U.S. firms deny link to Chavez

WASHINGTON — A U.S. manufacturer of touch-screen voting machines confirmed Sunday it was being investigated by the federal government for alleged ties to Venezuelan President Hugo Chavez but flatly denied any connection.

Sequoia Voting Systems Inc., based in Oakland, Calif., said the Committee on Foreign Investment in the United States, or CFIUS, was conducting the formal inquiry into it as well as its parent software company, the Smartmatic Corp., at the firms' request after news articles suggested improper ties.

The inquiry was focusing on last year's acquisition of Sequoia by Smartmatic, which is owned by three Venezuelans, and whether Chavez's leftist government has any influence over their operations. Smartmatic is based in Boca Raton, Fla.

Chavez is a longtime foe of the Bush administration who drew criticism from lawmakers of both U.S. parties last month after he called President Bush "the devil" in a speech at the United Nations.

"Sequoia and Smartmatic are not connected, owned or controlled by the Venezuelan government whatsoever," Jeff Bialos, a Washington attorney representing the two firms, said in a telephone interview.

"There's no basis for the allegations. We were trying to prove a negative, so the two companies voluntarily submitted a notice asking CFIUS to review the acquisition to put to rest the press allegations," he said.

Brookly McLaughlin, a spokeswoman for the Treasury Department, which oversees the foreign investment committee, said Sunday that CFIUS has been in contact with Smartmatic but declined to comment as to whether there was a formal investigation.

The probe, disclosed in the final days before the November congressional elections, comes amid growing concern about the reliability of electronic voting machines in what are expected to be many tight races nationwide.

A report released earlier this month by The Century Foundation think tank found problems with malfunctioning voting machines in 10 states it sampled. Activists, meanwhile, have filed lawsuits in at least nine states contending the new electronic voting machines are not secure.

The inquiry also comes after the political furor earlier this year over a buyout that put a Dubai company in control of some operations at six American ports. The outcry led the Dubai company, DP World, to promise it would sell the U.S. operations to an American company.

Rep. Carolyn Maloney, D-N.Y., said Sunday she welcomed the formal review after she asked the government in May to examine the Sequoia takeover.