilean 
official for purported “communications advice” from the Chilean official’s chief of 
staff, and for purported “consulting services” by a relative of that Chilean official.  
SQM made these payments without receiving any supporting documentation that 
the “communications advice” or “consulting services” had ever been provided. 
 
c. An advisor to a Chilean official invoiced SQM for providing engineering and 
statistical services.  SQM paid the invoice and booked the payment as having been 
made for such services, when SQM had not received those services from the 
advisor. 
 
d. A relative of a Chilean official submitted a false contract to SQM for consulting 
services in “areas of fertilizing tests” and received payments from SQM without 
SQM receiving any supporting documentation that those services had been 
provided. 
 
12. Several Chilean officials sought payments from Contesse for not-for-profit 
foundations operated by relatives or with which the Chilean officials were otherwise associated.  
Contesse made these payments without regard to whether they were in accordance with SQM’s 
policies. 
 
C. As CEO, Contesse Was Responsible for SQM’s Internal Accounting Controls and 
Circumvented Them to Make PEP Payments 
 
13. Contesse was the CEO of SQM since before it became a public company in 1993 
and was responsible for the development of SQM’s internal accounting controls at all relevant 
times.  Contesse was also ultimately responsible for SQM’s anti-corruption policies and 
procedures.  During SQM’s development of the anti-corruption policies and procedures, Contesse 
was regularly briefed and was personally trained on their implementation and use by SQM’s then 
head of Internal Audit.   
 
14. In addition, Contesse served on SQM’s ethics committee and authored the cover 
letter to SQM’s Code of Ethics.  The Code of Ethics specifically proscribed improper payments to 
government officials.  As CEO of SQM and a member of its ethics committee, Contesse was 

 
 5 
responsible for ensuring that SQM’s internal accounting controls related to the proscription of 
improper PEP payments were effective. 
 
15. As part of management’s preparations for SQM’s annual Form 20-F filings, the 
company’s senior and executive officers met on a regular basis throughout the year to assess the 
effectiveness of the internal accounting controls.  As CEO, Contesse was involved in establishing 
and assessing these controls. 
 
16. In connection with the improper payments, Contesse circumvented SQM’s internal 
accounting controls.  Contesse used the CEO Account to effect the transactions. 
 
D. Contesse Caused SQM to Make Improper Payments and Falsely Record Them 
 
17. Contesse knew how SQM initiated, documented, authorized, and effected corporate 
transactions.  He also understood the company’s restrictive policies related to PEP transactions, 
both in his role as CEO and as a member of SQM’s ethics committee.  Nevertheless, he caused 
SQM to make the PEP transactions at issue in this case and, in most instances, instructed others to 
draft the inaccurate documents needed to support and effect the PEP payments.  
 
E. Contesse Failed to Disclose the Improper Payments to SQM’s Internal Audit 
Department 
 
18. Pursuant to SQM’s anti-corruption policies and procedures, SQM’s Internal Audit 
department was to conduct regular audits of certain transactions.  Upon discovery that certain high-
risk transactions identified in an internal audit were initiated by Contesse, the head of Internal 
Audit reviewed the high-risk transactions with Contesse.  Contesse failed to inform the head of 
Internal Audit that the transactions were improper.   
 
19. In one instance, Contesse had directed suspicious payments to the spouse of a PEP 
for “communications consulting.” When questioned about that transaction, Contesse told the head 
of Internal Audit the payments to the spouse were proper but would cease and that SQM would 
direct payments to a legitimate company providing these services.  Despite those statements, 
Contesse caused SQM to continue making improper payments to the PEP’s spouse.  
 
20. In another instance, SQM had been making improper monthly payments for five 
years to the son of a Chilean political party official.  Contesse told the head of Internal Audit that 
the contract with PEP’s son had been completed, so no further payments would occur.  The head of 
Internal Audit subsequently discovered that the payments to PEP’s son were ongoing and 
instructed SQM’s treasury department to cease payments to him.  Those payments ceased, but 
almost immediately thereafter Contesse redirected the PEP payments to the PEP’s aide.  
 
F. Contesse Signed Management Representation Letters to SQM’s Auditor That 
Contained False Information 
 

 
 6 
21. In connection with audits performed by SQM’s auditor during the relevant period, 
SQM submitted letters that contained representations by management related to the audits 
(Management Representation Letters).  As CEO, Contesse was a signatory on SQM’s 
Management Representation Letters. 
 
