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.”

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