Smartmatic

History

In 1997, three Venezuelans, Antonio Mugica, Alfredo José Angola and Roger Piñate founded Smartmatic in a "tiny office" in Caracas, Venezuela after meeting in a research lab. Using "the research and development department of Panagroup Corp." in Venezuela, the trio created a system where thousands of inputs could be placed into a network simultaneously. After the 2000 United States presidential election, the Venezuelans proposed to dedicate the system toward electoral functions.

After receiving funds "from private investors" which included Jorge Massa Dustou, one of the richest individuals in Venezuela, the company then began to expand rapidly, being officially incorporated on 11 April 2000 in Delaware and later establishing its headquarters in Boca Raton, Florida with only seven employees. In 2003, Smartmatic approached the Venezuelan government and formed the SBC organization that was owned 51% by Smartmatic, 47% Venezuelan state telecommunications organization CANTV and 2% by a Bolivarian Government of Venezuela affiliated company, Bizta. The Venezuelan government then invested in Bizta, the software company co-founded by then Smartmatic president Antonio Mugica that was losing money, granting Venezuela to own 28% of Smartmatic and placed a member of Venezuela's science ministry, Omar Montilla, on its board of directors. By the time Smartmatic made its first large deal with the Venezuelan government in 2004, the majority of employees worked in its Venezuela offices shared with Bizta, with 70 in Caracas while only 7 worked in Boca Raton, Florida and Sunnyvale, California.

Following Smartmatic's purchase of Sequoia Voting Systems in 2005, a Committee on Foreign Investment in the United States investigation was initiated over Smartmatic's links to the Venezuelan government. Smartmatic later sold Sequoia in 2006, though "Smartmatic scrapped a simple corporate structure" of being based in Boca Raton "for a far more complex arrangement" of being located in multiple locations, raising more speculation.

Smartmatic is presently headquartered in London, while it also has offices and R&D labs in the United States, Brazil, Venezuela, Barbados, Panama, the United Kingdom, the Netherlands, the United Arab Emirates, the Philippines, Estonia, and Taiwan. Though Smartmatic has made differing claims that they were either American or Dutch based, the United States Department of State states that its Venezuelan owners "remain hidden behind a web of holding companies in the Netherlands and Barbados" while other sources simply stated that Smartmatic was a Venezuelan company.

SGO Corporation

In 2014, Smartmatic’s CEO Antonio Mugica together with British Lord Mark Malloch-Brown announced the launching of the SGO Corporation Limited, a holding company headquartered in London whose primary asset is the election technology and voting machine manufacturer.

Lord Malloch-Brown became chairman of the board of directors of SGO since its foundation, while Antonio Mugica remained as CEO of the new venture. They were joined on SGO’s board by Sir Nigel Knowles, Global CEO of DLA Piper, entrepreneur David Giampaolo and Roger Piñate, Smartmatic’s COO and co-founder.

The aim of SGO, according to its CEO was "to continue to make investments in its core business (election technology), but it is also set to roll out a series of new ventures based on biometrics, online identity verification, internet voting and citizen participation, e-governance and pollution control.”

Elections Solutions

The electoral business unit combines a complex project management methodology with an electronic voting system that includes hardware (SAES voting machines), election management software, and canvassing software for a central location's servers. It includes several security mechanisms, such as encryption using a public key infrastructure (PKI) with 2048-bit digital certificates.

The hardware includes voting machine models with voter-verified paper audit trail (VVPAT), redundant memory, integrated printer, a touch screen supporting multiple-choice election processes, tactile remote control, earphones and sip and puff devices for disabled voters, and an add-on voting pad device for use in complex elections.

The software consists of an Electoral Management System (EMS), which manages the data on candidates, electoral seats and political parties, etc., that define the configuration of an election. The Election Day Management Platform (EDMP) suite of management tools directs technicians and operators installing and manning the voting centers using voting machines. It monitors, in real time, all aspects of voting machine use: installation, opening, closing and auditing of the polling booths, the transmission of results and the backing up of data during the event.

