The Devil's Excrement

Primero Justicia has announced
its decision to withdraw from the upcoming National Assembly elections
next Sunday (Here isn their document). With this, all major parties except regional party Nuevo
Tiempo have announced their deciswion to withdraw. The election now
becomes another futile non-democratic exercize very much like that of
Venezuela’s twin counry Zimbabwe, run by Chavez’ buddy Mugabe.

What now Hugo?

The letter
below is a symbol of the failure if Chavez’ much ballyhooed “participatory:
democracy, words that he tried to force into the final document at the Mar del
Plata Summit but was unable too. This letter was sent before the march two
weeks ago which was so sparsely populated by Chavez’ supporters. This despite
this so called “invitation” to “obligatorily”
participate in it. Those that still believe that Chavez is so popular should
come down to earth with this. Despite money, letters like this and threats, people
still did not go to this march. So, my dear fanatics, what is your explanation this
time around? This is the text of the letter from the Mayor’s office:

To:
Directors, Heads of Department and Coordinators of Committees

The purpose
of this memo is to invite you, with obligatory character, to participate in the
march that will take place on Nov. 11 2005 which will leave Plaza Morelos at 8:30
AM and will reach the corner of San
Francisco. The motive is to show our solidarity with
the presence of President Hugo Chavez in the Summit
of the Americas in Mar de Plata, Argentina
and against imperialism.

Note that
all of the people thus invited were forced to sign as proof that they had seen
this cordial invitation by the fascist Mayor of Caracas.

And while we worry about electoral issues, the riots in the city of Merida over the death of a student have now spilled over to Trujillo,
where a student was shot dead and another injured in very violent
demonstrations. Lots of pictures in the media like the one above,
shwoing a burned truck in reaction to the news of the death of the
student

Yesterday, I talked to a few technical people who have been involved
with the electoral process. I inquired about the things they have done
in audit of the software and the machines and after digesting what they
said I wrote the post last night. Basically their message was that they
were comfortable that the possible flaws in the system had been removed
and with the removal of the fingerprint capturing machines from the
process, they were capable of saying that it would be quite difficult
to cheat in the upcoming process, even if the possibility of a very
tricky and novel Trojan horse could not be eliminated. Thus, I
concluded and wrote that we had to go and vote. This is still my
opinion based on all of the technical details given to me by various
people in the last two or three days after it became known that the
sequence of votes could be easily determined using a shareware program,
which could be downloaded by anyone for free from the Internet.

I was taken aback by the strong reaction today by political parties,
most of which had decided not to participate. I had thought the
discovery of the problem with the sequence was also a victory, that
would give voters more confidence in the system and would drive out the
vote.I also found that most comments in my post were against the
participation by the opposition in the upcoming elections to the
National Assembly. In fact, I was also surprised that nobody ( Not one!) in the
comments supported my idea of going to vote, which was (and still is)
based on technical aspects.

Today I also talked to a political friend, discussing the issues and I
think he put it very well from his point of view, in the following
fashion:

Imagine you have been involved with some tough political negotiations.
You don’t trust the other side and you are trying to get things to be
as positive as you can for your side. You give and take for a while,
you win some and lose some. For the last year and half (and three elections) you have seen
hundreds of millions of dollars spent on voting technology which you
disagree with, but you have come to believe only a few things about. One
of the few things you believe in, because you have been told with a
straight face, time and time again, is that it is impossible to know how people voted: the vote of each person is absolutely secret. Then the following things happen in sequence (and it is not a pun):

1) You are told by a group of technical people which you don’t even know) that
this is not the case. The sequence of votes is easily known by
inspecting the hard drive. They not only tell you, but proceed to show
it and prove it in front of the international observers and the CNE.

You bring this up and the reaction from Jorge Rodriguez, President of
the Electoral Board is: Impossible! Smartmatic, my people, my technical
people, have all told me this is simply not possible. This is simply an
attack on the CNE, you people are trying to boycott the whole process.

A meeting is held in which the technicians prove it to the point that it can not be denied.

2) Another meetng is held with the head of the CNE, showing him the
evidence that the sequence can indeed be known. On the advice of his
technical people he offers: We will erase the hard dives within 72 hours
of the vote removing all evidence and traces of it.

