BlackBoxVoting's Bev Harris Walks Us Through the DOJ Anti-Trust Probe of ES&S
By Joan Brunwasser, December 21, 2009 at 14:42:12
JB: I'm happy to have with me Bev Harris, intrepid investigative journalist and founder of the non-profit elections watchdog group, BlackBoxVoting.org. Welcome to OpEdNews, Bev. Interesting developments in the election world these days. Would you care to walk us through the latest regarding the ES&S acquisition of its competitor Diebold (now known as Premier)?
Oh yes. Big things are happening here. The US. Dept. of Justice (USDOJ) has just announced that it has opened an antitrust investigation into the ES&S/Diebold deal.
In September, megamonster voting machine company Election Systems & Software (ES&S) acquired Diebold's Premier Election Solutions. BlackBoxVoting.org prepared a formal complaint to elicit action by the US Department of Justice.
The USDOJ needed specific information in order to ascertain that the acquisition would "overconcentrate" the elections industry. They use a formula called the Herfindahl Index for this. Unfortunately, the only thing the USDOJ can use is precise figures based on official sources, and there are over 5,000 jurisdictions. Getting the data is no picnic, and you can't just use something published on someone's Web site. So Black Box Voting compiled data from our many Freedom of Information documents and produced a sourced, detailed chart proving overconcentration of the industry.
We buttressed our complaint by documenting specific instances of past anticompetitive behavior, and provided a legal analysis, which showed that anti-trust actions can be taken years after the acquisition.
The Dept. of Justice wrote us last month to let us know they intended to take action if their preliminary evaluation supported our contention that the acquisition creates an unhealthy condition. And it didn't take long! Less than eight weeks after our complaint, the USDOJ launched a formal antitrust probe, and 14 individual states are now pursuing their own investigations.
JB: That must have been a huge effort for Black Box Voting to put together the necessary information. Would you care to talk about that a little?
Several years ago, we began collecting government source documents and voting machine make and models per jurisdiction. This has been especially challenging since so many places have been changing equipment over the past few years. And the hardest part was identifying what each of the municipality-run jurisdictions run. Wisconsin alone has about 1700 different municipality jurisdictions.
Once we had the data, we had to figure out how to accurately weight it. Obviously the 1700 Wisconsin jurisdictions couldn't be put up one to one against, for example, the 64 county jurisdictions in Colorado. And we had to look at the method most likely to provide the type of data needed by the Dept. of Justice. Should we determine by percent of votes counted by each machine? By total number of units? Or by jurisdiction? We decided that the best way to organize the data for antitrust purposes would be by purchasing unit (jurisdiction), with a weighted sample to equalize municipalities with counties.
More information than people want to know I'm sure, but this is the kind of detail that was needed to move from general grousing about monopoly to precise calculation of anticompetitive impact in violation of the Clayton Act.
More was needed; we created color-coded "before and after" maps to provide visual images for the impact of the acquisition, and studied antitrust laws to learn more about what kind of information to provide.
Perhaps most important, we received advice from volunteer consultants, including election officials and former federal investigators. This helped us know what information to include in the complaint, and also helped us determine which examples from our news archives, which have accumulated thousands of stories over the years, would work best for this purpose.
JB: Wow. What an undertaking. Can you show us the maps of Before and After acquisition and explain to us just what we're seeing and what it means?
Joan - here are the before and after maps:
US Map Pre-Merger
US Map Post-Merger
The blue areas are Diebold; the red are ES&S. As you can see, the industry was already overconcentrated before the acquisition, with way too many locations dependent on just a few vendors. But after the acquisition, you see the blue areas convert to red, and it is clear that this gives ES&S near-total domination of US elections.
JB: So, why is ES&S's domination necessarily a bad thing? Wouldn't some standardization of equipment across the country be helpful for those running the elections?
The reason antitrust laws exist is to prevent unhealthy and predatory business practices. We are already seeing these in the elections industry, where public records show that ES&S has been price-gouging and strong-arming local officials into "take it or leave it" clauses in contracts. If there isn't enough competition, it leaves election officials with no choices, no bargaining power, and no leverage to enforce quality controls or fairness.