Solutions for Smart Cities

This unit comprises security applications for government critical mission projects, such as Public Safety Platforms, Public Transport Systems, Emergency Management Solutions and Census Projects. The services portfolio includes concept and design, technology development, technology implementation and operation, as well as maintenance and support. Smartmatic’s Unified Security Platform automates the interaction between network devices, operators, end users, and security-specific applications. It is designed to provide an end-to-end solution for emergency response using technology to support the handling of emergency calls and to provide immediate responses. It includes hardware, software and deployment services for solutions aiming to improve citizen's quality of life.

Identity management

Smartmatic Identity Management Solutions enables government agencies to manage people's biographic and biometric information securely. Products and services include identity card programs, immigration and border control, welfare and social benefit distribution programs, civil and voter registration. It uses both specialized mobile devices for enrollment of people in field applications and an integrated system for stationary use. It includes ID management software, and a back-office system for data consolidation and safeguard.

Elections

The company was contracted in 2004 for the automation of electoral processes in Venezuela. Since 2004, its election technology has been used in local and national elections in: Venezuela, United States, Belgium, Brazil, Ecuador, Argentina, Chile, the United Kingdom, Mexico and the Philippines.

2012 Belgium regional elections

On October 14, 2012, Belgium utilized Smartmatic’s technology and managed services to carry out regional elections in 153 communes in the Flanders and Brussels-Capital regions. The Flemish government stated "the Venezuelan Smartmatic fails for technical issues and demands that the system, which cost 40 million euros, will be improved by 2014". There were nearly 2,000 incidents with 25% of them being technical issues, with some instances of voters casting a ballot twice for a candidate by quickly pressing the screen. Following the election, Flanders refused to pay 16.5% of the initial agreed payment due to Smartmatic's failure.

Brazil

Smartmatic provided election technology services to Brazil’s Superior Electoral Court (TSE) for the Brazilian Municipal Elections, 2012, Brazilian General Election, 2014 and Brazilian Municipal Elections, 2016 cycles.

In October 2012, Smartmatic provided election support for data and voice communications to 16 states in Brazil, and the Federal District (FD) (deploying 1,300 Broadband Global Area Network (BGAN) satellite devices), as well as support services to voting machines.These services implied hiring and training 14,000 technicians who worked at 480,000 polling stations. In 2014, the Brazilian electoral commission relied on an increased number of BGAN terminals, deployed by Smartmatic, to enable results transmission. BGAN satellite broadband voice and data service was used to connect voting stations to the nation’s electronic voting system.

Estonia

In 2014, Smartmatic and Cybernetica, the Estonian IT lab that built the original Internet voting system used in the country, co-founded the Centre of Excellence for Internet voting. The Centre is working with the government of Estonia to advance Internet voting on a global scale.

Estonia is the only country to run Internet voting on a wide scale, where citizens can access services through their eID card. The e-voting system, the largest run by any European Union country, was first introduced in 2005 for local elections, and was subsequently used in the 2007, 2011 and 2015 parliamentary elections, with the proportion of voters using this voting method rising from 5.5 per cent to 24.3 per cent to 30.5 per cent respectively.

Some experts have warned that Estonia's online voting system might be vulnerable to hacking. In 2014, J. Alex Halderman, an associate professor at the University of Michigan, described the Estonian "i-voting" system as "pretty primitive by modern standards ... I got to observe the processes that they went through, and there were just—it was just quite sloppy throughout the whole time". A security analysis of the system by the University of Michigan and the Open Rights Group that was led by Halderman found that "the I-voting system has serious architectural limitations and procedural gaps that potentially jeopardize the integrity of elections". The analysis concluded:

As we have observed, the procedures Estonia has in place to guard against attack and ensure transparency offer insufficient protection. Based on our tests, we conclude that a state-level attacker, sophisticated criminal, or dishonest insider could defeat both the technological and procedural controls in order to manipulate election outcomes. ... Due to these risks, we recommend that Estonia discontinue use of the I-voting system.

