Wednesday, July 26, 2006

New York Observer: Lou Dobbs Praises Maloney on Smartmatic - Sequoia Venezuela Warning

Dobbs Likes Maloney
Grumpy Lou Dobbs dislikes plenty of people, but apparently Carolyn Maloney isn't one of them. A Maloney aide brought to our attention the following exchange on Dobbs' CNN program Tuesday night about the use of Venezuelan-produced Smartmatic voting machines in American elections. (Maloney has urged caution about the machines and pressed the issue in Congress.)
Lou Dobbs: ...I think we have to give just extraordinary credit to Congresswoman Carolyn Maloney. She focused on this issue, she brought it to the attention of the public, and our hats are off to her. She's just doing a wonderful job here.
Kitty Pilgrim: She's been very vigilant, and until this came to light publicly, there was really no -- absolutely no acknowledgment that there was a problem with this.
Lou Dobbs: It is nice to see our elected officials, when it does... rarely happen, doing their job, and again, our compliments and commendation to Congresswoman Maloney.
--Jason Horowitz

Sunday, July 23, 2006

Financial Times: Smartmatic-Sequoia Venezuela Deal Stirs CFIUS Interest

Venezuela deal in US stirs Cfius interest
By Stephanie Kirchgaessner in New York
Financial Times
The takeover last year of a California-based voting machine company by a group with ties to Venezuela has caught the attention of the Treasury-chaired com­mittee that investigates deals on national security grounds.
The revelation that the committee on foreign investment, or Cfius, has shown interest in the deal – and could initiate a retroactive review – underscores how dramatically the vetting process for foreign takeovers has changed following the furore earlier this year over the approval by the Bush administration of the sale of five US port terminals to a Dubai-controlled company.
The Treasury Department said it had made contact with Smartmatic, a private Delaware-incorporated subsidiary of a Dutch company that is controlled by Antonio Mugica, a Venezuelan citizen, but declined to comment on whether Cfius was reviewing the deal.
In the years before the Dubai controversy put Cfius at the centre of a political storm, the panel, comprising 12 government agencies, generally reviewed transactions involving sensitive defence technology. But the uproar over the approval of the Dubai deal, which ultimately scuppered it, has prompted the administration to take a tougher approach, in part because it is fighting off attempts in Congress to give lawmakers more oversight of Cfius.
The Treasury said it had taken steps to get Congress more involved, including notifying congressional committees once investigations of deals are closed, giving the director of national intelligence a greater role, and by giving only "Senate-confirmed officials" the ability to sign off on Cfius cases.
"There have been a number of changes in Cfius. It is a much more difficult regulatory environment than it was six months ago," says David Marchick, an attorney with Covington Burling who handles Cfius cases.
Todd Malan, who heads the Organisation for International Investment, which represents US subsidiaries of foreign companies, said of the Smartmatic takeover of Sequoia, the California-based company, that he could not recall another instance when Cfius had contacted a company after a transaction was complete but that it was sign of a more flexible approach to defining "national security".
"To me, all this adds up to the fact that elected policy- makers should have confidence that things are happening outside the legislative context," Mr Malan said.
The Treasury declined to say what spurred its interest in the Smartmatic deal but it was the subject of a letter to John Snow, then Treasury secretary, last May from New York congresswoman Carolyn Maloney, who has backed a House proposal to tweak the Cfius process.
Smartmatic said there was "absolutely no ownership" by the Venezuelan government and that the deal had no "military, defence or nat­­ional security applications".
Copyright The Financial Times Ltd. All rights reserved.


Sunday, July 16, 2006

VoteTrustUSA: Federal Committee To Investigate Sequoia-Smartmatic Ownership

By Warren Stewart, VoteTrustUSA
July 16, 2006
Responding to a request from Rep. Carolyn Maloney (D-NY, pictured at right), the Committee on Foreign Investments in the United States (CFIUS) has opened an investigation into whether the foreign ownership of Sequoia Voting Systems compromises national security. Smartmatic, whose majority owners once had links to the Venzuelan government, acquired Sequoia last year. Earlier this year CFIUS, a 12-agency panel chaired by the Treasury Department, approved a bid by a Dubai company to buy several U.S. port operations, a deal that was subsequently terminated after questions were raised in Congress and in the media.The ranking member of the subcommittee on Domestic and International Monetary Policy, Trade and Technology, which has jurisdiction over CFIUS, Maloney sent a letter on May 4, stating that she wanted to ensure the Smartmatic deal had received federal scrutiny. Maloney was quoted in a recent syndicated article "as you can imagine, having a foreign government investing in or owning a company that supplies voting machines for U.S. elections could raise concerns over the integrity of elections conducted with those machines."In a press release that accompanied her letter to CFIUS Maloney wrote:
Smartmatic was first the subject of controversy in 2004 when the Hugo Chavez-led Venezuelan government selected it to provide the voting machines system for the presidential recall election, even though it would be the company’s first time providing machines for an election. Smartmatic teamed up with a Venezuelan software company, Bitza, which at the time was 28% owned by Chavez’s government. More recently, a Chicago city alderman questioned the possible ties between Sequoia and the Venezuelan government when that company’s machines were used in the March 2006 Chicago primaries.According to the article cited above, Brookly McLaughlin, a CFIUS spokeswoman, said she could not comment on whether the committee cleared the purchase. McLaughlin also declined to confirm or deny whether the committee is investigating Smartmatic's purchase of Sequoia. She said she could only say that CFIUS "has been in contact" with Smartmatic.

