New York Times

Antonio Mugica, chief of Smartmatic, at the testing center for the company's electronic voting machines.

Gabriel Osorio for The New York Times
Antonio Mugica, chief of Smartmatic, at the testing center for the company's electronic voting machines.

A Crucial Vote for Venezuela and a Company

Published: July 20, 2004

CARACAS, July 19 - Most Venezuelans see the coming referendum on the rule of President Hugo Chávez as a chance to rebuild this divided nation. But Antonio Mugica, chief executive of the networking company Smartmatic, sees a phenomenal marketing opportunity for his company's voting technology.

Smartmatic's voting machines will be used for the first time in the Aug. 15 referendum that is likely to be one of Venezuela's most hotly contested elections, making the company's baptism by fire an all-or-nothing gamble that its first electoral count will be flawless.

"If we can prove that this product works under the most hostile of conditions, we can sell it anywhere in the world," said Mr. Mugica, a 30-year-old Venezuelan electronic engineer, in an interview in his downtown Caracas office. "That's our marketing strategy."

The gamble is a big one. Smartmatic will have to navigate the turbulent waters of Venezuela's political struggle, which in just over two years has led to a coup d'état that briefly removed Mr. Chávez from power and a two-month strike that briefly almost shut down the crucial oil industry. Any operational glitches leading to accusations of fraud or vote manipulation would scar the company's reputation.

But if all goes well, Smartmatic could become a rising star of the budding world of electronic voting, which in this year's United States presidential elections will be used by an estimated 30 percent of voters, compared with 9 percent in 2000, according to one election expert.

Smartmatic expects its sales to rise from less than $10 million in 2003 to more than $100 million this year, and it expects steady growth if the recall vote goes without a hitch.

Mr. Mugica and his childhood friend Alfredo Anzola opened Smartmatic in Boca Raton, Fla., in 1999, intent on developing applications for the emerging field of device networking, which allows electronic devices like cameras and alarm systems to share information.

But after living through the Palm Beach County ballot-counting uproar in the 2000 presidential elections, the two decided that the best application of their networking platform was as an electronic voting system.

This year, Smartmatic teamed with the Venezuelan telephone company CANTV, which is 6.6 percent owned by the government, and a Florida engineering company, Bizta, to form a consortium called SBC. In February, the group won a $63 million contract to sell 20,000 of its newly designed SAES 3000 election machines and licenses for their software to Venezuelan authorities for $63 million and a $27 million contract for service during the recall vote.

But this booming business has not come easy. Opposition leaders attacked the electoral authority's decision to hire a company with no electoral experience for such a sensitive vote, complaining that the selection process had not been open enough. The credibility of Smartmatic took another hit in May when The Miami Herald reported that the Venezuelan government owned a 28 percent stake in Smartmatic's partner company Bizta, leading the opposition to suspect that the government would rig the results. Bizta quickly bought out the government's stake.

Smartmatic representatives said they never expected the subject of impartiality to come up, indicating that the company was as inexperienced in managing its public image as it was in counting votes.

Critics of electronic voting also say that Smartmatic is providing an overengineered solution to a situation where a manual count would work just as well.

"The Venezuelan referendum has to be the simplest election I've ever heard of - yes versus no," says Aviel Rubin, an associate professor of computer science at Johns Hopkins University who has researched electronic voting. "A paper ballot vote with a manual vote count would be the most transparent way to hold this election."

Mr. Mugica says the country's long history of electoral fraud makes this impossible. But even opposition leaders admit they are less wary of Smartmatic than of the National Electoral Council, Venezuela's electoral authority, which is dominated by a pro-Chávez directors. In March, the board, citing technicalities, discarded hundreds of thousands of signatures requesting the recall referendum. The action led to violent protests that left 14 dead and dozens wounded.

Last Sunday, Smartmatic held test votes in more than 4,000 locations around the country to prove the reliability of its voting machines, which include encryption that the company says will make fraud statistically impossible. The company's touch-screen voting machines, roughly the size of a desktop printer, are the first of their kind to print a paper record that allows for a manual recount.

The test vote used the country's two rival baseball teams as candidates, the Leones of Caracas and the nearby Valencia Magallanes team. The results, however, were not released, as Mr. Chávez is a known Magallanes fan, an indication of the political eggshells the company is walking on.

Ezequiel Zamora, an opposition director on the National Electoral Council, said of the technical performance, "The equipment worked perfectly."

Mr. Mugica, who as a 9-year-old was already programming simple video games on a 1983 Hewlett-Packard 86B desktop computer, says he believes that electronic voting is an improvement over manual-count elections. Nonetheless, he acknowledges that his engineering background gives him an unusual perspective on elections.

"Venezuelans are obsessed with the referendum for its political implications," he said. "But for me, it's really just a networking challenge."

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