The Estonian National Electoral Committee responded to the report, stating that the claims "were unsubstantiated and the described attacks infeasible." Before each election, the system is rebuilt from the ground up, and security testing including penetration testing and denial-of-service mitigation tests are carried out. In their statement, the Estonian National Electoral Committee says: “every aspect of online balloting procedures is fully documented, these procedures are rigorously audited, and video documenting all conducted procedures is posted online. In addition to opening every aspect of our balloting to observers, we have posted the source code of our voting software online. In the past decade, our online balloting has stood up to numerous reviews and security tests. We believe that online balloting allows us to achieve a level of security greater than what is possible with paper ballots”.

However, after the criticism, the number of Estonian e-voters at the 2015 Parliamentary Election was a record-breaking 176.491 (30.5% of casted votes).

Philippines

The project to automate the Philippine elections had been met with vociferous opposition from the beginning. Several groups which were benefiting from the traditionally fraudulent conduct of Philippines polls found themselves facing great political and economic loss with the promised transparency and auditability of the automated elections system. The adoption of Smartmatic was overseen by the Philippines' Commission on Elections (Comelec).

However, Smartmatic's entry into the Philippines was controversial, with The Manila Times stating that "only the truly uninformed would still find Smartmatic’s combination of PCOS/VCM and CCS an acceptable solution to the automation of Philippine elections" and that "glitches" as well as the "lack of transparency ... convinced us of the system’s unreliability and its vulnerability to tampering".

2008 Philippine regional elections

On August 11, 2008, automated regional elections were held in the Philippines' Autonomous Region of Muslim Mindanao (ARMM). In the Maguindanao province, voters used Smartmatic's electronic voting machines, while voters in the other 5 provinces (Shariff Kabunsuan, Lanao del Sur, Basilan, Sulu, and Tawi-Tawi) used manually marked ballots processed using OMR technology. The overall reaction of both the public and authorities was positive toward the solution.

2010 Philippine general election

In May 2010, Smartmatic automated the National Elections in the Republic of the Philippines. Election Day was Monday, May 10, 2010 with live, full coverage from ABS-CBN, ANC and GMA Network. The elected president became the 15th President of the Philippines, succeeding President Gloria Macapagal-Arroyo, who was barred from seeking re-election due to term restrictions. The successor of the Vice-President Noli de Castro is the 15th Vice President of the Philippines. Legislators elected in these 2010 elections joined the senators of the 2007 elections and comprised the 15th Congress of the Philippines.

On June 29, 2010, the Philippine Computer Society (PCS) filed a complaint with the country's Ombudsman against 17 officials of the Commission on Elections and the Smartmatic-TIM Corp. for alleged “incompetence,” graft and unethical conduct. A survey conducted by the Social Weather Stations (SWS) showed that a majority (75%) of Filipinos were very satisfied with the conduct of the automated elections. The survey also found that voters regarded the 2010 elections one of the most-credible and transparent in Philippine history.

2013 Philippine midterm elections

On 13 May 2013, halfway between its last Presidential elections in 2010 and its next in 2016, the Philippines held its midterm elections where 18,000 positions were at stake.

Smartmatic again provided technology and services to Comelec. The same 82,000 voting machines used in 2010 were deployed.

Election watchdog National Citizens Movement for Free Elections (Namfrel), which is one of the Comelec's official citizen's arm for the midterm elections, assessed the polls as "generally peaceful and organized."

The Philippine National Police considered the 2013 the most peaceful elections in the history of the country.

The US Embassy commended the Filipinos for the elections.