22. For audits of fiscal years 2012 and 2013,  Contesse signed Management 
Representation Letters, dated April 22, 2013 and April 28, 2014, respectively, that contained 
representations to SQM’s auditor which, in light of the improper PEP transactions, made certain 
of those representations by Contesse misleading. 
 
23. For example, the Management Representation Letters submitted to SQM’s auditor 
for fiscal years 2012 and 2013 state, among other things: 
 
a. That SQM management had: 
i. maintained effective internal control over financial reporting;  
ii. disclosed to the auditor all deficiencies in the design or operation over 
financial reporting;  
iii. not identified any deficiencies they believed constituted significant 
deficiencies or material weaknesses in internal control over financial 
reporting; and 
 
b. There had been no violations or possible violations of laws or regulations whose 
effects should be considered for disclosure in the consolidated financial 
statements or as a basis for recording a loss contingency. 
 
G. Contesse Signed False Certifications 
 
24. Rule 13a-14 promulgated under the Exchange Act requires that the chief 
executive officer provide a certification which is included in the filing of Form 20-F for foreign 
private issuers.  Through that certification, Contesse was required to make, among others, the 
following representations: 
 
a. Contesse had designed, or caused to be designed SQM’s internal controls over 
financial reporting to provide reasonable assurance of the reliability of SQM’s 
financial reporting and the preparation of its financial statements in accordance with 
generally accepted accounting principles;  and 
 
b. Contesse had disclosed to SQM’s auditor all significant deficiencies in the design 
or operation of SQM’s internal control over financial reporting which were 
reasonably likely to adversely affect SQM’s ability to record, process, summarize, 
and report financial information.   
 
25. Contesse signed the certifications related to SQM’s internal control over financial 
reporting during the relevant years of his tenure as CEO.  For SQM’s fiscal years 2012 and 2013, 

 
 7 
Contesse signed certifications included as exhibits to SQM’s Forms 20-F filed with the 
Commission in April 2013 and 2014.   
 
26. Contesse’s certifications referenced above were false. 
 
H. Contesse Omitted to Disclose the Improper Payments to SQM’s Auditor 
27.  SQM included audited financial statements in its Forms 20-F filed with the 
Commission during the relevant period.   
  
28. With respect to the audits of those financial statements, SQM provided copies of 
Contesse’s certification to SQM’s auditor. 
 
29. Contesse knew, or should have known, that those certifications would be provided 
to, and relied upon by, SQM’s auditor in connection with their audits of SQM’s financial 
statements and in their evaluation of SQM’s internal accounting controls. 
  
30. In connection with those certifications, Contesse omitted to disclose to SQM’s 
auditor that: 
 
a. He had falsified SQM’s books, records, and accounts by entering, and causing to 
be entered, fictitious transactions to third-party vendors associated with PEPs to 
appear as legitimate business transactions; 
 
b. He had circumvented SQM’s internal accounting controls to effect the improper 
PEP transactions; and 
 
c. That, as a member of SQM’s management with a significant role over SQM’s 
internal control over financial reporting, Contesse had nevertheless caused SQM 
to effect the improper PEP transactions. 
 
Legal Standards and Violations 
 
31. Under Section 21C(a) of the Exchange Act, the Commission may impose a cease-
and-desist order upon any person who is violating, has violated, or is about to violate any 
provision of the Exchange Act or any rule or regulation thereunder, and upon any other person 
that is, was, or would be a cause of the violation, due to an act or omission the person knew or 
should have known would contribute to such violation. 
 
32. Section 13(b)(2)(A) of the Exchange Act requires every issuer with a class of 
securities registered pursuant to Section 12 of the Exchange Act to make and keep books, 
records, and accounts which, in reasonable detail, accurately and fairly reflect the transactions 
and dispositions of the assets of the issuer. 
 

 
 8 
33. Section 13(b)(2)(B) of the Exchange Act requires such issuers to, among other 
things, devise and maintain a system of internal accounting controls sufficient to provide 
reasonable assurances that the transactions are (i) executed in accordance with management’s 
general or specific authorization; (ii) recorded as necessary to permit preparation of financial 
statements in conformity with generally accepted accounting principles (“GAAP”) or any other 
applicable criteria; and (iii) recorded as necessary to maintain accountability for assets. 
 
34. As a result of his conduct described above, Respondent caused SQM to violate 
Sections 13(b)(2)(A) and 13(b)(2)(B) of the Exchange Act. 
 
