Smartmatic to sell US subsidiary due to CFIUS investigation

By Aleksander Boyd

Caracas 08.01.07 | It seems that Hugo Chavez's e-voting company has decided to dispose off of its US subsidiary after the "Committee on Foreign Investment in the United States (CFIUS) began a national-security investigation last fall" reports the Miami Herald today (see article below). Smartmatic, which was first formed with capital lent in unknown terms by the Venezuelan regime, refused to reveal its true ownership, deciding instead to sell Sequoia Voting Systems, a fully owned US subsidiary. The move, thought in some quarters to be -in part- consequence of investigations on its ownership posted in this site, is a good sign that should contribute with the strenghtening of democratic processes held in US soil.

Sale could ease doubt about elections


The pending sale of Smartmatic Corp.'s subsidiary, Sequoia Voting Systems Co., should ease doubts voters may have about possible foreign influence in U.S. elections. A U.S. Treasury panel that was investigating Smartmatic regarding national-security concerns said that it will ''closely monitor'' the sale of Sequoia. This should help assure Americans that no hostile government can meddle in U.S Elections.

Smartmatic purchased Sequoia, a leading voting-equipment vendor, in 2005. The company has been under a cloud since the Committee on Foreign Investment in the United States, or CFIUS, began a national-security investigation last fall. The concern was that the Venezuela, headed by President Hugo Chávez, who is known for anti-U.S. antics, might have undue influence in Smartmatic. Given the growing distrust of electronic-voting systems and the fear of vote manipulation, careful review of Smartmatic was justified.

Bribery probe

Smartmatic initially resisted the CFIUS investigation. Later, The Wall Street Journal reported that the Justice Department had undertaken a different investigation of Smartmatic. This investigation was related to possible bribes and tax evasion in Smartmatic's sale of voting equipment to Venezuela's government for use in its 2004 presidential recall election.

Antonio Mujica, Smartmatic's CEO and founder, is a Spanish-Venezuelan dual citizen. He and other company officials repeatedly have denied any connection to the Venezuelan government and all allegations of bribery or tax evasion.

Unnamed investors

Smartmatic's ownership structure is so convoluted that it is virtually impossible to verify all its owners. Parent company Smartmatic International is owned by a Netherlands company, which is owned by Curacao trusts, which in turn, are controlled by unnamed investors.

The Venezuelan government once had a stake in a company closely linked to Smartmatic. Venezuela invested in Bizta, which is owned by two of Smartmatic's main owners, including Mr. Mujica. Bizta provides software for Smartmatic's voting system and joined Smartmatic in selling that system to the Chávez government for the 2004 recall election. Venezuela sold its stake in Bizta after The Miami Herald reported on the investment, which prompted complaints that the Chávez government shouldn't have any interest in machines that would determine his stay in office.

U.S. Rep Carolyn Maloney, D-N.Y., who initiated the CFIUS probe, says that Smartmatic ''could not overcome the cloud of doubt'' about its ownership of Sequoia. CFIUS was right to take decisive action to protect national security and the integrity of U.S. elections.