You go back to the technical people and they laugh at you. First they
tell you, the machines have a UBS port, so, at each polling station
anyone can simply copy everything and have the information, you simply
can not have control over 27,000 voting machines for 72 hours. Second,
there is no truly reliable way of erasing the information on disk.Any
reformatting, rewriting or erasing of the disk leaves traces of the
earlier information and basically the only possibility is to destroy
the 27,000 hard dives.

3) You go back and tell this to the Head of the CNE, who once again
shows his ignorance of these matters. At this point he offers to
disconnect the machines, which certainly does not sem to help much as
even if they are disconnected they keep the sequence which can be used
later to know the votes.

4) Finally you get him to accept the removal of the fingerprint
machines. This eliminates the correlation unless somebody at 27,000
voting tables keeps a precise record of the orderof each voter. This
seems acceptable, until the annoncement is made publicly and the same
guy who promised the world, says this is simply a concession to lower
abstention and threatens that even if they are being graciously removed
in this election, they will be there a year from now for the 2006
Presidential election.

At this point you give up. You simply can not go on accepting that this
guy is running the voting process. Forget it, we are out.

How would you feel, he says?

I understand, this has become emotional, political and even personal.
There has been lie, after lie, after lie and manipulation after
manipulation. These guys can no longer accept this. And that is why
they made their decision. It is a political and somewhat emotional
decision.

But, I still think that technically, there was sufficient guarantees
from opposition technical people to assure us a fair electronic voting
system. But the cheating and deceit (and ignorance!) on the part of CNE
President Rodriguez has been truly unbelievable. He lied and he used
hundreds of millions of dollars to violate the law and the secrecy. And
apparently, nothing will happen to him. Such are the ways of the
revolution.

So, here we are, four days to go. We still don’t know if Primero
Justicia will or not go. But I get the feeling it does not matter. The
level of confusion and mistrust on the CNE is such that I appear to be
a very miniscule minority that thinks that we should go vote. I
understand them, but I suspect that unless all parties withdraw and the
international observers back that position, not voting may even be a
more damaging alternative to voting. Obviously, if I have no
candidates, I will not vote, but it just does not feel right. We shall
see.

Accion Democratica has announced that it will withdraw its candidate
from the upcoming Assembly elections due to the security loopholes still
in place. Reportedly Primero Justicia will announce the same soon. Only
Nuevo Tiempo, the party of Zulia Governor Manuel Rosales, who would win
easily in his state, may keep its candiadtes in the upcoming election
next Sunday. Two sources are confirming Primero Justicia is withdrawing.Proyecto Venezuela has also withdrawn. MAS has indicated
it will participate in the election. This evening, with half an hour to
go until the press conference of Primero Justicia to announce its
position, there are indications that they are now leaning towards participating again.

In a typical mystery of this Government a US Congressional delegation
was not allowed in the country, the trip had been arranged by the
Venezuelan Embassy in DC and had a scheduled meeting with Hugo himslef. The bipartisan delegation simply turned around and left.

Before the
developments of the last few days I was going to vote. For a very simple
reason: you gain very little by not voting unless everyone in the opposition
decides not to vote. What is clear is that if the CNE had not decided to back
down on the use of the fingerprint grabbing machines, everyone would have
called for voters to abstain, because in contrast with the observation missions
that came for the recall referendum, the two currently in Caracas, the one from
the OAS and the one from the EU have been saying in private what the OAS and
the Carter Center never said in the recall vote. And they are applying pressure
and it is showing, by now the CNE is absolutely embarrassed by their cynical
two-faced behavior and they know these observers can’t be fooled and they are
here to stay.

The negative side

Numerous
problems remain. Besides the “morochas” or twins, which will allow the Chavez
coalition to get a larger percentage of Deputies in the Assembly that their
votes should give them, there is the electoral registry, with its fake data,
duplicity and migrations that nobody can fix.

