Smartmatic’s controversial track record and alleged ties with the Venezuelan government is now the subject of a post qualification probe by the Commission on Elections (Comelec), even as its automation machines hurdled the systems requirement for the May 2010 polls.

Comelec Special Bids and Awards Committee (SBAC) chair Ferdinand Rafanan said they are also verifying “who really owns the patent” for the technology that Smartmatic will use in the automated elections, as well as its relationship with two other Taiwan-based companies.

Smartmatic is the other half of the consortium that has been pre-qualified by the SBAC to bid for the poll automation project, where six other groups competed. Its local partner is Total Information Management (TIM).

It submitted a bid of P7.2 billion for the right to implement the country’s first automated national polls.

Venezuela ties

Founded in 2000, Smartmatic has offices in the US, Mexico, Venezuela, Barbados, Spain, Taiwan, and the Philippines.  Critics, however, pointed out that Smartmatic has only implemented a nationwide election operation in Venezuela.

In 2006, the US Treasury investigated Smartmatic over alleged ties to the anti-US Venezuelan government of President Hugo Chavez. The probe was prompted after it acquired Sequioa Voting Systems, one of the US leading election equipment providers. The probe centered on the alleged secret partnership between Smartmatic and the Venezuelan government.

Similarly, another probe was conducted by the US State Department over allegations that Smartmatic evaded taxes and bribed its way in cornering the US$91 million contract to supply voting machines in Venezuela. In 2004, Smartmatic bagged the contract for the presidential recall referendum in Venezuela which Chavez won. The result of the election was widely questioned.

Smartmatic has denied the allegations but the pressure forced it to sell its stakes to Sequioa that year.

Questions over the patent for the technology that Smartmatic will use cropped up during the SBAC's pre-qualification stage after it was found out that what it submitted as certificate of acceptance--which indicates that the technology has been implemented in previous elections--belonged to Dominion Voting System, an election provider in Canada.

Smartmatic said it will use “Smartmatic Auditable Election System 1800” or SAES 1800 for the polls. Its company website brags that it has an accuracy rate of 99.99999 percent accuracy rate, better than the SBAC requirement of 99.995 percent.

The suspicion is that SAES 1800 actually belongs to or is a prototype of Dominion’s technology. Smartmatic, however, claims it owns the patent.

As for Smartmatic’s relationship with two Taiwan-based firms, it was losing bidder Avante International that questioned its ties with Jarltech International Inc., and Kenmec Mechanical Engineering.

No subcontracting

Avante said it appears that Smartmatic will engage Jarltech to manufacture its machines. However, it also appears that Jarltech will subcontract the job to Kenmec. The SBAC has ruled that the winning bidder should not engage in subcontracting the manufacture of the machines.

Such set-up, Avante warned in a letter to SBAC, puts the government in a “disadvantageous position” since they--Jarltech and Kenmec--will not be jointly and severally liable if something goes wrong with the project.”

“The government may not have any legal standing in collecting unliquidated damages if Jarltech, Kenmec, or Dominion abscond in their responsibilities to provide the critical component of the project,” Avante pointed out.

Rafanan said the SBAC is trying to determine the actual ties among Smartmatic, Jarltech and Kenmec.

He said he has already signed letters and sent them to some parties to verify Smartmatic’s claims and documents.

Rafanan said that if it is proven that Smartmatic made false claims or misrepresentation in its documentary requirements, the P11.3 billion automation contract will not be awarded to the consortium, even if its machines pass all the system evaluation.

“Laws will be violated” if the contract is awarded to Smartmatic but then fails the post-qualifcation stage, Rafanan said. “I will go to jail and I cannot afford that.”

As of this posting, Smartmatic’s machines have passed 19 criteria out of the 26 in the SBAC list. Its demonstration machines also were able to pass the accuracy rate with 100 percent, Rafanan said.