Critics chip away at Sequoia's roots: Fears arise because e-voting machine maker's owners are Venezuelan

Inside Bay Area:

Article Last Updated: 6/18/2006 02:51 AM

By Ian Hoffman, STAFF WRITERInside Bay Area
For three years, the nation's two largest suppliers of voting machinery have driven feverishly for sales and shown the symptoms of overextension — missed deliveries, faulty equipment and breach-of-contract lawsuits.
Until recently, the supplier running a close third, Sequoia Voting Systems, kept a lower profile than competitors Diebold and Election Systems & Software while quietly snapping up sales of voting systems on both coasts, all of Nevada and Louisiana, and Chicago and Cook County, Ill.
With a $13.3 million contract signed Friday by Alameda County, Oakland-based Sequoia arguably became the dominant voting-system maker in California, having signed up more counties than any other company.
But a controversy regarding Sequoia's foreign ownership could upset its quiet, sell-what-you-can service strategy.
Politicians in the Windy City and CNN newsman Lou Dobbs suggested recently that the federal government was derelict in not having investigated Sequoia and its acquisition last year by Smartmatic, a Boca Raton, Fla., firm largely owned by Venezuelan businessmen.
After Chicago and Cook County were plagued with delays this spring in tallying votes for a primary, city alderman Edward Burke suggested Sequoia's voting machines were part of a conspiracy by Venezuelan President Hugo Chavez to manipulate U.S. elections.
"We may have stumbled across what could be (an) international conspiracy to subvert the electoral process in the United States of America," Burke told reporters.
"Tell me a single, solitary reason there is to trace ownership through three shell corporations to the Curacao Islands and its roots to Venezuela, where they have already been involved with the dictator of Venezuela, who Defense Secretary (Donald) Rumsfeld says is an enemy of the United States."
Soon after, editorial writers at Investors Business Daily warned that "we might just get ambushed ... if the Venezuelan government ends up controlling our elections."
In late May, the U.S. Treasury Department requested Sequoia and Smartmatic documents on the transaction, as a potential preliminary to review by the Committee on Foreign Investment in the United States, a process typically reserved for defense firms.
A few days later, CNN's Dobbs opened fire on electronic voting and Sequoia in particular as "an outright threat to our democracy."
Next to a television logo reading "Democracy for Sale," Dobbs said, "We know what we're dealing with, and it is a dysfunctional government that is trying to render our elections precisely the same."
The indignation has taken Sequoia executives by surprise, partly because the company has been foreign-owned for 24 years. The firm's roots go back to 1890.
In the early 1980s, Sequoia was sold to the Irish printing conglomerate Jefferson Smurfit, which sold it to De La Rue, a British banking technology and currency printing house.
Sequoia lost money in 2004, and De La Rue sold it to Smartmatic Co. of Boca Raton for $16 million in cash. Smartmatic in turn is owned by holding companies based in the Netherlands and in Curacao. The lead investors are four founders, led by Antonio Mugica and his father, who have Spanish and Venezuelan citizenship.
Smartmatic was a virtual unknown until 2004, when as part of a consortium it won a $91 million contract to supply voting machines for the recall referendum against Venezuelan President Hugo Chavez. Another firm in the consortium, Bizta, had some of the same investors and had obtained a loan from the Venezuelan government secured by a 28 percent equity stake.
News of the Venezuelan government's stake in Bizta sparked protest, and according to Smartmatic officials, Bizta paid off the loan before the election.
Smartmatic purchased Sequoia a year later, and executives of both companies say neither has ties to the Venezuelan government.
Sequoia executives say the purchase by Smartmatic, another voting company, has been a good fit and brought fresh development money that Sequoia rarely saw under De La Rue.
"It is a wonderful and healthy partnership, and I couldn't be happier," said Howard Cramer, Sequoia's vice president of sales.
The firm employs 150; slightly more than half are in Oakland.
Elections officials in the Chicago area say most of their problems in the March primary sprang from shifting to a new voting system of three electronic components, after decades of voting on punchcards.
Harvard "Larry" Lomax, registrar of voters in Clark County, Nev., has been using Sequoia equipment since 1998. When Sequoia first introduced backup records or paper trails for its touch-screens, Lomax was the first head of elections in a large urban county to try them.
He said the foreign ownership issue is "ridiculous."
"I just think that's political posturing on those people's part," Lomax said. "The product hasn't changed, the reliability hasn't changed. We run the elections. It isn't like someone in Venezuela can decide to do something and just do it."
Given the uproar following China's bid for Unocal and Dubai Ports' aborted management of several Northeast U.S. ports, Sequoia's Cramer listened for a broader outcry.
What he's heard is "zero," he said.
"There is no market interest in this topic," he said. "It's a non sequitur. It's as though it doesn't exist."
Critics of electronic voting say a more relevant matter than ownership is an industry penchant for secrecy and the lack of scrutiny for voting machines.
"You care less about them if the system is patently transparent and you can tell whether it's honest," said Doug Jones, a computer science professor and voting systems examiner in Iowa. "If we had sufficient transparency in our elections systems, the devil himself could build our voting systems and we could still hold honest elections."
Contact Ian Hoffman at

