Voting machine firm seeks probe into rumors

updated 8:49 a.m. ET Oct. 30, 2006

WASHINGTON - A U.S. company that makes touch-screen voting machines said it requested a federal investigation to dispel what it called baseless rumors of ties to Venezuelan President Hugo Chavez.

Sequoia Voting Systems Inc. said it asked the Committee on Foreign Investment in the United States, or CFIUS, to investigate it and its parent software company, the Smartmatic Corp. The request comes after news articles suggested improper ties.

“Sequoia and Smartmatic are not connected, owned or controlled by the Venezuelan government whatsoever,” Jeff Bialos, a Washington attorney representing the two companies, said in a telephone interview.

The focus is on last year’s acquisition of Sequoia by Smartmatic — a Boca Raton, Fla. company owned by three Venezuelans — and whether Chavez’s leftist government wields influence over their operations.

Chavez is a longtime foe of the Bush administration. Last month, he called President Bush “the devil” in a speech at the United Nation, drawing prompt criticism from lawmakers from both U.S. parties.

CFIUS has been in contact with Smartmatic, said Brookly McLaughlin, a spokeswoman for the Treasury Department, which oversees the foreign investment committee. She declined to say whether there was a formal investigation.

Elections approach
The probe’s disclosure by the companies comes days before the November congressional elections, and amid growing concern about the reliability of electronic voting machines.

A report released earlier this month by The Century Foundation found problems with malfunctioning voting machines in 10 states it sampled. Activists, meanwhile, have filed lawsuits in at least nine states contending the new electronic voting machines are not secure.

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The inquiry also comes after the political furor earlier this year over a buyout that put a Dubai company in control of some operations at six American ports. The outcry led the Dubai company, DP World, to promise it would sell the U.S. operations to an American company.

Rep. Carolyn Maloney, D-N.Y., said Sunday she welcomed the formal review after she asked the government in May to examine the takeover of Sequoia, based in Oakland, Calif.

“Having a foreign government investing or owning a company in this country that makes voting machines could raise a question about the integrity of the elections,” she said.

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According to Smartmatic, the company is owned primarily by three individuals and their families: Antonio Mugica, a dual-Spanish-Venezuelan national who is the chief executive officer (78.8 percent); Alfredo Anzola (3.9 percent); and Roger Pinate (8.5 percent). Investor Jorge Massa as well as Smartmatic employees and other friends own the remainder.

“No foreign government or entity — including Venezuela — has ever held an ownership stake in Smartmatic,” Mugica said in a statement.

‘Very confident’
Sequoia has operated since the late 1800s and began providing electronic voting equipment in the 1980s. It currently supplies electronic voting machines to 16 states and the District of Columbia.

“Sequoia is very confident our equipment will perform as well as it has over the course of history,” Sequoia spokeswoman Michelle Shafer said.

The investigation by CFIUS was first reported Saturday by The Miami Herald. Questions about company ownership were first raised last spring.

Separately, activist Patricia Axelrod of Reno, Nev., sued Sequoia on Wednesday, claiming her vote in the 2004 general election was not counted because of a defective machine.

Shafer said Sunday she had not seen the suit and could not comment on it.

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