Pinochet’s former son-in-law to exit SQM shareholder group

Julio Ponce, the former son-in-law of Chile’s late dictator Augusto Pinochet, announced his departure from the holding companies through which his family owns a major stake in lithium miner SQM.

Under a proposed simplification of the SQM ownership structure, the number of holding companies will be reduced to two from six, according to a regulatory filing Thursday. In a separate emailed statement, Ponce “bequeathed” control of the shareholder group to his daughter Francisca.

The withdrawal of the controversial 79-year-old entrepreneur comes at a key moment for SQM. The world’s No. 2 lithium supplier has agreed to partner Chile’s state copper giant Codelco in its prized Atacama brine operations in a bid to extend operations beyond a 2030 contract expiry. That tie-up is facing opposition from some Chilean politicians and major SQM shareholder, Tianqi Lithium Corp., and still requires approval from Chinese antitrust regulators.

Ponce was part of a management buy-out of the state-owned SQM in the 1980s, when Pinochet was in power, becoming chairman in 1987. Francisca is the third of four children born to Ponce and Veronica Pinochet, daughter of Augusto, before their marriage was annulled.

In a storied career leading the company, he fended off a 2006 takeover attempt by PotashCorp. by signing a pact with Japanese trading firm Kowa. He resigned as chairman in 2015 amid a probe over illicit political campaign financing, which led to a $30 million settlement with the US Securities and Exchange Commission and a fine for SQM’s then-CEO. Ponce himself was not charged. He also fought allegations of market manipulation in courts, and successfully reduced a record $70 million fine.

“The story of this endeavor, and my own, has been inundated with myths, criticisms and controversies that have ultimately yielded to the evidence of the facts, the results and the magnitude of what has been achieved,” Ponce wrote Thursday. “That is why now — at the time, place and manner that I have so decided — I also want to announce that I will no longer be a protagonist in this story.”

In a reorganization proposal outlined by Ponce’s Norte Grande SA, a series of corporate actions will see just two holding companies emerge: Soc. de Inversiones Oro Blanco and Potasios de Chile.

SQM shares were up 0.5% at 4:03 p.m. in Santiago. Norte Grande climbed as much as 20%, the steepest intraday gain since late 2015.

(By James Attwood)