Friday, November 03, 2006

Investor's Business Daily: Hugo's Revenge

Posted 11/3/2006

Elections: If missing smart-cards and multiple ballot-casting buttons aren't enough trouble from electronic voting machines, the one complication we don't need is a foreign predator at the controls.

Think it can't happen? Well, it already has, with Smartmatic, an electronic voting firm that owes its presence in U.S. markets to Venezuelan leader Hugo Chavez's abundant cash.

Until 2004, Smartmatic was a little-known startup in Boca Raton, Fla., run by two 30-year-old Venezuelan engineers who claimed their only motivation was to prevent another 2000 Florida hanging-chad controversy. They were worth at most $2 million and operated out of one of their father's houses in Boca Raton.

They had a sudden change of fortune after Chavez got involved. The two Venezuelans, Antonio Mujica and Alfredo Anzola, won gigantic contracts from Venezuela's government for Chavez's recall referendum in 2004. It was a referendum he declared he would win no matter what. And, given the fraud charged in the aftermath, he apparently did.

Mathematicians Ricardo Hausmann of Harvard and Roberto Rigobon of MIT, who studied the referendum, declared it fraudulent with 99% certainty, pointing to manipulation of the Smartmatic software in the counting room, where two-way electronic communication seemed to take place as the votes were tallied.

Shortly after that, Smartmatic bought up U.S.-based Sequoia Voting Systems for $16 million, flush with $120 million in Venezuelan cash. They made sure to thank their biggest client.
They took out a front page ad in the New York Times specifically touting the Venezuela referendum, "free of hanging chads," something that doubled as spin control for Chavez as a firestorm of controversy over fraud swirled in Caracas.

What they didn't say was that something much worse than hanging chads happened in Venezuela — a total loss of voter confidence. At the next Smartmatic election in Caracas, in December 2005, 82% of voters stayed home.

Now that the U.S. Committee on Foreign Investment is looking into the Venezuelan government's involvement in U.S. elections, the voting machine company's executives seem to be distancing themselves from that fiasco. Sequoia's CEO Jack Blaine declared Monday that "Sequoia designs voting systems. It does not manage elections and it does not count votes."
Maybe so. But Smartmatic, mostly through its Sequoia subsidiary, operates in 20 states, according to Smartmatic's Web site (the Sequoia site says 16). And with 33% of Americans forced into electronic voting, millions will have no choice but to use the machines.

If U.S. e-voting goes badly, Americans will avoid voting, like Venezuelans. With many hotly disputed congressional races that are bound to be close, even minor manipulation would be disastrous.

We know which side Hugo Chavez is on in this election. The specter of foreign control over our voting apparatus demands utmost scrutiny by federal regulators. If not, American voters someday may be as cynical about their democracy as Venezuelans.