Philippine authorities allege Smartmatic “is compromised.” In the past, the software contractor has been linked with murky controversies and mysterious fortunes. The debacle casts a dark shadow over the 2022 Philippine election.
According to the Philippine Cybercrime Investigation and Coordination Center (CICC), the system of Smartmatic, the contractor of the Commission on Election (Comelec), “is compromised” and not the server of the poll body. The tentative results of the CICC inquiry were disclosed on Friday in the Joint Congressional Oversights Committee, as reported by The Manila Times.
Since 2004, Smartmatic’s election technology has been used in Africa, Latin America, Europe, Asia, and the United States. These activities have gone hand in hand with vocal controversies, particularly in Venezuela, the US and Philippines.
Smartmatic’s PH debacles – from cyber ploys to Bautista
Some three years ago, Senator Vicente Sotto III called for probe on alleged manipulation of May 2016 poll results in the Philippines. The alleged irregularities surfaced with the contest for Vice President.
Days after the May 2016 elections, Ferdinand “Bongbong” Marcos Jr. alleged that Smartmatic had tampered with the votes which cost him being elected Vice President. Marcos attributed his narrow and controversial defeat to Liberal Party’s Leni Robredo to discrepancies and irregularities in Comelec’s servers and data. Currently, Bongbong and vice-presidential hopeful Sara Duterte dominate Philippine election surveys, with Robredo far behind.
The debacle about Comelec’s data was soon linked with Andres “Andy” Bautista, a constitutional legal expert, who was appointed Comelec’s chairman in 2015 by former President Benigno Aquino III. In 2010-15, Bautista had served as Aquino’s chair of the Presidential Commission on Good Government (PCGG), whose primary mandate had been to recover “ill-gotten wealth” accumulated by Bongbong Marcos’s father, Ferdinand Marcos.
Yet, PCGG itself has been implicated in several corruption scandals. One of these involves its chairman Bautista. The story goes back to 2017, when his estranged wife Patricia Paz Bautista released information on his unexplained wealth.
How to make P1 billion while “fighting corruption”
Following his wife’s disclosures, Bautista announced he would resign as Comelec chairman hoping to get out in time. But the House of Representatives voted to impeach him. Shunning the House and the Senate committee subpoena, Bautista “disappeared.” In early 2018, he surfaced in the US claiming he could not travel, due to ill health.
Documents presented by his wife to the National Bureau of Investigation (NBI) indicated that her husband had a boxful of bank books and documents for undeclared wealth worth P1billion, or $20 million.
In May 2021 the Court of Appeals affirmed the findings of the National Privacy Commission (NPC) that Bautista had violated Philippine data privacy Act in the April 2016 data breach; just a month before election. The breach placed the personal information of millions of Filipino voters at risk.
In 2016, when the Pandora Papers exposed an alleged shadow financial system for the world’s richest, it also featured Bautista and his Baumann Enterprises Ltd, registered in the British Virgin Islands in 2010. The same year when Aquino made him the chair of the PCGG to fight corruption. The offshore company was reincorporated in 2017, when Bautista got in hot water. It was not declared in his official Statement of Liabilities, Assets and Net Worth (SALN).
When Bautista was officially investigating Marcos’s wealth, he was unofficially accumulating his own ill-gotten wealth.
But if the Smartmatic Philippine story is Kafkaesque, its own story is even more so.
Smartmatic’s odd origins
Over two decades ago, three engineers, led by Antonio Mugica, began to develop a new election technology in Venezuela. After the controversial 2000 US election, they saw an opportunity. With funds from private investors, they incorporated in Delaware in 2000. One of the investors was Jorge Massa Dustou, Venezuela’s richest man married with the sister of Gustavo Cisneros, a billionaire and Dustou’s former boss. Reportedly, Cisneros bankrolled the failed 2002 Venezuelan coup d’état attempt against Hugo Chávez.
When Mugica’s company got funds from the Chavez government, the US began to investigate Smartmatic’s links to the Venezuelan government. And so, the software contractor moved quickly its HQ to London in 2012. Two years later, in a murky reorganization, CEO Mugica and British Lord Mark Malloch-Brown launched SGO Corp. Ltd. The holding company’s key asset was Smartmatic.
Malloch Brown’s Philippine ties stem from the mid-1980s when the former Economist journalist became the lead international partner at the Sawyer-Miller Group, Presidential hopeful Corazon Aquino’s PR agency. After a poll controversy, Aquino won, but tightly and Malloch Brown formed a close relationship with the thankful family dynasty. Cooperation was re-ignited ahead of the 2010 election, when Benigno S. Aquino III became the first Philippine President whose votes were counted by Smartmatic, despite persistent allegations about systemic vulnerabilities.
In July 2015, Malloch Brown returned to the Philippines. Subsequently Comelec’s Bautista awarded Smartmatic contracts at a total of P2.6-billion in the 2016 election.
But Smartmatic was a small stepping stone for Malloch Brown’s big ambitions.
Soros and his protégé
It is the interplay of public agendas and private gains that seems to be the common denominator of Malloch Brown’s activities with billionaire speculator George Soros, starting with the Brit’s Refugees International which focused on commodity-rich poor countries in which the West and Soros had “strategic interests” in the ‘90s.
Malloch Brown also joined the Soros advisors, ahead of the devastating conflict when the billionaire financed agencies cooperating with US authorities, such as Philip Goldberg – later US Ambassador to Philippines until his departure and alleged regime change plan in fall 2016, as The Manila Times reported at the time.
During the ’90s, Malloch Brown rented his apartment from Soros while working on UN assignments in New York. From the World Bank, he moved on to serve as the head of the UN Development Program and Kofi Annan’s deputy. Soros expanded his projects with Malloch Brown and UN, particularly in Eastern Europe where his Open Society Institute shaped the West’s post-Cold War agendas.
In 2002, Malloch Brown suggested that the UN and Soros’ Open Society work together to fund humanitarian functions, despite associated moral hazards. In exchange, Soros’ Quantum Fund in 2007 appointed Malloch Brown as VP, and vice chair of the Open Society. Yet, the Brit had no prior investment experience. Afterwards, he became chairman of the US-based FTI Consulting, one of the largest financial consulting firms, whose restructuring business made fortunes from the 2008 Great Recession.
When Malloch Brown stepped down as chair of SGO in December 2020, he was made the president of Soros’s Open Society Foundations. As Smartmatic’s chair, he was succeeded by Peter Vance Neffenger, a US Coast Guard Admiral and President Obama’s head of transportation security and a member of Biden’s transition team.
Trained in Harvard and US Naval War College, Neffenger was seen as the right man to protect elections worldwide (and to sell Smartmatic to skeptical Americans).
Smartmatic’s origins are overshadowed by the election software contractor’s odd associations and long trail of controversies, moral hazards, conflicts of interests and unexplainable fortunes in the name of “good governance.”
Perhaps sometimes those who speak loudest for “public interest, freedom and democracy” are but façades for private interests and oligarchies derailing the very democracy they purport to serve.
Electronic election software has great demand and multifaceted vulnerabilities.
This article was originally published in The Manila Times on 31 January 2022. It can be accessed here: https://www.manilatimes.net/2022/01/31/opinion/columns/smartmatics-global-controversies-follow-the-money/1831212
About the Author
Dr. Dan Steinbock is an internationally recognized strategist of the multipolar world and the founder of Difference Group. He has served at India, China and America Institute (US), Shanghai Institutes for International Studies (China) and the EU Center (Singapore). For more, see https://www.differencegroup.net/