35. Section 13(b)(5) of the Exchange Act provides that no person shall knowingly 
circumvent or knowingly fail to implement a system of internal accounting controls or 
knowingly falsify any book, record or account of an issuer described in Section 13(b)(2) of the 
Exchange Act.  Exchange Act Rule 13b2-1 prohibits any person from, directly or indirectly, 
falsifying or causing to be falsified any book, record, or account subject to Exchange Act Section 
13(b)(2)(A). 
 
36. Exchange Act Rule 13b2-1 prohibits any person from, directly or indirectly, 
falsifying or causing to be falsified any book record, or account subject to Exchange Act Section 
13(b)(2)(A).   
 
37. By knowingly providing false documents, including fabricated invoices and 
contracts to SQM, and by circumventing SQM’s internal controls over the CEO Account to 
conceal his improper payments to Chilean PEPs, Respondent violated Exchange Act Section 
13(b)(5) and Rule 13b2-1 thereunder.  
 
38. Rule 13b2-2 provides that no officer of an issuer shall directly or indirectly omit 
to state, or cause another to omit to state, any material fact to an accountant in connection with 
any audit or the preparation or filing of any document or report required to be filed with the 
Commission.   
 
39. By signing the false Management Representation Letters and certifications, and 
causing those letters and certifications to be provided to SQM’s accountants in connection with 
their audit of SQM, Respondent violated Exchange Act Rule 13b2-2. 
 
40. Rule 13a-14 sets forth the requirements for certain reports filed under Section 
13(a) of the Exchange Act, including specified certifications by the principal executive officer of 
the issuer. 
 
41. In his certifications submitted with SQM’s Forms 20-F for fiscal years 2012 and 
2013, Respondent falsely stated that he had evaluated the effectiveness of SQM’s internal 
accounting controls and that any material weaknesses in those controls had been disclosed.  By 
signing these false certifications, Respondent violated Exchange Act Rule 13a-14.  
 

 
 9 
 
IV. 
 In view of the foregoing, the Commission deems it appropriate to impose the sanctions 
agreed to in Respondent’s Offer. 
Accordingly, pursuant to Section 21C of the Exchange Act, it is hereby ORDERED that: 
A. Respondent cease and desist from committing or causing any violations and any 
future violations of Sections 13(b)(2)(A), 13(b)(2)(B), and 13(b)(5) of the Exchange Act and Rules 
13b2-1,13b2-2, and 13a-14 thereunder. 
B. Respondent shall, within 14 days of the entry of this Order, pay a civil money 
penalty in the amount of $125,000 to the Securities and Exchange Commission for transfer to the 
general fund of the United States Treasury, subject to Exchange Act Section 21F(g)(3).   If timely 
payment of a civil money penalty is not made, additional interest shall accrue pursuant to 31 
U.S.C. §3717. 
 
Payment must be made in one of the following ways:    
(1) Respondent may transmit payment electronically to the Commission, which will 
provide detailed ACH transfer/Fedwire instructions upon request; 
(2) Respondent may make direct payment from a bank account via Pay.gov through 
the SEC website at http://www.sec.gov/about/offices/ofm.htm; or  
(3) Respondent may pay by certified check, bank cashier’s check, or United States 
postal money order, made payable to the Securities and Exchange Commission 
and hand-delivered or mailed to:  
Enterprise Services Center 
Accounts Receivable Branch 
HQ Bldg., Room 181, AMZ-341 
6500 South MacArthur Boulevard 
Oklahoma City, OK 73169 
 Payments by check or money order must be accompanied by a cover letter identifying 
Patricio Contesse González as a Respondent in these proceedings, and the file number of these 
proceedings; a copy of the cover letter and check or money order must be sent to Daniel J. 
Wadley, Regional Director, Salt Lake City Regional Office, Securities and Exchange Commission, 
351 S. West Temple, Suite 6.100, Salt Lake City, Utah 84101.   
C. Amounts ordered to be paid as civil money penalties pursuant to this Order shall be 
treated as penalties paid to the government for all purposes, including all tax purposes.  To 
preserve the deterrent effect of the civil penalty, Respondent agrees that in any Related Investor 
Action, he shall not argue that he is entitled to, nor shall he benefit by, offset or reduction of any 

