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SANTIAGO, March 27 (Reuters) - The largest U.S.-based shareholder of SQM has demanded an overhaul of the board and resignation of its chairman "to restore credibility" to the Chilean fertilizer company.
SailingStone Capital Partners, which holds almost 15 percent of SQM's Nasdaq-listed American Depositary Receipts, told directors in a letter on Thursday that they were not fulfilling their fiduciary obligations. The letter was filed with the U.S. Securities and Exchange Commission.
Authorities in Chile are investigating whether money from SQM and other companies was siphoned to fund political campaigns, principally for UDI, a right-wing party with links to the 1973-1990 Augusto Pinochet dictatorship.
SQM said this week that it had identified about $11 million in questionable payments from the office of former Chief Executive Officer Patricio Contesse, whom it fired earlier this month.
The scandal has hit SQM shares hard and raised questions from investors over the company's corporate governance standards. Three directors appointed by Canadian shareholder Potash Corp have resigned.
SQM, which has rights to some of the world's biggest nitrates and lithium reserves in the Chilean desert, could not immediately be reached for comment.
"To restore credibility in SQM, we urge the directors to work with all shareholders to create a proposal to restructure the board and resolve the outstanding corporate governance issues," SailingStone said in its letter.
It demanded the resignation of Contesse's son, who is also called Patricio Contesse, citing the board member's "obvious conflicts of interest."
It also said Chairman and controller Julio Ponce, who was fined in a separate insider trading scandal last year, should go.
"It is inappropriate for any director who has been found guilty of insider trading to sit on a board of a publicly traded company," SailingStone said.
Ponce built up his stake in the company when assets were sold in the 1980s during the dictatorship of Pinochet, who was his father-in-law. (Reporting by Rosalba O'Brien; Editing by Lisa Von Ahn)