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The Oakland Tribune

Sequoia quietly leading state e-voting

Foreign ownership an issue for rising Oakland company

June 18-19, Article Last Updated: 6/19/2006 02:32 AM
By Ian Hoffman, STAFF WRITER

For three years, the nation's two largest suppliers of voting machinery have driven feverishly for sales and shown the symptoms of overextension -- missed deliveries, faulty equipment and breach-of-contract lawsuits.

Until recently, the supplier running a close third kept a lower profile than competitors Diebold and Election Systems & Software, though quietly snapping up sales of voting systems on both coasts, all of Nevada and Louisiana, as well as Chicago and Cook County.

With a $13.3 million contract signed Friday by Alameda County, Sequoia Voting Systems arguably became the dominant voting-system maker in California, with more counties than any other.

Outside California, a controversy has sprung up over the foreign ownership of Oakland-based Sequoia.

Politicians in the Windy City and CNN journalist Lou Dobbs suggested recently that the federal government was derelict in not having investigated Sequoia and its acquisition last year by Smartmatic, a Boca Raton, Fla., firm largely owned by Venezuelan businessmen.

After Chicago and Cook County were plagued with delays this spring in tallying a primary, city alderman Edward Burke suggested Sequoia's voting machines were part of a conspiracy by Venezuela President Hugo Chavez to manipulate U.S. elections.

"We may have stumbled across what could be (an) international conspiracy to subvert the electoral process in the United States of America," Burke told reporters. ...

Soon after, editorial writers at Investors Business Daily warned that "we might just get ambushed again if the Venezuelan government ends up controlling our elections."

In late May, the U.S. Treasury Department requested Sequoia and Smartmatic documents on the transaction, as a potential preliminary to review by the Committee on Foreign Investment in the U.S., ...

Next to a television logo reading "Democracy for Sale," Dobbs said, "we know what we're dealing with, and it is a dysfunctional government that is trying to render our elections precisely the same."

The indignation has taken Sequoia executives by surprise, partly because Sequoia has been foreign-owned for 24 years. The firm's roots go back to 1890.

In the early 1980's, Sequoia was sold to the Irish printing conglomerate Jefferson Smurfit, which sold the company to De La Rue, a British banking technology and currency printing house. Sequoia lost money in 2004 and De La Rue sold it to Smartmatic Co. of Boca Raton, which is owned by companies of the Smartmatic Group based in the Netherlands and Curacao.

Smartmatic was a virtual unknown until 2004 when as part of a consortium, it won a $91 million voting machine contract in Venezuela. Another firm in the consortium, Bizta, had some of the same investors and had gotten a loan from the Venezuelan government secured by a 28 percent equity stake. The consortium's machines were used in the unsuccessful 2004 recall referendum against Chavez.

News of the Venezuelan government's stake in Bizta sparked protest, and Smartmatic officials said, Bizta paid off the loan before the election.

Smartmatic purchased Sequoia a year later, and executives of both companies say neither has ties to the Venezuelan government.

Sequoia executives say the purchase by Smartmatic, another voting company, has been a good fit.

"It is a wonderful and healthy partnership, and I couldn't be happier," said Howard Cramer, Sequoia's vice president of sales. The firm employs 150; just more than half are in Oakland.


Elections officials in the Chicago area say most of their problems in the March primary sprang from shifting to a new voting system of three different electronic components after decades of voting on punchcards.

For Cook County Clerk David Orr, Sequoia's foreign ownership is a "bogus issue," said Orr spokeswoman Kelly Quinn.

Critics of electronic voting say Sequoia's Venezuelan ownership isn't as much an issue as the industry's penchant for secrecy.

Doug Jones, a computer science professor and voting systems examiner in Iowa, said the company matters less if the voting machinery is open to public scrutiny.

"You care less about them if the system is patently transparent and you can tell whether it's honest," Jones said. "If we had sufficient transparency in our elections systems, the devil himself could build our voting systems and we could still hold honest elections."

Contact Ian Hoffman at ihoffman@angnewspapers.com