Codelco’s Double Counting Scandal Exposes Pacheco’s Tenure and Imperils Chile’s State Copper Firm

Original article: Codelco: el doble conteo que desnuda la era Pacheco y ensucia el nombre de la estatal del cobre

Two simultaneous audits, an ongoing criminal investigation, and a pressing question: how were production figures inflated at the world’s largest copper mining company during the period when Máximo Pacheco chaired its board? The Codelco case of double counting that uncovers the Pacheco era and tarnishes the reputation of the state-owned copper company lies at the heart of this controversy.

By The El Ciudadano Investigative Team

SANTIAGO — Codelco, the world’s largest copper producer, is facing one of the most critical moments in its recent history. Two independent external audits are proceeding concurrently, a criminal investigation is underway by the Public Ministry, and Congress has activated its oversight mechanisms. The storm centers around a finding communicated by the company on October 6: the same material was recorded as production by more than one division during 2024 and 2025, specifically during the years when Máximo Pacheco led the board of the Chilean state-owned company.

This issue is not an isolated accounting error. It marks the second time in fewer than six months that Codelco has acknowledged inflating its production figures. The first incident erupted in May when an internal audit revealed the company had overstated its 2025 production by 26,875 metric tons of fine copper. The second confirmation this week points to duplications in inter-divisional inventories between Salvador and Ministro Hales that purportedly generated an «artificial increase» in the reported production during the Pacheco period.

The Double Counting Mechanism

The logic behind the fraud—or the error, depending on the final interpretation—is deceptively simple. One division records the material dispatched for processing as its own production. Another division receives that same material, processes it, and also counts the resulting product as its own. The same copper, reported twice.

The Ministro Hales and Salvador divisions are at the center of the review. Company sources indicated to Ex-Ante that the inflated figures «would not be far off from the 27,000 tons» of the first scandal, although they would be lower in magnitude. The board has commissioned EY to conduct a specialized external audit to determine the nature and extent of the duplications, identify responsibilities, and assess economic impacts, including the calculation and payment of variable incentives. Concurrently, KPMG continues to review the entirety of the production for 2024 and 2025.

The Shadow of Pacheco

The two scandals share a common denominator: they both occurred during the presidency of Máximo Pacheco Matte, the economist and former Minister of Energy under Michelle Bachelet, who joined Codelco in March 2022 with the mandate to reverse the company’s production decline. His tenure formally ended on May 25, 2026, amid heightened tension with the government of José Antonio Kast.

The internal audit that uncovered the first overstatement identified violations of internal standards, improper use of exceptions, and flaws in approval processes. The board terminated César Márquez, the former Budget and Management Control Manager, and penalized six other executives. The overstatement triggered the payment of US$14.3 million in bonuses to approximately 6,300 workers and executives from Chuquicamata, Ministro Hales, and the headquarters. The administration ordered a recalculation of the incentives, leading to an upsurge in union backlash. «We owe no debt to anyone,» the Union No. 3 of Chuquicamata declared.

Pacheco stated that the complaint that triggered the first audit reached his inbox in February 2026, which he promptly forwarded to the internal auditor and the Audit, Compensation, and Ethics Committee. The lingering question surrounding his legacy is: if the complaint arrived in February 2026, what controls failed in the preceding two years?

The Regional Prosecutor of O’Higgins, Aquiles Cubillos, confirmed in May that he does not rule out summoning Pacheco to testify and revealed that the former president’s lawyer has already contacted the prosecutor’s office to arrange for his statement. The crimes under investigation include forgery of public documents, fraud against the treasury, possible embezzlement of public funds, and mismanagement. Cubillos also denied that Pacheco’s distance from his position excuses him from criminal responsibility.

The Government Tightens Its Grip

The Kast government has turned this case into a political banner. The Minister of Economy and Mining, Daniel Mas, strongly supported the new board’s decision to conduct external audits and inform the Public Ministry. “Complete transparency; zero tolerance for irregularities,” he wrote on social media. “Let whoever may fall do so; the heritage of all Chileans must be respected.”

An internal memo from La Moneda released in May went even further. The document stated that “Codelco does not belong to a board, does not belong to a manager, does not belong to a government; Codelco belongs to Chile. The company needed leadership, control, and transparency, what we found was disorder, opacity, and management that did not measure up.” This official diagnosis politically ended Pacheco’s term at Codelco.

Pacheco has not remained silent. After leaving his position, he also resigned from the board of NovaAndino Litio, the joint venture between Codelco and SQM to exploit lithium from the Salar de Atacama. He accused an “offensive” driven by “certain sectors” with “purely partisan” motivations. “I do not wish to motivate an odious controversy,» he wrote in his resignation letter. «The country should always come first, but I see that not everyone understands this”.

The Financial Backdrop

The accounting scandal comes at the most precarious time for Codelco’s finances. The company has a gross financial debt exceeding US$20 billion, one of the highest in the global mining industry. Its production of 1,307,570 metric tons in 2025 was the lowest in nearly three decades, 19% below the totals recorded in 2021.

The Kast government responded with an unprecedented measure: allowing Codelco to retain 100% of its 2025 earnings—about US$2.42 billion—for the first time since its founding in 1976, to ease its financial crisis and prevent further debt accumulation. The new chairman of the board, Bernardo Fontaine, has pledged to prioritize profitability over production volume, arguing that his predecessors were “unrealistic” in pursuing the goal of 1.7 million tons annually within five years.

What Lies Ahead

Codelco now faces a critical test. The audits from KPMG and EY will determine the actual magnitude of the duplicities and whether there was intent or negligence at the top echelons of the company during Pacheco’s years. The Public Ministry is advancing in parallel, Congress has activated its oversight mechanisms, and unions, which already reject returning bonuses tied to inflated targets, may harden their stance.

In the context of exceptionally high copper prices and growing global demand for the red metal for energy transition, the question is not only how much copper was accounted for incorrectly. The question is whether Codelco—and by extension, the Chilean state—can demonstrate that it can control, audit, and report rigorously on the production of its primary asset. At stake is not only an accounting adjustment: it is the reputation of the company that has been the cornerstone of the Chilean economy for decades.

Máximo Pacheco left Codelco on May 25. The Prosecutor’s Office stated that it “eventually will” summon him for questioning. Only the date remains.

By The El Ciudadano Investigative Team