Then there
are little details like the President of the Electoral Board Jorge Rodriguez
suddenly appearing to become objective in the presence of the observers, threatening
to fine all those Government officials appearing on campaign literature or advertising,
forgetting that he had allowed the ultimate unfair advantage: the presence of
Chavez’ face on all of the ballots representing Chavez’ MVR, its twin party UVE
and others supporting it. There it is, on the ballot itself, the ultimate unfair
advantage that Rodriguez claims is absent from the process, approved, sealed
and ratified by the CNE, under protest form the opposition parties. And the
international observers have taken notice

Electronic voting in the past

This will
be the fourth process in a row in which electronic voting with the Smartmatic
machines and the Cogent fingerprint machines is used. In each case, there are
four basic components to the system: The Smartmatic voting machine, the
tallying system, the transmission and the fingerprint machines.

The Smartmatic machine is a windows based
machine with all of the file systems of windows, the same processes, controls
etc. It has USB ports, can transmit and can print. The Cogent AFIS system is
really a software system that looks at certain characteristic features of
fingerprints and matches it with a database, it comes with hardware like the
fingerprint reader and a laptop made by somebody else, mostly IBM. The tallying system is just a piece of
software that adds the votes according to the characteristics of the electoral
process going on, i.e., it is not the same for a recall vote than for a more
complex election for city councilmen or Deputies.

Recall Referendum: Despite claims to the contrary,
for the recall referendum the software was never tested or audited. Despite
promises that there would be no transmissions between the voting machines and
the servers during the day, there were not only transmissions all day, but in
some cases more material was transmitted in one direction than the other. There
were supposed to be 120 “hot audits” the night of the recall, only 30 of them
took place. (Curiously the vote against Chávez won in these, although
statistically it is not meaningful). There was a “cold” audit a few days later
under circumstances that leave a lot to be desired. The fingerprint machines
did not work well everywhere. In some locations they were not used, in others
they were used by choice of the voter.

Governor and Regional elections: The only improvement made was that
the machines were connected to the network only at the end of the day. However,
the totals were printed only after the transmission took place. The
fingerprint machines worked rather well. In fact, the suspicion is that the
Government used them as a real time exit poll, which combined with the data
from the recall referendum petition allowed them to know where they were doing
well, where they needed to go and get the voters out and where to concentrate
resources.

The Current elections: A group of technical people was
allowed this time to look at the machines and their software. They first looked
at the machines. Each vote becomes a file in the Windows system, with three
dates and times which correspond to its creation, modification and last save.
All three of these are erased and using a randomizer certified by Microsoft,
each vote is saved in a different location of the memory. In this manner all
traces of the sequence of the votes was supposed to be lost.

However,
the technicians noticed that if you used the type of file system tools, free in
the Internet, that are used for file examination and recovery on an NTFS disk
drive, you could locate a file that had a fourth date and time stamp associated
with each file and thus the sequence of voters could be known. If you then correlated this with the orders in
which people used the fingerprint capturing system, then each vote could be
exactly matched to each person.

Of course,
the CNE and Smartmatic technicians and officers had always denied the
possibility that this could be done. Last Wednesday in a mock up vote in
Caracas, in the presence of the international observers, ten people voted and
the technicians afterwards told each person which votes was his or hers, And as
they say “the you know what hit the fan” and the rest is now history. (Even
afterwards the President of the CNE denied this possibility with virulence).

But for
once, political parties were united, either the fingerprint machines were
eliminated or they would all withdraw. That is what is called a good way to
abstain, all or nothing. The President of the CNE offered then to disconnect
the fingerprint syetm, but under pressure from the observers and the fear that
the world would know the truth about Venezuelan elections (recall three elections,
including the recall vote were done with this very faulty system) forced the
CNE to yield the use of the fingerprint capturing machines on Sunday. (Some
parties are still doubtful of participating now).

The
technicians also checked and tested all other aspects of the software without
finding any possibility of changing, altering or manipulating the results. This
system is now activated by the use of three keys or passwords, one of which is
in the hands only of the opposition. Thus, an opposition member has to be
present to activate it.

Tallying and transmitting the
votes: The
technicians also looked at the process of printing, tallying and transmitting
the votes. In the previous processes, the tallying was performed and to the surprise
of the technicians, the machines not only send the totals, but also send the contents
of each one of the votes. This may seem weird at first, in Venezuelan elections
many parties may support a candidate and there are circuits, like the one where
I live, where there are two candidates to vote for. Now, according to
Venezuelan law, a party may change the candidate it supports up to five days
before an election, by that time all voting machines are out in the field, thus
the program can no longer be changed. Thus, all votes have to be transmitted so
that if this happens events like a person voting twice for the same candidate do
not take place.