For example, Black Box Voting obtained information in our public records requests which revealed that Angelina County, Texas had been subjected to horrible treatment by ES&S, and when they complained, ES&S threatened them with shutdown of election support for their 2008 presidential election if they didn't sign. The situation was egregious: ES&S required them to use ES&S-selected technicians to run their election, and the technician miscounted the election, resulting in a judge ordering a new election (at Angelina County expense!). Then ES&S charged Angelina County $1300 per day for the technician's work. When Angelina County officials protested, they were ordered to sign a new contract "or else."
An even worse example took place in Florida, where anti-competitive actions violated both the Clayton Act and the Sherman Act. When Ion Sancho worked with Black Box Voting to demonstrate the vulnerability of the Diebold system to vote manipulation, Diebold refused to provide a legally required update. Florida authorizes only three vendors to sell voting machines. When Sancho tried to replace Diebold's system with another vendor, all three vendors refused to sell to him. This kind of collusion is not just illegal; it is a crime. Then, the governor of Florida tried to push Ion Sancho out of office, threatening him with loss of his job if he didn't purchase the update, which the limited number of vendors refused to sell to him.
But there are worse consequences. What we have talked about so far is the "horizontal monopoly" -- when there aren't enough different vendors to buy from, which invites price-gouging, lack of quality, and strong-arming on contracts. But the "vertical monopoly" is even more dangerous.
A vertical monopoly exists because ES&S controls the whole process. Imagine this: Suppose you have just one farmer providing all the wheat for breakfast cereals, and the same farmer owns the ONLY breakfast cereal company. The farmer could price-fix and gouge on both ends, the supplier end and the retail end.
Diebold provides voter registration software, which affects WHO can vote; it provides electronic pollbooks, which control the report of WHO voted and who is allowed to vote, it controls the absentee ballot authentication software, which dictates which vote by mail ballots will be accepted for counting it controls the counting of both polling place and absentee votes, which is concealed from the public. ES&S has a similar vertical monopoly. This is a horrible, undemocratic situation that is ripe for fraud.
Quite literally, this vertical monopoly represents a transfer of power from the public to insiders with access to the system (whether they be government insiders or vendors).
The genius of a truly democratic system lies in dispersed power and public controls over public elections. When you consolidate power to a single entity, you create a system that is perhaps tidy, but very unstable. Dictatorships are tidy. Democratic systems are messy, but the dispersal of power makes them stable. Centralized control destabilizes our democratic system of government.
Note that currently, centralization has been achieved both by government, with the White House-appointed Election Assistance Commission, and through consolidation of the elections industry into just a few vendors.
JB: Okay, I get it. Vertical and horizontal monopolies are not good in general and especially bad for democratic elections. Let's pause here. When we return, Bev will explain what happens now with the anti-trust probe by the DOJ. I hope you'll join us.
JB: Welcome back for the conclusion of my interview with Black Box Voting's founder, Bev Harris. So, Bev, what happens now with the anti-trust probe, which has proceeded, thanks to the ample documentation you provided the DOJ?
The DOJ can require ES&S to divest itself of the Diebold Premier Election Solutions acquisition. Diebold sure as heck won't want it back they practically gave it away by selling it for just $5 million and agreeing to remain responsible for the liability and lawsuits. ES&S wouldn't need to sell it back to Diebold; they'd just need to divest themselves of it.
It's not the direct profit potential that ultimately drives this acquisition, nor any subsequent acquisition if divestiture is required. This is actually about power. What's at stake has a much higher value than you'll ever see on the balance sheet.
If divestiture is required, and it probably will be, it could get interesting. There may be someone undesirable waiting in the wings to snap this up. If another entity takes it over, the real identity will become very important, and we should keep in mind that ES&S has ties that lead back to Kiewit a road-building outfit with quite a sordid history of hidden ownership for its highway contracting bids.
Omaha's Kiewit outfit got into trouble a while back for bid-rigging and was banned from bidding for several government projects. So then Kiewit said "Here we go Loopdy-Loo" and started creating entities inside of other entities. It got pretty nutty. At one point, a bunch of White Kiewit golfing buddies from Omaha pretended to be Black women from Seattle. They hid real corporate identities in Oklahoma too, where they had been banned from doing work with the government, creating a maze of confusion over true ownership during government procurement cycles. Some of Kiewit's executives were indicted in schemes to bid-rig and cover up true ownership.