 
 10 
award of compensatory damages by the amount of any part of Respondent’s payment of a civil 
penalty in this action (“Penalty Offset”).  If the court in any Related Investor Action grants such a 
Penalty Offset, Respondent agrees that he shall, within 30 days after entry of a final order granting 
the Penalty Offset, notify the Commission’s counsel in this action and pay the amount of the 
Penalty Offset to the Securities and Exchange Commission.  Such a payment shall not be deemed 
an additional civil penalty and shall not be deemed to change the amount of the civil penalty 
imposed in this proceeding.  For purposes of this paragraph, a “Related Investor Action” means a 
private damages action brought against Respondent by or on behalf of one or more investors based 
on substantially the same facts as alleged in the Order instituted by the Commission in this 
proceeding. 
V. 
It is further Ordered that, solely for purposes of exceptions to discharge set forth in 
Section 523 of the Bankruptcy Code, 11 U.S.C. § 523, the findings in this Order are true and 
admitted by Respondent, and further, any debt for civil penalty or other amounts due by 
Respondent under this Order or any other judgment, order, consent order, decree or settlement 
agreement entered in connection with this proceeding, is a debt for the violation by Respondent 
of the federal securities laws or any regulation or order issued under such laws, as set forth in 
Section 523(a)(19) of the Bankruptcy Code, 11 U.S.C. § 523(a)(19). 
 By the Commission. 
 
 
        Brent J. Fields 
        Secretary 
 

UNITED STATES OF AMERICA 

 Before the 

 SECURITIES AND EXCHANGE COMMISSION 

 

SECURITIES EXCHANGE ACT OF 1934 

Release No. 84280 / September 25, 2018 

 

ADMINISTRATIVE PROCEEDING 

File No. 3-18839 

 

 

In the Matter of 

 

PATRICIO CONTESSE 

GONZÁLEZ, 

 

Respondent. 

 

 

ORDER INSTITUTING CEASE-AND-

DESIST PROCEEDINGS, PURSUANT TO 

SECTION 21C OF THE SECURITIES 

EXCHANGE ACT OF 1934, MAKING 

FINDINGS, AND IMPOSING REMEDIAL 

SANCTIONS AND A CEASE-AND-DESIST 

ORDER 

 

 

I. 
 

 The Securities and Exchange Commission (“Commission”) deems it appropriate and in the 

public interest that public cease-and-desist proceedings be, and hereby are, instituted pursuant to 

Section 21C of the Securities Exchange Act of 1934 (“Exchange Act”), against Patricio Contesse 

González (“Contesse” or “Respondent”).   

 

II. 
 

 In anticipation of the institution of these proceedings, Respondent has submitted an Offer 

of Settlement (the “Offer”) which the Commission has determined to accept.  Solely for the 

purpose of these proceedings and any other proceedings brought by or on behalf of the 

Commission, or to which the Commission is a party, and without admitting or denying the findings 

herein, except as to the Commission’s jurisdiction over him and the subject matter of these 

proceedings, which are admitted, and except as provided herein in Section V, Respondent consents 

to the entry of this Order Instituting Cease-and-Desist Proceedings, Pursuant to Section 21C of the 

Securities Exchange Act of 1934, Making Findings, and Imposing Remedial Sanctions and a 

Cease-and-Desist Order (“Order”), as set forth below.   

 

III. 
  



 

 2 

 On the basis of this Order and Respondent’s Offer, the Commission finds1 that: 

  

Summary 
 

1. This matter concerns Respondent’s role in causing his employer, Sociedad Química 

y Minera de Chile, S.A. (“SQM”), to violate the books and records and internal accounting control 

provisions of the Foreign Corrupt Practices Act (“FCPA”), and his circumvention of internal 

accounting controls, falsification of SQM’s books and records, and misleading of SQM’s 

accountants.  While acting as SQM’s CEO, Respondent caused SQM to make approximately US 

$14.75 million in improper payments to Chilean politicians, political candidates, and individuals 

and entities connected to them (collectively, “politically exposed persons” or “PEPs”).  These 

improper payments were made over the course of seven years, from 2008 to 2015.  Respondent 

directed and authorized these improper payments to PEPs, based on contracts, invoices, and other 

false documents.  Most of the improper payments involved falsified documents submitted to SQM 

on behalf of third-party vendors associated with PEPs who posed as legitimate vendors to SQM 

(“third-party vendors”).  Those payments were not supported by documentation that services were 

actually provided to SQM.   

 

2. Respondent caused SQM’s violations of the FCPA.  Respondent personally caused 

fictitious contracts with the third-party vendors to be created, and approved the contracts, invoices 

and other documents, so that the improper payments would be inaccurately recorded as legitimate 

business expenses.  His conduct caused SQM’s books and records to inaccurately record the 

improper PEP payments as legitimate business expenses.  Respondent’s actions also caused 

SQM’s internal accounting controls violations.  As CEO, Respondent was responsible for SQM’s 

internal accounting controls, including controls that related to an account through which the 

improper payments were made (the “CEO Account”).  Those controls were deficient and contained 

material weaknesses.  Respondent circumvented those deficient controls to cause SQM to make the 

improper payments to the Chilean PEPs.   