Once the votes
are tallied, the machine is made to print the totals for each candidate in a
record that has a number (000) that certifies it as being pre-transmission. Once this is printed the machine is connected
to the network and the transmission
is allowed to begin and after that everyone present can get a copy of the
tally, which will now have a different number (001).

At this
point, the witnesses do a tally of the paper ballots in 45% of all voting
centers, another new
feature that was
not available in previous electoral processes. The law says 100% of the
paper ballots should be counted, but this will not be done. The rule of
law is not the CNE’s strength.

Can there be cheating
electronically? Yes,
it is possible to be at a polling station with no opposition witness, transmit
first and then manipulate the results before the tally is printed. This would obviously
be the opposition’s fault. But there are 27,000 machines out there.

But the
point is that the process has been cleaned, checked and certified sufficiently
that with the withdrawal of the fingerprint machines the process should be more
transparent, fairer and cleaner than it was a week ago.

The
absence of the fingerprint machine has many advantages besides eliminating the
possibility of reconstructing the sequence: it removes the fear people have of the
Government knowing how they vote and losing their jobs, contracts or otherwise
being the victims of another Tascon-like list. Besides this, the Government
will no longer have the real time exit poll that will allow it to mobilize
voters where needed, paying them and driving them to vote. Either they mobilize
everyone or else.

Of course,
there are thousands of fake ID cards and corresponding voters out there and
many other tricks in the Electoral Registry. But, we should not become like the
Chavistas that we want to win everything and hold all positions. To claim that
we have been cheated we have to vote. The Chavistas appear to be a majority at
this time, but they are not a happy majority, they do not like the way problems
in Venezuela are not solved while Chavez seems to be trying to solve everyone
else’s problem, while neglecting ours. Both sides are not motivated, so that if
the opposition can have less abstention, the Chavismo may be blocked from grabbing
TOTAL control of the National Assembly. This should be our goal at this time and
with the removal of the fingerprint machines it is doable. If in
August’s regional elections abstention was 80%, you can bet it will be much
larger with fewer local leaders to motivate the voters. Additionally, the whole
campaign has been lackluster for both sides.

Thus, next
Sunday I will be there. I do not believe in any plan to have an alternative
other than to have held a separate election and count how many we are. Nobody
can count how many people go or not to church. If you want to call for
abstention do it, while mix religion and politics? Some people do not even like
to go to church or may not be seeing doing so.

It is simply
too late, in my opinion, to start to improvise. It is time to vote, or not to
vote, there is still a little freedom in this country for this and for now, you have a choice. I have made mine.
I will vote and in the evening I will go help count and will make sure my copy of
the tally sheet has a 001 at the bottom. Hopefully, most of you will do the
same, no matter what your political ideas are. It’s called democracy and as
long as it has a chance, we should also give it a chance.

Just imagine browsing through the travel section of the Sunday New York Times and finding an article on Caracas with
two recommendantions a block from my home, I live a block away from an
entrance (the most popular one?) to El Avila National Park and the
Tarzilandia Restaurant. I must confess I have not been to Tarzilandia
in like 30 years. Read on!

If the
previous post describes a gift to the rich that I find somewhat obscene, there
are worse things going on which are incredibly obscene. In the bond offering I
described, the terms are known, everyone can put in an order and the National
Assembly approves the issue. This contrasts with using the same procedure but
assigning the bonds by having the Ministry of Finance “choose” by unknown
procedures just a few banks to participate. Then these banks are giving the
gift and we can not even know if the profit was 10% or 20% because no info is
revealed on these deals. But if they are anything like those of the current
bonds offering, we are talking tens of millions of dollars in profit handed out
by the Government to their friendly banks. This deals clearly involve
corruption. In fact, all of these more “private” deals have not been announced,
but have leaked slowly thru the financial system until someone in Government
has talked about it.

I
talked earlier about the case of the “structured notes” whereby US$ 662
million in these notes was sold to five banks chosen by unknown procedures at
the official exchange rate. These banks turned around and sold the notes in US$
making a mint. The fact that it was done privately raises suspicions that
corruption was involved, so does the fact that the transaction was revealed by
the President of Bandes who held a press conference to make clear that his
institution had not sold them, but that they had been sold to the Ministry of
Finance who turned around and sold it to the banks.