ES&S does have origins that lead back to the Kiewit bunch, but true to form, you have to jump through so many hoops to follow their corporate permutations that you end up getting lost in the forest. I mentioned the Kiewit connections in our DOJ complaint, and I outlined some of the Kiewit backdrop behind ES&S here:
In my opinion, it is essential for the DOJ to unravel true ownership behind ES&S, because if they don't, how will they know that the next entity is not just the same guys hiding behind a different screen? And how would we know that a divestiture wasn't just the same game, different name?
So ES&S will probably be required to divest itself of its Diebold election purchase, but the devil will be in the details. We'll have to be exceptionally vigilant to find the real identities behind whoever picks it up from there.
Another consequence would be nice: There is precedent for the DOJ to recover costs for their investigation and any litigation when there is a wrongful acquisition under anti-trust laws. It would be justified in the ES&S acquisition, because ES&S has done this before! In 1997, ES&S acquired Business Records Corporation, triggering anti-trust action by the SEC. The company certainly knew better, but tried to create a monopoly again. They should pay.
All this being said, the bigger problem we are facing is concealment of key steps in elections from the public. If you conceal essential steps in a public election from the public, it ceases to be public. And if you cease having public elections, you no longer have liberty -- a violation of our highest-level human rights.
So while the antitrust investigation can at least hold another monster at bay, it doesn't solve the core issues. It does have potential to open some helpful information up for public examination, because the subpoenas will be flying, not only from the US DOJ but from the 14 states, and in most cases the responses to those documents will be obtainable through Freedom of Information actions. However, it took me four years to obtain the DOJ freedom of information documents on the investigation they did into me back in 2004, so let's not hold our breath for the document dump. And we can't request the records until after the investigation is closed.
In the mean time, we need to keep our eye on the ball: We need to restore public right to see and authenticate every step of elections. I can't emphasize enough how dangerous the situation is right now: We have destabilized our form of government through centralization of control, and we have transferred power to
insiders by authorizing undemocratic concealment of public election processes.
JB: Before we conclude, do you want to elaborate a little on what you said before about the core problem of "concealment of key steps in elections from the public?" What is the nature of this biggest problem facing our elections today?
Because we cannot see electrons, computerized counting conceals an essential step in public elections and therefore violates public right to know. Concealed vote counting systems have been deemed unconstitutional by the German equivalent of our Supreme Court, which has ruled that no public election can conceal any essential step in the election from the public.
Principles of public sovereignty over government are embedded into our Declaration of Independence (the document which provided much of the argumentation for women's suffrage), and are also internationally recognized and contained in the Universal Declaration of Human Rights.
The anti-trust suit is fascinating and important, but it's even more important to view all election issues within the context of inalienable rights that is, the public right to examine and authenticate every step of its public elections. It is the "public" nature of elections, and the public controls, which differentiate a real democratic system from a false one.
JB: How has this very important and anti-democratic aspect of our current elections escaped the attention of our fellow Americans?
There has been an effort, pushed along by the e-voting industry, to redirect arguments away from our inalienable rights and over to mechanics. In other words, instead of stating that the public has a right to see and authenticate every step of the election, we're told that having a "paper trail" will "ensure that elections are accurate and free of fraud."
Simply having a paper trail, or even hand counting all the ballots does nothing at all to restore our right to public controls if performed by government insiders behind closed doors.
We need to train ourselves to use the words "public" and "rights" every time we talk about elections. Learn the rights arguments (public right to see and authenticate every essential step of public elections). Practice using them when writing letters to public officials and always state the human rights framework when speaking with reporters.
Public elections, after all, are the consummation of our inalienable right to liberty. Whether we are talking about antitrust investigations or missing absentee ballots or strange impossible numbers, in every case we should insert the rights framework for our concerns. And using that framework means consistently using the words "public" and "right" in our communications.
JB: Anything you'd like to add, Bev?
Thank you, Joan, for the opportunity to address these issues.
JB: Thank you, Bev, for talking with me and for your tireless work as election watchdog. All American voters, regardless of their political views, are in your debt.
Black Box Voting website: http://www.blackboxvoting.org/