UPDATE 3-SQM stock plummets after directors from Potash Corp resign

Wed Mar 18, 2015 1:53pm EDT
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(Recasts, adds comments from Potash Corp, updates shares)

By Rosalba O'Brien and Rod Nickel

SANTIAGO/WINNIPEG, March 18 (Reuters) - Shares in Chilean fertilizer group SQM plunged on Wednesday after three board representatives from Canada's Potash Corp resigned in protest at its handling of an illicit payments scandal that has shaken the Chilean establishment.

SQM Vice Chairman Wayne Brownlee, who is also chief financial officer of Potash Corp, and two directors stepped down late on Tuesday after clashing with the rest of the board over whether and how far it should collaborate with a probe by Chilean authorities.

A quarter of the value of the $6 billion company was wiped out as investors feared what would come next for SQM, which has rights to huge nitrate and lithium reserves in Chile.

The development is the latest twist in a campaign financing saga that has dominated headlines in recent weeks in Chile, traditionally seen as having less corruption than other Latin American countries.

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

SQM's chairman and controller is Julio Ponce, Pinochet's former son in law, who built his stake after the dictator began selling assets in the 1980s.

Potash Corp , the world's largest fertilizer company by market value, owns an approximate 32 percent stake in the dual share structure of SQM , although it has flagged that it may not keep that indefinitely.   Continued...