Well,
there were rumors of a similar transaction but with Argentinean bonds. You see Venezuela
bought US$ 950 million of that country’s debt as a way of helping that country
since there was little interest in purchasing them on the part of foreign
investors. Fortunately for the Venezuelan Government emerging market bonds have
kept rallying even as interest rates rise in the US and Europe. Well, the
Minister of Finance, former mathematician and now proud debt trader Nelson
Merentes gloated that the Government had sold some US$ 400 million of these
bonds at a profit of US$ 40 million. But you see the bonds were sold to two
local banks that made a nice piece of change in the transaction as they paid
them with Bolivars at the official rate of exchange. Then, they turned around
and sold them in the international markets at a tidy profit in Bolivars.

The
question is once again, why those two banks? Why the lack of transparency? Why
not sell them in the international markets? Was there a profit in the end for
the Government? Obviously these transactions are doubly obscene as there seems
to be some sort of corruption involved in the handpicking of the institution
that these are sold to. But I will let Teodoro Petkoff in his Tal Cual
Editorial give you his opinion:

Swap by Teodoro Petkoff in Tal Cual

 A few days
ago we described the shenanigans with the so called “structured notes” of Bandes.
Now is the turn of the operation with part of the Argentinean bonds that the Government
acquired.

With
those, there was also an operation in the secondary market that happens to be
of a suspicious nature, much like those of the structured notes. In the first
two weeks of October some US$ 300 million in Argentinean bonds were sold to two
local banks. They had been acquired by the Venezuelan Government with at a discount
at 76.85% of their value and were sold, also at discount, somewhere between 80
and 85%. Did we win one? Keep reading.

At the
time, the official controlled Exchange rate was Bs. 2,150 to the US$. With the
discount, the implicit price of the bonds was some Bs.2300 per dollar. Where is
the trick? In the black market the price was hovering around Bs. 2600 and Bs
2700.

Singing softly those US dollars
left the country and maybe they went to the recently bankrupt Refco, where many
Venezuelans of the boli-bourgeois -the Bolivarian bourgeoisie- had placed their
precious green bills, for which there is no valid exchange control.

Now comes the questions. Who
pocketed the differential between the effective Exchange rate (Bs. 2300 per
US$) and the black market exchange rate (2600/2700). Supposing a difference of
Bs. 300 between both prices, the profit from the operation is around Bs. 900
million. (Petkoff made a “slight” mistake, it is actually 90,000 bolivars or US
$ 34 million at the parallel rate he assumed)

How were the buyers selected? It was not done publicly and
transparently, that is very clear. There was no auction. What is also clear is
that the Merentes method is much more opaque that the Nobrega method, because the
latter, at least, covered appearances, holding auctions for the placement of
public debt bonds that the country would then issue.

Do you have to be a professional dirty minded person to imagine that the
beneficiaries, chosen using fingermocracy for this operation, split the profits
with those that put them there?

If we recall the operation with the structured notes, we now
have that between the US$ 600 million of the former and the US$300 million the
latter, US$ 900 million were placed in the market. The difference between the
real or implicit price and the black market is around 3,000 million Bs. Not bad
(Once again Petkoff is orders of magnitude off, this is 270,000 million Bs. or
a clean US$ 100 million at the pararlel market rate. Unparallelled levels of
corruption for Venezuela)

How much was there
for each participant? How was the bounty split? Even admitting the lowest differential
between the real price of the dollar, implicit in the operation and the black market)
there would be some 2,700 (again x 100) million Bs. “sweated” by the chosen
banks for the operation and their accomplices in the Government.

The gears of corruption have their own life. Chavez said
that there would be no more debt operations and, nevertheless, the Finance Ministry
announced an upcoming placement of US$ 1.5 billion. The problem is that the
genie of cheating is out of the bottle and nobody has any interest in putting
him back in it. Today, much like in the oil boom of the 70’s, the large foreign
investment banks pressure, so that Venezuela will maintain its
presence in the international markets, issuing debt continuously and on the
local side are those that know how to profit from this very easy ride.