 

3. By falsifying contracts and invoices and submitting documents Respondent knew to 

be false into SQM’s accounting system, and by failing to inform SQM’s accountants about those 

fictitious transactions, Respondent knowingly circumvented SQM’s internal accounting controls 

and violated rules that prohibit falsifying a public company’s books and records and omitting 

material facts to an accountant in connection with an audit.  

 

4. Respondent signed certifications which were filed with SQM’s Forms 20-F during 

the relevant period.  Respondent’s representations in those certifications were false, as described 

below. 

 

 

 

 

                                                 
1
  The findings herein are made pursuant to Respondent's Offer of Settlement and are not binding on any 

other person or entity in this or any other proceeding.  



 

 3 

Respondent 

 

5. Patricio Contesse González is a Chilean citizen and resident.  He was SQM’s 

Chief Executive Officer from at least 1990 to March 2015. 

 

Other Relevant Entity 

 

6. Sociedad Química y Minera de Chile, S.A., is a multinational mining and 

chemical company headquartered in Santiago, Chile.  SQM’s Series B shares, in the form of 

ADSs, have been listed on the NYSE since 1993 and are registered with the Commission 

pursuant to Section 12(b).  The company files periodic reports with the Commission as a foreign 

private issuer. 

 

Facts 

 

A. Background 

 

7. From at least 2008 to 2015, SQM provided discretionary funding to its office of 

the Chief Executive Officer through a designated account, the CEO Account.  This account was 

intended for, among other things, travel, publicity, and advisory services for the office of the 

Chief Executive Officer.  SQM’s funding of the CEO Account ranged from US $3.3 million in 

2008 to US $5.7 million in 2014.   

 

8. In late 2014 and early 2015, Chilean authorities initiated tax and criminal 

investigations of suspicious payments SQM made to Chilean PEPs.  In response to Chilean 

authorities’ requests for relevant documents, SQM’s board of directors (the “Board”) formed a 

committee to conduct an internal investigation.  On March 16, 2015, the Board terminated 

Contesse’s employment contract. 

  

9. On January 13, 2017, the Commission issued a settled order that SQM cease-and-

desist from violating the books and records and internal control provisions of the FCPA, pay a 

penalty of $15 million, and comply with certain undertakings.  Also, on January 13, 2017, the 

Department of Justice and SQM entered into a three-year deferred prosecution agreement (DPA).  

As part of the DPA, SQM admitted its willful and knowing failure to implement a sufficient 

system of internal accounting controls and to violations of the FCPA’s books and records 

provisions.  SQM agreed to pay a criminal fine of approximately $15 million and certain 

undertakings. 

 

B. Contesse Used the CEO Account to Effect Improper Payments to PEPs 

 

10. From at least 2008 through 2015, Contesse used the CEO Account to make 

payments to Chilean PEPs totaling at least $14.75 million.  These payments were made through 

third-party vendors. 

 



 

 4 

11. Documents supporting the payments included, among other things, fictitious 

contracts and invoices for nonexistent services initiated by Contesse.  For example, utilizing the 

CEO Account, Contesse caused SQM to do the following: 

 

a. SQM paid funds on an invoice for purported “financial services” submitted by a 

relative of a Chilean official.  In fact, that Chilean official’s relative had not 

provided any services to SQM but had submitted the invoice in order to provide 

support for a payment by SQM to a Chilean political campaign. 

 

b. SQM paid several invoices submitted by third-party entities connected to a Chilean 

official for purported “communications advice” from the Chilean official’s chief of 

staff, and for purported “consulting services” by a relative of that Chilean official.  

SQM made these payments without receiving any supporting documentation that 

the “communications advice” or “consulting services” had ever been provided. 

 

c. An advisor to a Chilean official invoiced SQM for providing engineering and 

statistical services.  SQM paid the invoice and booked the payment as having been 

made for such services, when SQM had not received those services from the 

advisor. 

 

d. A relative of a Chilean official submitted a false contract to SQM for consulting 

services in “areas of fertilizing tests” and received payments from SQM without 

SQM receiving any supporting documentation that those services had been 

provided. 

 

12. Several Chilean officials sought payments from Contesse for not-for-profit 

foundations operated by relatives or with which the Chilean officials were otherwise associated.  

Contesse made these payments without regard to whether they were in accordance with SQM’s 

policies. 