2016 Philippine presidential election

For the country’s third national automated elections in the 2016 Philippine presidential election, which was held on May 9, 2016, a total of 92,509 vote-counting machines (VCMs) were deployed across an archipelago comprising 7,107 islands, while 5,500 VCMs served as back-up voting machines. For Overseas Absentee Voting Act (OAV), 130 VCMs were deployed in 18 countries. There were major challenges faced prior to elections, chief of which was the late-stage Supreme Court ruling that required each voting machine to print a receipt. The ruling was handed down on March 17, 2016, giving Comelec and Smartmatic less than two months to prepare. By election night, about 86% of election data had already been transmitted, prompting winners in local municipalities to be proclaimed around the same time. Also by election night, Filipinos already knew who the winning president was, leading other candidates to concede within 24 hours. This concession of several candidates signified acceptance of results that validated the credibility of the automation system. Over 20,000 candidates conceded. Rodrigo Duterte became the 16th President of the Philippines, succeeding Benigno Aquino III, while the 16th Vice-President succeeded Jejomar Binay. Legislators elected in the 2016 elections joined the senators elected in the 2013 midterm elections and comprised the 16th Congress of the Philippines.

Days after the May 2016 elections, Bongbong Marcos, son of the late dictator Ferdinand Marcos, alleged that Smartmatic had tampered with the votes which cost him being elected Vice President of the Philippines and criminal proceedings were filed by the Commission on Elections (Comelec) against Comelec personnel as well as Smartmatic employees, with Election Commissioner Rowena Guanzon stating that Smartmatic had violated protocols. After a Smartmatic employee fled the country, Bongbong Marcos accused the Comlec for his "escape", though two other Smartmatic personnel, one from Venezuela and the other from Israel, were present for criminal proceedings. In July 2016, it was reported that Smartmatic funneled votes through "unofficial servers". In an October 2016 editorial, The Manila Times called on all members of Comelec to resign due to the "innumerable controversies since its adoption of the Smartmatic-based Automated Election System".

2016 Utah republican presidential primaries

In the 2016 Utah Republican caucus, where Utah Republicans voted to choose the party’s nominee for president in the 2016 US Presidential election, the voters had the opportunity to vote using traditional methods or to vote online. For online voting, the Utah Republican Party used an internet voting system developed by the Smartmatic-Cybernetica Internet Voting Centre of Excellence, based in Estonia.

Despite warnings from security experts, Utah GOP officials billed the online voting system, for which the state paid $150,000. Multiple issues occurred with the system, with voters receiving error messages and even being blocked from voting. Smartmatic received thousands of calls from Utah voters surrounding issues with the process. The Washington Post states that "the concern seems to be less with the technology and more with the security of the devices people use to vote".

According to Joe Kiniry, the lead researcher of Galois, a technology research firm:

Several of us did a lightweight analysis of it remotely, to see how it was built and deployed and this sort of thing ... we found that they were using technologies that even modern Web programmers stay away from. ... It’s like the dumbest possible choices are being made by some of these companies with respect to deployed technology that should be mission-critical!

Venezuela

Smartmatic has been the main technology supplier for the last fourteen Venezuelan national elections.

These included:

2004 Venezuela recall referendum

Prior to the recall referendum, the Venezuelan National Electoral Council (CNE) began a tender process to choose a company to modernize the country’s automated voting system. Smartmatic took part in the bidding as a member of the SBC Consortium. After evaluating all the offers, the electoral authorities chose the SBC Consortium. The SBC Consortium was formed by Smartmatic, providing all the voting technology, Bitza Software, in charge of the audit processes, and CANTV de Venezuela, taking care of the telecommunications infrastructure.)

After the presidential recall referendum of 2004 in Venezuela, some controversy was raised about the use of electronic voting (SAES voting machines) in that country. The legal basis for this process of automation is found in Article 33(42) of the LOPE (2002), and in Article 154 of the LOSPP (1988).

One study following the 2004 Venezuela recall elections found that Smartmatic's network was "bi-directional" with data being able to be transferred both ways between Smartmatic devices and the state-run telecommunications company CANTV, with irregularities found between the Smartmatic and Venezuela's National Electoral Council election results.

