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Smartmatic to Bail From E-Voting Business

It looks like one time through the unruly U.S. electoral cycle was one time too many for Smartmatic.

After suffering through a difficult year on both regulatory and public relations fronts, the Boca Raton, Fla.-based technology vendor announced that it will try to find a buyer for its Sequoia Voting Systems unit, which it acquired in March 2005.

Antonio Mugica, president of Smartmatic, said the company reached this decision in light of the debate over foreign ownership of the voting systems vendor.

"Given the current climate of the United States marketplace with so much public debate over foreign ownership of firms in an area that is viewed as critical U.S. infrastructure -- election technology -- we feel it is in both companies' best interests to move forward as separate entities with separate ownership," Mugica said in a statement. "As part of this process, we plan to sell our Sequoia Voting Systems ownership."

But Sequoia has also been under fire because of how its voting systems are designed.

The company was criticized heavily by election integrity activists just days before the November elections, when a California group revealed that Sequoia's AVC Edge electronic machines could be set to allow a single voter to cast multiple votes.

Oakland, Calif.-based Sequoia agreed to address the issue after the elections and then resubmit the machine for certification.

That was far from the only hurdle the company was facing.

Smartmatic voluntarily submitted its acquisition of Sequoia to a review by the federal government after Congresswoman Carolyn Maloney asked the Treasury Department to investigate possible ties between Smartmatic and Venezuelan president Hugo Chavez.

The Treasury heads an interagency group called the U.S. Committee on Foreign Investment in the United States (CFIUS), which reviews foreign acquisitions of U.S. companies with possible national security ramifications.

The acquisition of Lucent by French telecom equipment vendor Alcatel was cleared by a CFIUS review last month.

Smartmatic, a privately held company owned by Venezuelan nationals, maintained that it was not controlled by Chavez or any other Venezuelan government official.

In the wake of its decision to find an acquirer for Sequoia, however, Smartmatic said it was withdrawing from the CFIUS review process.

The company said revenues at Sequoia grew four-fold since 2005, and indicated that it expects to get a good price for the voting-machine vendor.

"Sequoia and Smartmatic are two great companies with very bright futures, and we do not want the companies' ownership to be a distraction," said Mugica. "Therefore, we prefer to sell Sequoia to U.S. interests in order to give both companies the best possible futures."