 

C. As CEO, Contesse Was Responsible for SQM’s Internal Accounting Controls and 

Circumvented Them to Make PEP Payments 

 

13. Contesse was the CEO of SQM since before it became a public company in 1993 

and was responsible for the development of SQM’s internal accounting controls at all relevant 

times.  Contesse was also ultimately responsible for SQM’s anti-corruption policies and 

procedures.  During SQM’s development of the anti-corruption policies and procedures, Contesse 

was regularly briefed and was personally trained on their implementation and use by SQM’s then 

head of Internal Audit.   

 

14. In addition, Contesse served on SQM’s ethics committee and authored the cover 

letter to SQM’s Code of Ethics.  The Code of Ethics specifically proscribed improper payments to 

government officials.  As CEO of SQM and a member of its ethics committee, Contesse was 



 

 5 

responsible for ensuring that SQM’s internal accounting controls related to the proscription of 

improper PEP payments were effective. 

 

15. As part of management’s preparations for SQM’s annual Form 20-F filings, the 

company’s senior and executive officers met on a regular basis throughout the year to assess the 

effectiveness of the internal accounting controls.  As CEO, Contesse was involved in establishing 

and assessing these controls. 

 

16. In connection with the improper payments, Contesse circumvented SQM’s internal 

accounting controls.  Contesse used the CEO Account to effect the transactions. 

 

D. Contesse Caused SQM to Make Improper Payments and Falsely Record Them 

 

17. Contesse knew how SQM initiated, documented, authorized, and effected corporate 

transactions.  He also understood the company’s restrictive policies related to PEP transactions, 

both in his role as CEO and as a member of SQM’s ethics committee.  Nevertheless, he caused 

SQM to make the PEP transactions at issue in this case and, in most instances, instructed others to 

draft the inaccurate documents needed to support and effect the PEP payments.  

 

E. Contesse Failed to Disclose the Improper Payments to SQM’s Internal Audit 

Department 

 

18. Pursuant to SQM’s anti-corruption policies and procedures, SQM’s Internal Audit 

department was to conduct regular audits of certain transactions.  Upon discovery that certain high-

risk transactions identified in an internal audit were initiated by Contesse, the head of Internal 

Audit reviewed the high-risk transactions with Contesse.  Contesse failed to inform the head of 

Internal Audit that the transactions were improper.   

 

19. In one instance, Contesse had directed suspicious payments to the spouse of a PEP 

for “communications consulting.” When questioned about that transaction, Contesse told the head 

of Internal Audit the payments to the spouse were proper but would cease and that SQM would 

direct payments to a legitimate company providing these services.  Despite those statements, 

Contesse caused SQM to continue making improper payments to the PEP’s spouse.  

 

20. In another instance, SQM had been making improper monthly payments for five 

years to the son of a Chilean political party official.  Contesse told the head of Internal Audit that 

the contract with PEP’s son had been completed, so no further payments would occur.  The head of 

Internal Audit subsequently discovered that the payments to PEP’s son were ongoing and 

instructed SQM’s treasury department to cease payments to him.  Those payments ceased, but 

almost immediately thereafter Contesse redirected the PEP payments to the PEP’s aide.  

 

F. Contesse Signed Management Representation Letters to SQM’s Auditor That 

Contained False Information 

 



 

 6 

21. In connection with audits performed by SQM’s auditor during the relevant period, 

SQM submitted letters that contained representations by management related to the audits 

(Management Representation Letters).  As CEO, Contesse was a signatory on SQM’s 

Management Representation Letters. 

 

22. For audits of fiscal years 2012 and 2013,  Contesse signed Management 

Representation Letters, dated April 22, 2013 and April 28, 2014, respectively, that contained 

representations to SQM’s auditor which, in light of the improper PEP transactions, made certain 

of those representations by Contesse misleading. 

 

23. For example, the Management Representation Letters submitted to SQM’s auditor 

for fiscal years 2012 and 2013 state, among other things: 

 

a. That SQM management had: 

i. maintained effective internal control over financial reporting;  

ii. disclosed to the auditor all deficiencies in the design or operation over 

financial reporting;  

iii. not identified any deficiencies they believed constituted significant 

deficiencies or material weaknesses in internal control over financial 

reporting; and 

 

b. There had been no violations or possible violations of laws or regulations whose 

effects should be considered for disclosure in the consolidated financial 

statements or as a basis for recording a loss contingency. 

