Congress o f tbe @hitell States
ZllJlafibington, B d 20525
October 6,2006
Henry M. Paulson, Jr.
Secretary
Department of the Treasury
1500 Pennsylvania Ave., N.W.
Washington, D.C. 20220
Dear Mr. Secretary:
I am writing to follow up on my letter of May 4,2006, to Secretary Snow, seeking review
by the Committee on Foreign Investment in the United States of the acquisition of Sequoia Voting
Systems by Smartmatic, a foreign-owned company. I believe this transaction raises exactly the sort
of foreign ownership issues that CFIUS is best positioned to examine for national security concerns.
As discussed below, publicly reported information about Smartmatic's ownership and about the
vulnerability of electronic voting machines to tampering raises serious concerns. I strongly urge
CFIUS to independently verify the information provided to American officials and the public by
SequoiaISmartmatic, and to take all appropriate measures to safeguard our national security.
It is undisputed that Smartmatic is foreign-owned and it has acquired Sequoia, one of the
three major voting machine companies doing business in the U.S. According to a Sequoia press
release in May 2006 (copy attached) Sequoia voting machiies were used to record over 125 million
votes during the 2004 Presidential election in the United States. As we confront another election,
Americans deserve to know that the Administration has made sure that any foreign ownership of
voting machines poses no national security threat.
Although many press reports have tried, it appears that it is not possible to discern the true
owners of Smartmatic from information available to the public. Smartmatic now acknowledges that
Antonio Mugica, a Venezuelan businessman, has a controlling interest in Smartmatic, but the
company-bas not revealed who all the other Smartmatic owners are. According to the press,
Smartmatic's owners are hidden through a web of off-shore private entities. (See attached articles.)
The opaque nature of Smartmatic's ownership is particularlytroubling since Smartmatichas
been associated by the press with the Venezuelan government led by Hugo Chavez, which is openly
hostile to the United States. According to press reports, Smartrnatic shared a founder, officers,
directors and a principal place of business with Bizta, a company in which, according to Smartmatic,
the Venezuelan government previously held a 28% stake. Mugica is also a director of Bizta.
PRINTED ON RECYCLED PAPER
Henry M. Paulson, Jr.
October 6, 2006
Page 2
According to Smartmatic press releases, (copies attached) Smartmatic and Bizta were part of the
consortium that received the government contract to provide the voting machines for the 2004
referendum election to recall Chavez as Venezuela's president, and have since been awarded other
contracts by the Venezuelan government.
Smartmatic's possible connection to the Venezuelan government poses a potential national
security concern in the context of its acquisition of Sequoia because electronic voting machines are
susceptible to tampering and insiders are in the best position to engage in such tampering. The 2005
Government Accountability Office Report on electronic voting, GAO-05-956, and other private
sector studies consistently support this conclusion. Thus, the reports that Sequoia brought
Venezuelan nationals to the United States to work on the Chicago 2006 primary election raises
questions about whether these individuals are subject to direction from a foreign interest that might
pose a threat to the integrity of the election. Similarly, the use of Smartmatic software and machines
developed in Venezuela, such as the HAAT software that was at issue in Chicago, raises questions
as to whether this software is susceptible to manipulation by its unknown creators. Reportedly,
Smartmatic may soon be introducing into the United States the type of electronic voting machines
that were used (with Bizta software) in the controversial 2004 Venezuelan recall election, under the
label AVC Edge 11 Plus.
In reviewing the Smartmatic acquisition of Sequoia, it is important that CFWS understand
the products and services that are of Venezuelan origin and evaluate Smartmatic's ownership to
determine who could have influence and control over these and other Sequoia products and services
that are in use or intended for use in U.S. elections. In light of Smartmatic's failure fully to answer
these questions to date, this issue demands the most thorough independent investigation by CFWS.
Thank you for your consideration of this letter.
Sincerely,
Member of Congress u
Attachments
