Sale Ending Voting Machine Probe

By Laura Wides-Munoz
The Associated Press

Friday 22 December 2006

Miami - A major voting machine company owned by Venezuelan investors said Friday it plans to sell its U.S. subsidiary, ending a federal investigation into questions of possible ties between the company and Venezuelan President Hugo Chavez.

In March 2005, Smartmatic Corp. acquired Sequoia Voting Systems Inc., which produces touch-screen and other machines and is one of the largest voting equipment makers in the U.S.

The U.S. government began informally reviewing the deal earlier this spring after a request by Rep. Carolyn Maloney, D-N.Y., who cited a potential risk to the integrity of U.S. elections.

Smartmatic CEO Antonio Mugica, who has dual Spanish-Venezuelan citizenship, later called for an official investigation to clear the company. He and other company officials insist the Venezuelan government has never had any stake in Smartmatic, which is headquartered in Boca Raton, or in Oakland, Calif.-based Sequoia.

Sequoia spokeswoman Michelle Shafer said Friday that a buyer had not been found. Still, the sale announcement effectively ends the U.S. investigation by an interagency panel, the Committee on Foreign Investment in the United States.

Although the federal review had not yet concluded, the committee has agreed to allow the company to withdraw from the process, Treasury Department spokeswoman Brookly McLaughlin said.

"CFIUS will closely monitor the sale process," she said.

There was no immediate reaction from the Venezuelan government.

William Castillo, spokesman for Venezuela's National Electoral Council, said its nonpartisan members would not be making comments about what was exclusively a Smartmatic issue.

Although Venezuela is a top provider of U.S. oil, Chavez is a longtime foe of the U.S. government. During a recent speech at the United Nations, he called President Bush "the devil."

Sequoia officials said the controversy would not affect their company's role in U.S. elections.

"We believe Sequoia is well positioned to become the undisputed leader in the U.S. elections market," Sequoia President Jack A. Blaine said in a statement.

In the November election, 16 states and the District of Columbia successfully used Sequoia's electronic, touch-screen and optical scan voting machines, the company said. More than 50 percent of the machines provided paper audit trails, it said.

Smartmatic machines were also used during the this month's Venezuelan presidential election, which was certified by international observers including the Organization of American States and the European union.

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Associated Press Writer Ian James in Caracas, Venezuela, contributed to this report.

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