 

G. Contesse Signed False Certifications 

 

24. Rule 13a-14 promulgated under the Exchange Act requires that the chief 

executive officer provide a certification which is included in the filing of Form 20-F for foreign 

private issuers.  Through that certification, Contesse was required to make, among others, the 

following representations: 

 

a. Contesse had designed, or caused to be designed SQM’s internal controls over 

financial reporting to provide reasonable assurance of the reliability of SQM’s 

financial reporting and the preparation of its financial statements in accordance with 

generally accepted accounting principles;  and 

 

b. Contesse had disclosed to SQM’s auditor all significant deficiencies in the design 

or operation of SQM’s internal control over financial reporting which were 

reasonably likely to adversely affect SQM’s ability to record, process, summarize, 

and report financial information.   

 

25. Contesse signed the certifications related to SQM’s internal control over financial 

reporting during the relevant years of his tenure as CEO.  For SQM’s fiscal years 2012 and 2013, 



 

 7 

Contesse signed certifications included as exhibits to SQM’s Forms 20-F filed with the 

Commission in April 2013 and 2014.   

 

26. Contesse’s certifications referenced above were false. 

 

H. Contesse Omitted to Disclose the Improper Payments to SQM’s Auditor 

27.  SQM included audited financial statements in its Forms 20-F filed with the 

Commission during the relevant period.   

  

28. With respect to the audits of those financial statements, SQM provided copies of 

Contesse’s certification to SQM’s auditor. 

 

29. Contesse knew, or should have known, that those certifications would be provided 

to, and relied upon by, SQM’s auditor in connection with their audits of SQM’s financial 

statements and in their evaluation of SQM’s internal accounting controls. 

  

30. In connection with those certifications, Contesse omitted to disclose to SQM’s 

auditor that: 

 

a. He had falsified SQM’s books, records, and accounts by entering, and causing to 

be entered, fictitious transactions to third-party vendors associated with PEPs to 

appear as legitimate business transactions; 

 

b. He had circumvented SQM’s internal accounting controls to effect the improper 

PEP transactions; and 

 

c. That, as a member of SQM’s management with a significant role over SQM’s 

internal control over financial reporting, Contesse had nevertheless caused SQM 

to effect the improper PEP transactions. 

 

Legal Standards and Violations 

 

31. Under Section 21C(a) of the Exchange Act, the Commission may impose a cease-

and-desist order upon any person who is violating, has violated, or is about to violate any 

provision of the Exchange Act or any rule or regulation thereunder, and upon any other person 

that is, was, or would be a cause of the violation, due to an act or omission the person knew or 

should have known would contribute to such violation. 

 

32. Section 13(b)(2)(A) of the Exchange Act requires every issuer with a class of 

securities registered pursuant to Section 12 of the Exchange Act to make and keep books, 

records, and accounts which, in reasonable detail, accurately and fairly reflect the transactions 

and dispositions of the assets of the issuer. 

 



 

 8 

33. Section 13(b)(2)(B) of the Exchange Act requires such issuers to, among other 

things, devise and maintain a system of internal accounting controls sufficient to provide 

reasonable assurances that the transactions are (i) executed in accordance with management’s 

general or specific authorization; (ii) recorded as necessary to permit preparation of financial 

statements in conformity with generally accepted accounting principles (“GAAP”) or any other 

applicable criteria; and (iii) recorded as necessary to maintain accountability for assets. 

 

34. As a result of his conduct described above, Respondent caused SQM to violate 

Sections 13(b)(2)(A) and 13(b)(2)(B) of the Exchange Act. 

 

35. Section 13(b)(5) of the Exchange Act provides that no person shall knowingly 

circumvent or knowingly fail to implement a system of internal accounting controls or 

knowingly falsify any book, record or account of an issuer described in Section 13(b)(2) of the 

Exchange Act.  Exchange Act Rule 13b2-1 prohibits any person from, directly or indirectly, 

falsifying or causing to be falsified any book, record, or account subject to Exchange Act Section 

13(b)(2)(A). 

 

36. Exchange Act Rule 13b2-1 prohibits any person from, directly or indirectly, 

falsifying or causing to be falsified any book record, or account subject to Exchange Act Section 

13(b)(2)(A).   

 

37. By knowingly providing false documents, including fabricated invoices and 

contracts to SQM, and by circumventing SQM’s internal controls over the CEO Account to 

conceal his improper payments to Chilean PEPs, Respondent violated Exchange Act Section 

13(b)(5) and Rule 13b2-1 thereunder.  

 

38. Rule 13b2-2 provides that no officer of an issuer shall directly or indirectly omit 

to state, or cause another to omit to state, any material fact to an accountant in connection with 

any audit or the preparation or filing of any document or report required to be filed with the 

Commission.   