Hugo, you aren't the boss of us

By Joel Engelhardt
Palm Beach Post Columnist
Tuesday, June 20, 2006
In Chicago, aldermen usually try to avoid hearings into fraud, not lead them. But when the subject is vote-counting, that's another matter.
Alderman Edward Burke didn't like how long it took to count votes - more than two days - after the city's March primaries. He organized hearings and learned that the company that supplied Chicago with its voting machines, Sequoia Voting Systems Inc., is owned by Venezuelans.
"We may have stumbled across what could be (an) international conspiracy to subvert the electoral process in the United States of America," Alderman Burke declared. "I am saying the potential for tampering with the American electoral process where presidential elections can be determined by just one state exists here."
Uh-oh. Venezuelans in charge of America's elections. Venezuela is the nation whose leftist president, Hugo Chávez, keeps thumbing his nose at the Bush administration while playing nice with Fidel Castro. If he's in charge of Sequoia, which doesn't supply equipment just for Chicago's elections but supplies 52,000 touch-screen voting machines throughout the nation - including those in Palm Beach, Indian River, Hillsborough and Pinellas counties - that's something to be concerned about.
Unless Mr. Chávez nationalizes the privately held company, however, he is no more in control of Sequoia than President Bush is in charge of Wendy's.
What raised Alderman Burke's suspicion was the circuitous trail that led to the new owners of the 100-year-old company. Sequoia was acquired in 2005 by Smartmatic Corp., a private company based in Boca Raton but owned by Venezuelan investors through a series of holding companies in Europe and the Caribbean, the Los Angeles Times reported.
"Tell me a single solitary reason there is to trace ownership through three shell corporations to the Curacao Islands and its roots to Venezuela," Alderman Burke said. When a Chicago alderman sees an investment cloaked like that, he normally takes notes, not umbrage. Despite his long tenure on the Chicago City Council - he has served since 1969 - Alderman Burke didn't like this corporate shell game.
Venezuelan ownership explained why Venezuelan technicians could be found in restricted counting areas on election night. Results were delayed primarily by failures in remote reporting. More confusion came about because Chicago, unlike Palm Beach County, wasn't satisfied with a single voting system to replace its now-discredited punch-card ballots. The city known for the Election Day battle cry "Vote early and often," gave voters more than one choice.
As if elections aren't hard enough, the city's 2,604 polling places were outfitted with both touch-screen machines (accompanied by printers to create a paper trail) and optical-scan, fill-in-the-bubble ballots. Voters weren't encouraged by Chicago politicians to cast two votes - one on each system - as far as I know. But poll workers didn't know all the subtleties of the new hardware. Many had nothing more than a poorly written manual to go by. Some had been trained by videotape. Most didn't touch the equipment until Election Day.
Alderman Burke started an investigation. He found a smoking gun linking Sequoia to Hugo Chávez. A software company owned by the new owners, Sequoia admits, took a $150,000 loan from the Venezuelan equivalent of the U.S. Small Business Administration. The loan gave the government a temporary ownership position, but it was repaid within a year. That didn't stop Alderman Burke from reminding Chicagoans that Hugo Chávez has been declared by no less than Defense Secretary Donald Rumsfeld "an enemy of the United States."
It's bad enough to be an election equipment maker these days without being linked to Hugo Chávez. Every complaint about any kind of voting system indicts all. It's not too great a leap to the day that Hugo Chávez is blamed for poor screen illumination at King's Point.
Alderman Burke's outrage is easy to understand. After all, in Chicago, counting votes is a time-honored tradition of the city's politicians. No Chicago alderman worth his salt is going to stand for handing that power off to foreigners.

