US embassy cable - 04CARACAS2108


Identifier: 04CARACAS2108
Wikileaks: View 04CARACAS2108 at
Origin: Embassy Caracas
Created: 2004-06-28 21:49:00
Classification: CONFIDENTIAL
Redacted: This cable was not redacted by Wikileaks.
This record is a partial extract of the original cable. The full text of the original cable is not available.

C O N F I D E N T I A L  CARACAS 002108 
E.O. 12958: DECL: 06/26/2014 
Classified By: Mark Wells, A/PolCouns, for Reasons 1.4(b) and (d). 
1. (C) Venezuela's new automated voting system will make its 
premiere in the August 15 recall referendum against President 
Hugo Chavez.  The consortium behind the untested system, led 
by the U.S. company Smartmatic, has yet to finalize its 
contracts with the National Electoral Council (CNE).  The 
consortium has imported 16,000 of the 19,200 touch-screen 
machines that will be deployed to voting centers, and is 
installing the dedicated network throughout Venezuela to 
connect them.  Critics have attacked nearly every aspect of 
the system including the reliability of the machines, the 
vulnerabilities to "backdoor" tampering, and the expedited 
manner in which the CNE granted the concession to Smartmatic. 
 Consortium reps maintain that the system is highly 
auditable, dependable, and will have been fully tested before 
August 15.  But as this is Smartmatic's first venture into 
electoral technology, we cannot rule out significant problems 
during the referendum due to unforeseen technical or 
organizational problems.  End summary. 
The Smartmatic-led Consortium 
2. (C) The National Electoral Council (CNE) on February 16 
awarded the concession for a new automated voting system to 
the SBC Consortium (see ref).  The Consortium is led by 
Smartmatic, a Delaware-registered firm founded by Venezuelans 
with offices in Boca Raton, Florida.  The firm maintains a 
research and development office in Caracas and has offices in 
Mexico.  Smartmatic's owners are Antonio Mugica, Alfredo 
Anzola, and Roger Pinate, young Venezuelan computer engineers 
who went to the U.S. several years ago to make it in 
business.  There are diverse rumors over the true identity of 
Smartmatic's investors; among them are Caracas daily El 
Universal, owners of Caracas' renowned Tamanaco Hotel, and 
even Vice President Jose Vicente Rangel.  Jorge Tirado, an 
electoral expert working with Smartmatic, told poloff June 23 
that Mugica and Anzola come from upper class anti-Chavez 
families -- Anzola's father is a member of the Coordinadora 
Democratica -- but the two engineers have kept quiet about 
their politics. 
3. (C) Tirado said Smartmatic is responsible for providing 
the networking technology (i.e., Smartmatic's high-speed, 
encrypted network platform), electoral software, totalization 
services, and 19,200 voting machines and the programming and 
warehousing thereof.  About 16,000 of the machines have been 
imported from Italian manufacturer Olivetti.  Tirado said 
Smartmatic also purchased 1,000 backup machines and several 
hundred display models for a public education campaign.  As 
Smartmatic has no previous electoral experience, the company 
formed a joint venture with Tirado's Caribbean Government 
Consultants (CGC), of Puerto Rico, to assemble the team that 
will operate the system.  CGC will total the votes on 
election day and deliver the results to CNE Director Jorge 
Rodriguez, said Tirado. 
4. (C) Venezuela's privatized telephone company, CANTV 
(28-percent owned by Verizon), will provide site support and 
transmission of data to the CNE.  CANTV General Manager for 
Businesses and Institutions Ramon Ramirez told poloff June 23 
they have hired 8,000 on-site representatives to connect the 
machines and attend to basic maintenance problems (paper 
jams, power supply, etc.).  CANTV reps will also be present 
at smaller centers that will use manual ballots (covering 
five percent of the electorate) and transmit the data by 
cellular telephone or satellite.  An additional 1,000 
technicians will be on call throughout Venezuela to handle 
other problems, such as removing a defective unit and 
transferring voting data to the replacement. 
5. (C) The final consortium member, Bizta, is a small 
Venezuelan software company run by a Venezuelan software 
engineer.  Smartmatic's owners, according to Tirado, were 
Bizta's principal investors.  As reported by the Miami 
Herald, Bizta had received a $200,000 investment from a 
Venezuelan venture capital fund last year and named a GOV 
science ministry official to Bizta's board.  Tirado described 
these as one-year loans, carried out in two $100,000 
tranches.  The final tranche was reimbursed, said Tirado 
around the time the Miami Herald story broke.  Bizta's role 
in the Consortium, said Ramirez, is to adapt Smartmatic's 
software and machines to Venezuela's electoral regulations. 
For the referendum, Ramirez said, this amounts to designing 
the touch screen image that will be displayed to voters.  For 
the more complex regional elections, Bizta will oversee the 
application of formulas for figuring the proportional 
representation of municipal councils. 
6. (C) Ramirez said the CNE held a private bidding process 
due to time constraints, which meant the CNE invited specific 
companies to present bids.  After winning the bid, Smartmatic 
signed a $63 million contract (vie a GOV letter of credit) 
with the CNE to buy the voting machines and other computer 
equipment.  Two service contracts -- about $24 million for 
the referendum and $28 million for the regional elections -- 
have not been signed.  Ramirez attributed the delays to 
budget shortfalls at the CNE, which by law cannot sign a 
contract unless the obligated funds are in its accounts. 
Ramirez said the CNE Director Rodriguez's recent purchase of 
fingerprint readers for the election (see para 11) caused the 
budget shortfall.  Of the approximately $52 million in 
services, Tirado said Smartmatic will receive 51 percent, 
CANTV 47 percent, and Bizta 2 percent. 
How It Works 