 

39. By signing the false Management Representation Letters and certifications, and 

causing those letters and certifications to be provided to SQM’s accountants in connection with 

their audit of SQM, Respondent violated Exchange Act Rule 13b2-2. 

 

40. Rule 13a-14 sets forth the requirements for certain reports filed under Section 

13(a) of the Exchange Act, including specified certifications by the principal executive officer of 

the issuer. 

 

41. In his certifications submitted with SQM’s Forms 20-F for fiscal years 2012 and 

2013, Respondent falsely stated that he had evaluated the effectiveness of SQM’s internal 

accounting controls and that any material weaknesses in those controls had been disclosed.  By 

signing these false certifications, Respondent violated Exchange Act Rule 13a-14.  

 



 

 9 

 

IV. 

 In view of the foregoing, the Commission deems it appropriate to impose the sanctions 

agreed to in Respondent’s Offer. 

Accordingly, pursuant to Section 21C of the Exchange Act, it is hereby ORDERED that: 

A. Respondent cease and desist from committing or causing any violations and any 

future violations of Sections 13(b)(2)(A), 13(b)(2)(B), and 13(b)(5) of the Exchange Act and Rules 

13b2-1,13b2-2, and 13a-14 thereunder. 

B. Respondent shall, within 14 days of the entry of this Order, pay a civil money 

penalty in the amount of $125,000 to the Securities and Exchange Commission for transfer to the 

general fund of the United States Treasury, subject to Exchange Act Section 21F(g)(3).   If timely 

payment of a civil money penalty is not made, additional interest shall accrue pursuant to 31 

U.S.C. §3717. 

 

Payment must be made in one of the following ways:    

(1) Respondent may transmit payment electronically to the Commission, which will 

provide detailed ACH transfer/Fedwire instructions upon request; 

(2) Respondent may make direct payment from a bank account via Pay.gov through 

the SEC website at http://www.sec.gov/about/offices/ofm.htm; or  

(3) Respondent may pay by certified check, bank cashier’s check, or United States 

postal money order, made payable to the Securities and Exchange Commission 

and hand-delivered or mailed to:  

Enterprise Services Center 

Accounts Receivable Branch 

HQ Bldg., Room 181, AMZ-341 

6500 South MacArthur Boulevard 

Oklahoma City, OK 73169 

 Payments by check or money order must be accompanied by a cover letter identifying 

Patricio Contesse González as a Respondent in these proceedings, and the file number of these 

proceedings; a copy of the cover letter and check or money order must be sent to Daniel J. 

Wadley, Regional Director, Salt Lake City Regional Office, Securities and Exchange Commission, 

351 S. West Temple, Suite 6.100, Salt Lake City, Utah 84101.   

C. Amounts ordered to be paid as civil money penalties pursuant to this Order shall be 

treated as penalties paid to the government for all purposes, including all tax purposes.  To 

preserve the deterrent effect of the civil penalty, Respondent agrees that in any Related Investor 

Action, he shall not argue that he is entitled to, nor shall he benefit by, offset or reduction of any 



 

 10 

award of compensatory damages by the amount of any part of Respondent’s payment of a civil 

penalty in this action (“Penalty Offset”).  If the court in any Related Investor Action grants such a 

Penalty Offset, Respondent agrees that he shall, within 30 days after entry of a final order granting 

the Penalty Offset, notify the Commission’s counsel in this action and pay the amount of the 

Penalty Offset to the Securities and Exchange Commission.  Such a payment shall not be deemed 

an additional civil penalty and shall not be deemed to change the amount of the civil penalty 

imposed in this proceeding.  For purposes of this paragraph, a “Related Investor Action” means a 

private damages action brought against Respondent by or on behalf of one or more investors based 

on substantially the same facts as alleged in the Order instituted by the Commission in this 

proceeding. 

V. 

It is further Ordered that, solely for purposes of exceptions to discharge set forth in 

Section 523 of the Bankruptcy Code, 11 U.S.C. § 523, the findings in this Order are true and 

admitted by Respondent, and further, any debt for civil penalty or other amounts due by 

Respondent under this Order or any other judgment, order, consent order, decree or settlement 

agreement entered in connection with this proceeding, is a debt for the violation by Respondent 

of the federal securities laws or any regulation or order issued under such laws, as set forth in 

Section 523(a)(19) of the Bankruptcy Code, 11 U.S.C. § 523(a)(19). 

 By the Commission. 

 

 

        Brent J. Fields 

        Secretary