US Investigates Smartmatic on Eve of US Congressional Elections

The US government is investigating Smartmatic, the privately-owned Venezuelan parent company of Sequoia Voting Systems to verify if there is any truth to the rumors that Smartmatic has links to the Venezuelan government.

Caracas, Venezuelan, October 31, 2006  ( – The US government is investigating Smartmatic, the privately-owned Venezuelan parent company of Sequoia Voting Systems, one of the US’s largest electronic voting machine manufacturers.  The investigation is underway to verify if there is any truth to the rumors that Smartmatic has links to Venezuelan President Hugo Chavez and his government. 

In a press release on Sunday, Smartmatic and Sequoia Voting Systems announced that, “contrary to reports, the companies have voluntarily submitted a notice to the U.S. Committee on Foreign Investment in the United States (CFIUS).  The companies filed voluntarily in order to allow the U.S. Government to review Smartmatic’s acquisition of Sequoia.”  Smartmatic acquired Sequoia Voting Systems on March 8, 2005, from De La Rue, Inc.

The investigation comes after months of rumors of a supposed link between Smartmatic and the Venezuelan government.  Officials at both Smartmatic and the Venezuelan government have strongly denied the rumors.

"No foreign government or entity – including Venezuela – has ever held an ownership stake in Smartmatic, and we have voluntarily filed with CFIUS to put to rest the baseless but persistent rumors about our ownership," said Antonio Mugica, Chief Executive Officer, Smartmatic.

The Miami Herald, which on Saturday was the first to report the investigation, stated that the probe stems from a May 4 letter to the Treasury Department by New York Democrat Representative, Carolyn Maloney.  According to the Herald, Malony expressed concerns regarding Smartmatic’s purchase of Sequoia last year and a possible connection between the Venezuelan government and Smartmatic through the software company, Bizta- which “is operated by two of the same people who own Smartmatic.” 

In 2004, the Miami Herald reported that the Venezuelan government at one time owned 28% of Bizta.  However, according to Sequoia, this part “ownership” in Bizta was actually just collateral for a $150,000 loan that Bizta had received in 2003 from the Venezuelan Industrial Credit Fund – “the equivalent of the U.S. Small Business Administration”. 

“Bizta pledged 28% of its shares as a guarantee for this routine loan. The loan was paid in full in 2004 prior to the Recall Referendum,” declared a Sequoia document from May, 2006. 

Smartmatic, Bizta, and the Venezuelan telecommunications mogul, CANTV, played an integral roll in the 2004 referendum against Venezuelan President Chavez, by supplying the electronic voting machines for the election, in a contract worth $91 million.  

Smartmatic and Sequoia representatives held a press conference yesterday in Washington in an attempt to further dispel the rumors around the involvement of the Venezuelan government.  

“We expect that when the investigation is complete, these questions about ownership and baseless allegations and conspiracy, will be put to rest,” said Michelle Shafer, Communications Vice President of Sequoia Voting System yesterday evening.  Shafer could not comment on the length or depth of the investigation. 

Sequoia Voting Systems defines itself as “an American company, based in Oakland, California with a 100-year history of providing accurate, reliable, state-of-the-art voting solutions dating back to the nation’s first lever-based mechanical voting equipment in the 1890s.”   

Smartmatic is owned primarily by three young entrepreneurs: Antonio Mugica, a dual-Spanish-Venezuelan national (78.8%); Alfredo Anzola (3.87%); and Roger Pinate (8.47%).  The other main investor is Jorge Massa (5.97%), a well-known French-Venezuelan businessman.

In Nevada, in the 2004 Presidential elections, Sequoia became the first voting machine manufacturer in the United States to implement Voter Verifiable Paper Audit Trail (VVPAT) technology, which permits that all votes made on electronic machines also produce a paper receipt for each vote cast.  Sequoia’s voting equipment will be used in the November 7, 2006 Congressional elections in 16 US states and the District of Columbia.