7. (C) The Smartmatic machines are re-engineered lottery 
machines with a six-inch touch screen, a built-in printer, 
and a network connection.  Machines are pre-programmed to 
accept a specific number of votes corresponding to its 
assigned electoral table.  Tirado said the maximum number of 
votes one machine can accept is 600 -- hence, a voting center 
with 1,500 votes will be assigned three machines, two with 
600 votes each, one with 300.  Voters will read the 
referendum question, press "yes" or "no" boxes on the screen, 
and lock in their votes.  The machine prints a receipt that 
confirms the vote.  The receipt is deposited in an electoral 
urn.  The Smartmatic system makes five electronic and two 
paper records of each vote.  At the end of the day, the 
machine prints a tally sheet of the votes (acta) to be signed 
by the poll workers.  The workers then transmit the results 
to the CNE via CANTV regional data centers. 
8. (C) The CNE continues to debate the referendum procedures, 
though CANTV's Ramirez said the system is designed to be 
"highly auditable," in its software, hardware, and paper 
trail.  It remains unresolved, therefore, whether the poll 
workers will tally the paper receipts and match them against 
the computerized results, known as a "hot audit." 
Representatives of the Coordinadora Democratica have told us 
they will insist on the "hot audit," though CNE Director 
Rodriguez has suggested publicly that this extra step could 
delay the certification of results.  Tirado said the "hot 
audit" is not necessary and would probably cause more 
problems than it solves.  Tirado said the CNE may authorize 
an expanded acta that lists every vote cast on the machine. 
Tirado said the CNE does not plan to give actas to 
international observers, though the system could be 
programmed to do so (party representatives will get a copy). 
Tirado said if everything goes smoothly with the data 
transmission, his team would have preliminary results for the 
CNE by midnight on election day. 
Critics Attack the System 
9. (C) Electoral experts, some of them linked to Smartmatic's 
competitors, raised multiple questions about the system. 
Generally, there is doubt whether re-engineered lottery 
machines, never before used for an electoral event, can do 
the job, such as whether the touch-screens will be properly 
calibrated or the printers will function smoothly.  There are 
also doubts as to the electronic security of the machines and 
data network.  Since the votes are stored electronically, 
critics say, manipulation is possible no matter how 
sophisticated the machines.  (Tirado said a team of 20 
computer programmers -- 10 from the GOV and 10 from the 
opposition -- are currently testing the machines to ensure 
their reliability on this and other points.)  Software codes, 
to which the CNE will have complete access, can also be 
changed, critics charge.  Ramirez commented that some Chavez 
supporters have alleged the USG will "use its satellites" to 
manipulate the referendum results. 
Where's The Fraud? 
10. (C) Consortium reps defended the security of their 
system.  Ramirez pointed out that the 19,200 machines will be 
sending their data on election night in short bursts of no 
more than two minutes, making widespread tampering nearly 
impossible.  Sumate representative Roberto Abdul told poloff 
June 23 he is not worried about the machines, but rather the 
computer server to which the machines report.  Tirado said 
his team -- not the CNE informatics department -- would total 
the results and give them to the CNE.  Abdul said Smartmatic 
can give whatever results they want to the CNE, but he did 
not rule out that the CNE could still change them.  Tirado 
discounted the possibility, saying it would be difficult for 
the CNE cover up documented results.  Asked whether he was 
prepared if the CNE decided to falsify the results, Tirado 
hinted that he had prepared a "contingency" plan to preserve 
the true results.  Tirado said that he has consulted on more 
than 60 elections worldwide under shadier conditions; he 
asserted it would be a clean election. 
Fingerprints A No-Go 
11. (C) Fraud aside, there is still a possibility that some 
unforeseen operational glitch crashes the system.  The 
Consortium plans to stage a simulation of the system on July 
18.  Tirado said he is confident the system will work, but 
said there are two backup plans if there are interruptions, 
one of which is a manual vote.  Ramirez said the CNE's 
insistence on using fingerprint readers to prevent multiple 
voting will jeopardize the system's success.  Ramirez said 
the CNE plans to purchase 12,000 to 16,000 readers, fewer 
than the number of voting machines.  The readers will scan 
the thumb and index finger prints from every voter, send the 
data to the CNE, where it will be checked against the prints 
of everyone who has already voted.  Ramirez said the 
fingerprint readers have a 1 in 120 error rate, which could 
result in thousands of Venezuelans being denied the right to 
vote.  Tirado said the plan is unworkable and doubted the CNE 
could get it deployed before the referendum. 
12. (C) The touch-screen system is a fait accompli  The 
opposition has largely accepted it, and is now focused on 
imposing enough controls on the system.  The Consortium reps 
make good arguments to rebuff the criticisms, many of the 
which are not systemic, generalized issues.  A system 
collapse cannot be ruled out completely, however, due to lack 
of experience.  Fraud and manipulation are still possible, 
though it seems to be more likely at level of the CNE board 
rather than among the technicians.  All of this makes it more 
imperative than ever that the Carter Center, the OAS, and 
possibly the EU bring in as part of their observation team 
experts in automated voting systems and information 
technology.  The sooner they arrive, the better they will be 
able to prevent fraud through manipulation of the Smartmatic 
      2004CARACA02108 - CONFIDENTIAL 

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