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Friday, July 14, 2006

Panel scrutinizes Smartmatic's ties to Venezuela

July 15, 2006

By Alfonso Chardy
McClatchy Newspapers
A U.S. Treasury-led panel that investigates whether U.S. companies with ties to foreign investors compromise national security has contacted the Boca Raton, Fla., parent company of a voting machine supplier whose top executives once had links to the Venezuelan government.
The company, Smartmatic, last year acquired Sequoia Voting Systems, a well-known supplier of electronic voting equipment in 16 states. Palm Beach and Hillsborough counties are among those that use Sequoia's electronic voting machines. Smartmatic was a partner in a consortium that supplied electronic voting machines used in the controversial referendum President Hugo Chavez won in 2004.
Sequoia has also come under fire in Chicago, where glitches in voting tabulations in a recent election, coupled by the company's admission that its technology support staff is comprised of Venezuelan nationals, raised concern among some city council members who grilled the company's president, Jack Blaine.
"The history of the company that was hired to run this election is no stranger to scandal, not the least of which involves its ties to Venezuela and the claims of its partnership with political corruption in that country," said Alderman Edward Burke at an April 7 Chicago City Council meeting where Blaine was questioned.
Neither Smartmatic nor the Committee on Foreign Investments in the United States, CFIUS, said why Smartmatic had been contacted. But earlier this year Rep. Carolyn Maloney, D-N.Y., asked Treasury whether the committee had cleared Smartmatic's purchase of California-based Sequoia.
Rep. Maloney echoed the concerns of anti-Chavez critics, suggesting in her May 4 letter to Treasury that CFIUS should review the transaction and determine whether the company is a tool of the Chavez government to influence U.S. elections.
"As you can imagine, having a foreign government investing in or owning a company that supplies voting machines for U.S. elections could raise concerns over the integrity of elections conducted with those machines," Maloney wrote.
Mitch Stoller, a Smartmatic spokesman, said the company did not seek CFIUS review of the transaction because it was not considered to have military, defense or national security implications. Before the purchase, Sequoia was already foreign owned. Its prior owner was De La Rue of Britain.
"Smartmatic is an independent company and no foreign government or entity - including Venezuela - has ever held an ownership stake in Smartmatic," Stoller said
Smartmatic's principal executives are from Venezuela, but the Venezuelan government did not invest in the company. Rather, the government invested in Bizta Corp., which provided software used by Smartmatic, The Miami Herald revealed in 2004.
CFIUS, which includes several federal agencies, emerged from obscurity earlier this year when it approved a bid by a Dubai company to buy several U.S. port operations. The public uproar and congressional questioning eventually scuttled the deal.
Maloney, the ranking Democrat on the subcommittee on Domestic and International Monetary Policy, Trade and Technology, which has jurisdiction over CFIUS, said in her letter to Treasury that she wanted to ensure the Smartmatic deal had received federal scrutiny.
"I would have concerns if this transaction was done outside the CFIUS process, a process that was put in place to appropriately examine these types of foreign investment."
CFIUS is a 12-agency panel chaired by Treasury and includes the departments of State, Defense and Homeland Security.
Brookly McLaughlin, a CFIUS spokeswoman, said she could not comment on whether the committee cleared the purchase. McLaughlin also declined to confirm or deny whether the committee is investigating Smartmatic's purchase of Sequoia. She said she could only say that CFIUS "has been in contact" with Smartmatic.
Smartmatic is owned by Smartmatic International Holding B.V. in Amsterdam, Stoller said. Blaine, Sequoia's president, told the Chicago City Council that the Amsterdam outfit is owned by Smartmatic International Group, N.V. of Curacao.
Bizta was owned by the same Venezuelan nationals who control Smartmatic, Antonio Mugica Rivero and Alfredo Anzola Jaumotte, childhood friends and engineering school graduates.
Anzola's father, Alfredo Anzola Mendez, was a prominent opposition member and a columnist in the anti-Chavez Caracas newspaper Tal Cual. "I'm anti-Chavez by conviction," he said in a 2004 interview at his home in an exclusive Caracas neighborhood.
The Venezuelan government's investment in Bizta gave the Caracas government 28 percent ownership of the company. The Venezuelan government agency that made the investment, a venture capital fund, said it had nothing to do with the referendum and that it was a bid to promote a promising small company.
In February 2004, the National Electoral Council in Caracas, awarded Bizta and partners Smartmatic and CANTV, Venezuela's publicly held phone company, a $91 million contract to develop new voting machines. But shortly before the referendum, Bizta announced that it was buying back the Venezuelan government's shares.
© 2006, The Miami Herald.