Other independent election monitors claimed fraud and submitted appeals, and statistical evaluations including a peer-reviewed article in 2006 and a special section of 6-peer-reviewed article in 2011 concluded that it was likely that electronic election fraud had been committed. The analysis of communication patterns allowed for the hypothesis that the data in the machines could have been changed remotely, while another of the articles suggested that the outcome could have been altered from about 60% against the sitting president, to 58% for the sitting president.

Yet, representatives from international election observation agencies attested that the election conducted using SAES was at that time fair, accurate and compliant with the accepted timing and reliability criteria. These agencies included the Carter Center, the Organization of American States (OAS), and the European Union (EU).

Jennifer McCoy, Carter Center Director for the Americas, stated that several audits validated the accuracy of the machines. “We found a variation of only 0.1% between the paper receipts and the electronic results. This could be explained by voters putting the slips in the wrong ballot box”.

2005 Venezuela parliamentary election

Prior to the 2005 Venezuela parliamentary election, one technician could work around "the machine's allegedly random storage protocols" and remove voting secrecy. Since the voting systems were Windows based and only randomized data, the technician was able to download a simple software that could place Windows files in order. Following this revelation, voter turnout dropped substantially with only 25% of registered Venezuelans voting and opposition parties withdrawing from the election. This resulted in Hugo Chávez's party, as well as his allied parties, to control 100% of Venezuela's National Assembly

2012 Venezuelan presidential election

In October 2012, Smartmatic participated in the elections of 3 countries. In Venezuela, October 7, for the first time in the world, national elections were carried out with biometric voter authentication to activate the voting machines. Out of 18,903,143 citizens registered to vote in the presidential elections, voter turnout was around 81%, both record figures in Venezuelan electoral history.

Other endeavors

USP (from Smartmatic Security Solutions) was installed in more than 500 branches of Santander-Serfin Bank, (Mexico). Since 2006, the Office of the Mayor of Metropolitan Caracas in Venezuela began the installation of the integrated public security system that helps authorities to provide immediate response to citizens whose safety has been jeopardized. In 2011, The District of Cartagena in Colombia selected Smartmatic as technology provider for the new Financial Administration Service of the Integrated Mass Transit System (Transcaribe), which will operate based on a highly automated fare collection and fleet control system.

The Smartmatic Identity Management Solution has been deployed in Bolivia (Biometric Voter Registration for the Bolivian National Electoral Court (July 2009 – October 2009) with 5.2 million people registered); Mexico (Provision of enrollment terminals and software for the National ID Program of the Secretariat of Governance (Dec 2009 – Dec 2012) with 100 million people to be registered); and Zambia (Provision of enrollment terminals and software for Digital Mobile Voter Registration contracted by The United Nations Development Programme (UNDP) & Electoral Commission of Zambia (February 2010 – October 2010).

Philippines

Smartmatic has been criticized by various entities for its motives and handling of elections in the Philippines.

The Manila Times has stated that Smartmatic's system was unreliable, glitchy and vulnerable to tampering. After the newspaper reported that Smartmatic had been funneling voter information through "unofficial servers", The Manila Times ultimately called on officials from the country's electoral body, Comelec, to resign. In early-2017, The Manila Times reported that Smartmatic machines were equipped with SD cards where voter entries are recorded, citing Glenn Chong, a former congressman of the NGO Tanggulang Demokrasya (TANDEM) stating that "at least one SD card was tampered with", allegedly showing that Smartmatic's system was "very much open to hijacking or sabotage".

The IBON Foundation, a non-profit research organization based in the Philippines also criticized Smartmatic's system, stating in 2016 that "Why Smartmatic keeps on winning Comelec contracts boggles the mind especially considering the numerous and major malfunctions by the machines and services that Smartmatic provided in the past two elections" and that there were "allegations of rigged bidding to favor Smartmatic such as designing contracts where only Smartmatic can qualify or omitting requirements that will otherwise disqualify Smartmatic". IBON also noted that Lord Mark Malloch-Brown, chairman of Smartmatic's holding company SGO, had previously intervened in Philippine elections before, being the chief strategist of Corazon Aquino in 1986 when she led the People Power Revolution against the dictator Ferdinand Marcos. Brown, speaking of his previous achievements involving Philippine elections June 2015 stated that an "outstanding accomplishment during the Cory campaign was to produce an exit poll that indicated that she had won", with IBON further describing him as "a foreigner who made a career out of influencing elections".

