Major Player in Military Contracts Seeks to Buy Diebold

For the last two years United Technologies has been seeking to purchase the Diebold Corporation. Diebold’s main business is ATM machines but, it is the manufacturer of election equipment under the name Premier Election Solutions. Its software is responsible for counting votes throughout the United States.

Business Week, in its report on the attempted purchase, wonders why United Technologies would want to acquire Diebold, writing “Some analysts are wondering how United Technologies would benefit from acquiring Diebold, which generates more than two-thirds of its revenue from ATMs — a business that United Technologies is not in.” Perhaps it’s not the ATM business that United Technolgies is interested in; maybe it is the election business?

Just what does United Technologies do and who is behind it? United Technologies, a major multinational conglomerate with a range of technology interests, receives approximately $5 billion in military contracts from the United States annually. Among United Technologies products is the Black Hawk Helicopter, a tactical transport and assault helicopter which costs $5.9 million each of which 2,600 have been built. Their businesses include Sikorsky Aircraft which makes helicopters, Hamilton Sunstrand which produces aircraft engines and rockets, UTC power which creates fuel cells for defense and aerospace systems as well as Otis Elevator and security systems.

United Technologies is also a major donor to political campaigns — the sixth largest defense industry donor in the 2004 election with two-thirds of their donations going to Republicans. In 2008, they are the fifth largest defense industry contractor and have given $485,000, with 57% going to Democrats. They have had numerous government officials on their board, including a former secretary of defense and undersecretary of the air force.

The corporation they are trying to by is Diebold, infamous for producing electronic voting machines that have serious security and performance problems. Their election division became so problematic that they created a veil of separation between their ATM business and their election products in August 2007. They renamed the division Premier Election Solutions and this February gave it a separate board of directors (three out of five of the board were Diebold officials). Diebold tried to sell the troubled election system in 2007 but was unable to find a buyer.

The former CEO of Diebold, Walden O’Dell raised distrust about Diebold as an honest vote counter by announcing before the 2004 election in a fundraising letter for President Bush that he would do all in his power to deliver Ohio for Bush. He was forced to resign in 2005 as security fraud and insider trading charges loomed. Diebold continues to have unresolved accounting problems with the U.S. Securities and Exchange Commission.

The company has been caught using federally uncertified software in elections. Security reviews of the machines have found widespread flaws, and the machines have been known to break down in the midst of voting. In 2004, they entered into a $2.6 million settlement with California to resolve a lawsuit that alleged the Texas-based firm provided false information to obtain payments from the state and counties for its electronic voting equipment. Black Box Voting found source code of Diebold’s on the web and shared it with a top computer security expert, Avi Rubin of Johns Hopkins University, who published a report in 2003 that found widespread security problems. Since then numerous reports conducted by various states have confirmed and expanded on those security holes.

What makes the Diebold machines even more problematic is that the software used to count the vote is secret; it cannot be completely reviewed by computer experts. Further, many of their machines do not produce a paper record, making it impossible to audit the result in order to verify that the count was accurate. The machines that do have a paper record produce a flimsy ATM-like receipt with small print that is difficult for voters to read and challenging for election judges to count. While many states are turning away from touch screen machines because of their expense, unreliability, and lack of transparency, many of the states do not require an audit of the optical scan count–op-scan machines are also computers that rely on software and can be insecure. With no audit why bother having a paper record?

In an editorial blog, the New York Times reminded its readers of the warning that President Eisenhower gave the American public in 1961 as he left office: “In the councils of government we must guard against the acquisition of unwarranted influence, whether sought or unsought by the military industrial complex. The potential for the disastrous rise of misplaced power exists and will persist.” The Times noted “we suspect that Eisenhower would be appalled to learn that a defense contractor could be counting the votes in the next presidential election.”

Thus far, Diebold’s board has rejected United Technologies’ $2.6 billion offer. However, the multinational is very likely not to give up and could take the offer to the shareholders of Diebold. So, we may see the next election counted in large part by a defense contractor. They already virtually determine the outcome of elections through their contributions and their control of the media, e.g. GE’s ownership of NBC. If this purchase goes through, they will be counting the vote in secret with no independent review.

The problem of a military contractor counting the votes is really a symptom of a bigger problem of corporate-government. Across the country election administrators have outsourced vote counting to private corporations. In fact, Diebold’s central tabulator software counted most of the votes in the last presidential election and 80% of the votes were counted by two corporations: Diebold and ES&S.

It is time to return voting to the responsibility of government by non-partisan elections administrators and to make voting transparent with an independent record that is verified by the voter. Further, audits of initial results need to become a routine part of every election, i.e. comparing a hand count of paper ballots with an adequate random selection of precincts to ensure the accuracy of the vote count. Finally, recounts need to be made not only easy for candidates to request, but also inexpensive. The foundation of the legitimacy of government is democracy and the foundation of democracy is voting. If we do not trust voting the government loses its legitimacy.