In 2004, three Venezuelan engineers and their software company Smartmatic emerged from nowhere to win a $128 million contract to manage a referendum on the recall of Hugo Chavez.
When Chavez later won that referendum, the opposition turned on Smartmatic, accusing them of corruption and rigging the count for the socialist leader.
Now fast forwared to 2020 and Smartmatic is in the news again. Lawyers for President Donald Trump are linking the company to massive fraud and the election of Joe Biden. The software that helped Chavez cheat his way to victory, the lawyers say, is basically the same software used by Dominion Voting Systems to tally votes in the states that handed victory to Biden.
That’s the argument. But are the lawyers right about Smartmatic?
To answer this question, I’m going to break it down into three parts.
- Who is Smartmatic?
- Did they rig the election for Chavez?
- Is their software being used in the US today?
Smartmatic was founded in the late 1990s by three young software engineers: Antonio Mugica, Roger Pinate and Alfredo José Anzola.
They were focusing on markets like updating ATM machines in Mexico when the world’s attention was suddenly drawn to Florida, where the 2000 presidential election was coming down to several hundred bitterly contested votes.
The young engineers watched the world’s most technologically advanced nation squabble over poorly designed paper ballots, and they had an idea. Could their software technology be adapted to count votes electronically?
They moved quickly and soon formed a consortium involving three companies. There was Smartmatic, another software business called Bizta, which they also owned, and Venezuela’s big telecom provider CANTV.
This is where their first brush with controversy begins. The local press discovered that Bizta was also partly owned by the government. Furthermore, a Chavez advisor sat on its board.
So the young engineers were courting government officials to get business. This isn’t unusual in South America, but they would prove to be much better at it than most, especially one of the founders: Alfredo José Anzola.
Anzola was fiercely intelligent like his business partners. But he was also strikingly handsome and rumored to be dating the sister of a powerful Chavez ally named Jorge Rodriguez, who would eventually become vice president.
I looked into these rumors by combing through once-secret diplomatic cables sent from the US embassy in Caracas back to Washington DC.
One cable made a short reference to Jorge Rodriguez publicly accusing the political opposition of setting a car on fire in his sister’s buildiing.
The cable noted that a car near the fire was found to have a Smartmatic voting machine inside.
An educated guess says it belonged to Alonza.
This romantic connection would be key to Smartmatic’s early success because the girlfriend’s brother, Jorge Rodriguez, was also president of the National Electoral Council (CNE).
Before the referendum in 2004, the Electoral Council under Rodriguez suddenly canceled a contract with an experienced election company, and initiated a closed bidding process for a new contractor.
Despite having no electoral experience, Smartmatic emerged from nowhere and won the contract.
The CEO of Smartmatic today, the co-founder Antonio Mugica, insists everything was above board. But the company was dogged by accusations of corruption.
At one point, Smartmatic was forced to admit that they paid for Jorge Rodriguez to visit an exclusive resort in Boca Raton, Florida.
Rodriguez was eventually named vice president of Venezuela in 2007 while his sister, Delcy, would become a powerful politician in her own right. She is the country’s Vice President today, and both siblings are subject to international sanctions for their ties to the regime.
Smartmatic would also go on to bigger things. Now headquartered in London, they have overseen thousands of elections all over the world. CEO Mugica owns shares in their parent company SGO Corp. worth over 72 million pounds ($96 million) while fellow founder Roger Pinate is worth about 20 million pounds.
And what of Alonza, the romantic engineer who would visit his girlfriend’s apartment with a voting machine in the back seat of his car?
He would die in a plane crash in 2008. He was just 34.
According to the flight logs, the small plane was heading to the Caribbean island of Curacao when it developed engine trouble and turned back. But it didn’t make it, and crashed into a neighborhood killing all three people on board and several people on the ground.
There were rumors that the crash wasn’t an accident. Alonza was connected to the government, and it was revealed that the pilot was a convicted drug trafficker who had not only served time in a US prison, but was supposed to be in a Venezuelan prison at the time of the crash.
But the rumors came to nothing and the world moved on. The only trace I could find of Alonza today was a 0.94% stake in SGO Corp. worth about 1 million pounds in the name of Alfredo Anzola Mendez.
So what can we conclude from Smartmatic’s origin in Venezuela in the early 2000s? Close ties to powerful politicians and a remarkable success winning big contracts tied to these politicians.
That suggests corruption. But does it prove the bigger questions of was their software used to rig elections for Chavez, and was it later used to manipulate the US election this year?
Smartmatic was flush with cash after winning the election contract in 2004. Now they set their sights on the US.
In 2005, they bought the US voting machine company Sequoia Voting Systems. The Denver-based company had an extensive network of customers across the US but it was struggling financially.
Smartmatic brought in a high-flying executive named Jack Blaine from the multinational Unisys and quickly revived the company’s finances. They updated the old machines and introduced the cutting-edge election software they had been using in Venezuela.
But the success was short-lived. By 2007, they had caught the attention of the US government who were uncomfortable with a leading US election company being controlled by foreign owners, particularly those tied to the Chavez regime.
Smartmatic was ordered to cut ties with Sequoia.
And they did, to an extent.
Control was transferred to management including Blaine, and Sequoia got back to business. Until 2008 when another election company called Hart InterCivic attempted a hostile takeover.
The attempted buyout revealed something surprising. Despite being ordered to give up control of the American election company, Smartmatic and its Venezuelan owners still controlled Sequoia.
It turned out that Sequoia owed Smartmatic $2 million, so financial control lay with Smartmatic. Furthermore, Smartmatic still retained the rights to the new software that Sequoia was using.
