US embassy cable - 04CARACAS922

C O N F I D E N T I A L  CARACAS 000922 
 
SIPDIS 
 
 
NSC FOR CBARTON 
USCINCSO ALSO FOR POLAD 
STATE PASS USAID FOR DCHA/OTI 
 
E.O. 12958: DECL: 03/09/2014 
TAGS: PGOV, KDEM, BEXP, VE 
SUBJECT: U.S.-LED CONSORTIUM TO PROVIDE ELECTORAL 
AUTOMATION TO THE CNE 
 
 
Classified By: Abelardo A. Arias, Political Counselor, for Reasons 1.4( 
b) and (d). 
 
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Summary 
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1. (SBU) The U.S.-based company Smartmatic (Boca Raton, 
Florida) is the managing partner of the SBC Consortium that 
recently won the contract to provide automated electoral 
equipment and services for Venezuela's August 1 regional 
elections (and a presidential referendum if necessary).  The 
consortium will provide the National Electoral Council (CNE) 
with 20,000 touch-screen voting machines for 4,500 centers, 
and an encrypted telecommunications infrastructure for 
tallying the votes.  Smartmatic claims the US$60 million 
payment for the new equipment will pay for itself in savings 
after three elections.  Venezuelan electoral law calls for 
the automation of elections to the maximum extent possible. 
End Summary. 
 
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CNE Sought New, Secure Electoral System 
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2. (U) Venezuelan electoral law requires elections to be 
automated when possible.  The Spanish firm Indra had provided 
technical services for electoral processes since 2000, 
including maintenance of 7,600 optical reader machines 
purchased by the National Electoral Council (CNE) that year. 
The CNE, claiming budgetary shortfalls, had fallen behind in 
payments to Indra for the maintenance of the machines. 
Before leaving office in September 2003, the previous CNE 
board approved the extension of Indra's contract to provide 
services for the August 1, 2004, regional elections. 
 
3. (C) The new CNE board annulled Indra's contract in 
September, citing the "onerous" costs of maintenance and 
out-of-date technology.  CNE Director Jorge Rodriguez, head 
of the National Electoral Board, announced a new bidding 
process the autumn of 2003.  Rodriguez criticized the 
previous system that left Indra in charge of the computer 
programs that tallies votes.  Rodriguez argued that the CNE 
should own the technology, including software codes, involved 
in counting ballots.  Based on these criteria, a CNE 
technical committee on February 16 selected the SBC 
Consortium led by Smartmatic.  Rodriguez was also skeptical 
of the firms ES&S, which provided the software for the old 
machines.  He reportedly believed that ES&S worked with the 
Central Intelligence Agency and therefore could not be 
trusted. 
 
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U.S.-Led Consortium Will Provide Automation 
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4. (C) Representatives of the SBC Consortium gave a 
presentation to poloffs on March 9 on the electoral 
automation services they will provide to the National 
Electoral Council (CNE) for the August 1 elections for 
governors and mayors.  SBC Consortium is comprised of the 
Smartmatic Corporation (of Boca Raton, Florida), CANTV (the 
Venezuelan telecommunications operator, partially-owned by 
Verizon), and Bista Software (a local Venezuelan firm). 
 
5. (SBU) Smartmatic is managing the project and will provide 
the technology, equipment, and software.  Started by 
Venezuelans, Smartmatic incorporated in the State of Delaware 
several years ago and has moved its headquarters in Boca 
Raton, Florida.  It has an office in Mexico and maintains its 
research and development office (about 30 people) in 
Venezuela.  This is the first time Smartmatic has tried to 
apply its secure network technology to an electoral process, 
and it has contracted a team of electoral experts to 
implement the project. 
 
6. (SBU) Within the consortium, CANTV is to transport 
equipment to, and establish a network for, 4,500 electoral 
 
 
sites throughout Venezuela (which will cover 95 percent of 
the electorate), connecting them to municipal, regional, and 
national vote-tallying centers.  Bista will design the 
Venezuela-specific tallying software.  The contract between 
the CNE and the Consortium encompasses the purchase of US$60 
million in software and equipment and US$30 million for 
electoral services such as logistics and consulting (about 
US$30 million in U.S. exports and services).  An additional 
US$27 million will be added to the contract should the CNE 
hold a presidential recall referendum. 
 
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A New Touch-Screen Design 
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7. (SBU) With this change, the CNE leaps to touch-screen 
technology from the optical ballot readers used for several 
previous elections with error rates of up to 15 percent. 
Smartmatic will import 20,000 voting machines from Italy, in 
essence, re-engineered lottery machines.  Smaller than a cash 
register, each machines has a six-inch screen and an 
integrated printer that emits a receipt for each vote as well 
as the closing tally sheet.  Each machine will be assigned to 
a specific electoral table (an electoral center has several 
tables according to size) and will only accept the maximum 
votes designated for that specific table. 
 
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The "Secure" Voting Procedure 
----------------------------- 
 
8. (SBU) To vote, the person will present his or her national 
identity card to election workers, and sign and place a 
fingerprint in the electoral register.  The head of the 
electoral table then unlocks the voting machine by remote 
control.  After the voter makes his or her choices by 
pressing the corresponding square on the membrane and then 
presses the touch-screen to lock in the votes.  The machine 
prints a receipt record of the vote, which is assigned a 
random serial number.  The voter deposits the receipt in a 
ballot box and collects his or her national identity card. 
At the end of the day, the machine produces a paper tally 
sheet that is signed by poll workers and returned with the 
paper receipts to the CNE.  Once the tally sheet is produced, 
the machine transmits its data to the tallying center. 
 
9. (SBU) Smartmatic representatives claim the process is 
totally error-free in that the voter no longer fills out the 
ballot by hand.  Each vote is registered seven ways (five 
electronically, two manually), making fraud less likely.  The 
machines contain fixed flash memory as well as removable 
memory cards.  The machines work with special security paper 
bearing the CNE watermark.  The use of random serial numbers, 
they assert, ensures privacy by making it impossible to match 
the voting results with its corresponding electoral register. 
 The data transmission uses 128-bit encryption with 
public-private keys. 
 
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Comment 
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10. (C) The Smartmatic system is impressive at first blush, 
though we wonder whether Venezuela's volatile electoral 
landscape provides the best venue for its premiere 
performance.  CNE Director Jorge Rodriguez, who heads the 
National Electoral Board, pressed ahead with this project 
despite the crushing workload of the signature verification 
process for the presidential recall referendum.  Putting this 
system on line now aids the GOV's strategy to use the 
regional elections to distract attention from the recall 
vote. 
 
SHAPIRO 
 
 
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      2004CARACA00922 - CONFIDENTIAL