Relationship with Venezuelan government

Links to the Bolivarian Government of Venezuela have raised suspicions that Smartmatic may have been funded by the Bolivarian government. The company went from a small start-up with no electoral experience to a major electronic voting company in a few years. Venezuela's previously existing laws that were established before Hugo Chávez's Bolivarian Revolution stated that automated voting was required in Venezuela, with United States firm Election Systems & Software and Spanish company Indra Sistemas already being used in the country.

Affiliations with Bolivarian government politicians raised suspicions, with instances of an interior vice minister, Morris Loyo, being hired to lobby for Smartmatic contracts and with the company paying for the National Electoral Council (CNE) president Jorge Rodríguez to stay at a private resort in Boca Raton, Florida. A lawyer who had worked with Rodríguez, Moisés Maiónica, was also employed by Smartmatic, providing legal and financial assistance that allowed it to provide voting systems for the 2004 elections. Both Rodríguez and Maiónica were central for Smartmatic's first major contract for the 2004 recall elections. After Venezuelans demanded a recall referendum against President Hugo Chávez, the pro-Chávez electoral board, the CNE, contracted Smartmatic to produce automated voting machines, paying the company $128 million, with Smartmatic retrofitting gambling machines to be used for the process. Years after the election in December 2008, Maiónica pled guilty in the United States District Court for attempting to cover up Maletinazo scandal, an incident where Hugo Chávez attempted to finance Cristina Kirchner's 2007 Argentine Presidential Election campaign to influence Argentina's presidential election, with Maiónica stating that he was working for Venezuela's spy agency, the National Directorate of Intelligence and Prevention Services.

In April 2008, Alfredo José Anzola Jaumotte, a co-founder of Smartmatic was gravely injured in a plane crash. Diosdado Cabello, a high ranking Venezuelan official, personally ordered for Anzola to be moved to better equipped hospital in Caracas following the incident. Multiple Venezuelan officials that included Jorge Rodríguez and Minister of Interior and Justice Ramón Rodríguez Chacín, who was related to Anzola, accompanied Anzola on his death bed.

Acquisition and divestiture of Sequoia

In 2005, Smartmatic acquired Sequoia Voting Systems, one of the leading US companies in automated voting products. Following this acquisition, U.S. Representative Carolyn B. Maloney requested an investigation to determine whether the Committee on Foreign Investment in the United States (CFIUS), a committee of the United States Department of the Treasury that reviews whether companies in the United States are being controlled by foreign individuals, had followed correct processes to green-light sale of Sequoia to Smartmatic, which was described as having "possible ties to the Venezuelan government".

The investigation was prompted after a March 2006 electoral fiasco in Chicago and Cook County, where a percentage of the machines involved were manufactured by Sequoia, and Sequoia provided technical assistance, some by a number of Venezuelan nationals flown in for the event. According to Sequoia, the tabulation problems were due to human error, as a post-election check identified only three mechanical problems in 1000 machines checked. Election officials blamed poor training. Some problems with the election were later blamed on a software component, developed in Venezuela, for transmitting the voting results to a central computer. A local alderman said the troubles could be due to an "international conspiracy".

After initially cooperating with the CFIUS investigation in October 2006, particularly to clarify the company's ownership, Smartmatic withdrew in December 2006 and sold Sequoia without sharing who may have been involved in the company. Even though Smartmatic had sold Sequoia, it was found that it still licensed software developed in Venezuela that Sequoia used to count votes and that Venezuelan nationals had codes to access Sequioa systems.