U.S.-LED CONSORTIUM TO PROVIDE ELECTORAL

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out-of-date technology.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
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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