I wondered about that debt. If Sequoia was supposed to sever ties with the Venezuelans and an experienced executive like Blaine was now at the helm, why would they want to remain obligated to Smartmatic?
According to the records of his divorce in 2004, Blaine had been earning $678,000 a year while at Unisys. After his divorce he had just over $2 million to his name.
Blaine had wealth, and probably could have secured financing from elsewhere, so why retain the link to Smartmatic when it was clearly an obstacle to doing business in the US? I can only speculate but it’s possible that Smartmatic insisted on retaining ultimate control while appearing not to.
In any case, once these ties were fully exposed they had to find an exit.
And this is where Dominion Voting Systems enters the picture. The small and relatively unknown company from Toronto was looking to expand into the US. The newly revamped Sequoia with their suite of new software products was a perfect fit.
Which brings us to the software. Designed by young and ambitious engineers in Venezuela. Used in very controversial elections involving the autocratic socialist leader Hugo Chavez. And now here in the US, to be used in elections across the country.
Was it really designed to manipulate vote counts and rig elections?
Let’s take a look.
In 2006, one year after starting their expansion into the US via the purchase of Sequoia, Smartmatic released a filing to the US government. The filing revealed the company’s shareholders.
After the three founders, the next biggest shareholder was Jorge Massa with just under 6% of the equity. Massa is an interesting individual. He is the founder of the pharmaceutical giant Grupo Mistral and one of Venezuela’s wealthiest businessman.
He is also closely linked to the country’s political opposition through his marriage to the sister of Gustavo Cisneros, a billionaire proponent of free enterprise with an American wife and deep ties to the Clintons.
US embassy cables from 2004 refer to Cisneros as an opposition figure. Cisneros was also said to be behind an attempted coup against Chavez in 2002.
So this poses an important question. Why would Smartmatic rig a vote count for Chavez when its shareholders included powerful businessmen opposed to Chavez’s rule?
There’s something else, and it occurred just after midnight on August 16, 2004, when the polls had closed on the Venezuelan referendum. Senior government officials, international observers and Antonio Mugica from Smartmatica were gathering in a room to reveal the results of the referendum.
The US embassy provided the following report sourced from an observer with the Carter Center, who were there that night. The report is copied in full below with light editing to clean up names and remove unnecessary text.
CNE Director Jorge Rodriguez invited select international observers to witness the tabulation around midnight. He said Rodriguez stood at the door and personally vetted each observer.
Rodriguez made a quick speech and then asked a general for the envelope with the security key. Rodriguez opened the envelope and entered the code to instruct the server that had received transmissions from the voting machines to run the tabulation program loaded on a second server.
A few moments later, the total showed that Chavez had won. The calculations took a few seconds, and the results stunned most of those present.
It was as if a bomb had exploded. CNE director Zamora, turned white. Smartmatic President Antonio Mugica, whose company provided the electronic voting system, was visibly shocked and asked whether the results were confirmed by Carter Center’s quick count. Mugica would “receive the academy award” if his surprise at the results was an act.
According to an observer with the respected Carter Center, a widely respected international monitor of elections, Smartmatica’s Mugica was shocked that Chavez had pulled off a victory.
The Carter Center and other observers later said they believed the referendum to be conducted fairly. Two years later in 2006, Chavez would win another election and numerous independent polls supported the result.
So what does this tell us?
Smartmatic probably acquired their early success through connections to politicians in the Chavez government.
But the investors in Smartmatic included powerful opponents of the Chavez regime. Why would they fund a company that would rig an election for Chavez?
And finally, a witness on the night of the election was convinced that Mugica was shocked that Chavez won.
It doesn’t prove Smartmatica didn’t rig the election for Chavez. But it does suggest they did not.
Now what about the third question I asked at the beginning of this story. Is Smartmatic’s software being used in the US today.
Up to this point in my research, I was starting to move away from the idea that Smartmatic is somehow connected to Dominion and that their software was manipulating votes.
The company is emphatic that there is no connection, and released this statement earlier in the week.
Smartmatic says they never provided Dominion with any technology. That’s pretty clear.
But is it true?
When I was researching another story I found a document from a product testing company called SLI. They had been asked by Dominion to help certify their products so they could be approved by the government.
This was in 2011, one year after they had bought Sequoia from Smartmatic, and Smartmatic was supposed to be barred from participating in US elections.
You can see the full test report here but take a look at the screenshot below, where there’s a reference to testing a product called HAAT.
Now look at this screenshot from a link I found online from Smartmatic.
There’s HAAT again. More importantly, Smartmatic describes HAAT as “one of the more than 20 US-patented inventions owned by Smartmatic.”
I’m not an expert in software but if HAAT was invented and patented by Smartmatic, and Dominion is clearly using a form of HAAT, then how is it possible for Smartmatic to say, as they did this week, that “they have never provided Dominion with any technology.”
Now I’m feeling skeptical again. It seems clear that Dominion did receive technology from Smartmatic, so why would Smartmatic deny it?
I can’t determine if Dominion is still using Smartmatic’s technology, or if it was used to do anything so dramatic as fiddle with vote counts.
But there may be a person who could answer this question. His name is Edilmo Palencia and according to his LinkedIn profile he was working for Smartmatic in Venezuela in 2004, at the time of the referendum on Chavez.
Palencia’s profile says he helped design and develop the software and hardware for the company’s first version of the voting machine, including HAAT.
Where is Palencia today?
In California and working at Microsoft, where he’s a principal AI engineer.
So here we are. America is bitterly divided over the results of the election. The president’s lawyers are accusing a software company with ties to the regime of Hugo Chavez of being involved.
And yet in California today there is someone who not only helped design the software, he was there in 2004 when it was used in the supposedly rigged referendum.
Maybe someone should give him a call.