Calif. settles electronic voting suit against Diebold for $2.6M

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<http://sfgate.com/cgi-bin/article.cgi?f=/news/archive/2004/11/10/financial1831EST0118.DTL>

Ths San Francisco Chronicle

Calif. settles electronic voting suit against Diebold for $2.6M

RACHEL KONRAD, AP Technology Writer

Wednesday, November 10, 2004

(11-10) 15:31 PST SAN FRANCISCO (AP) --

  California Attorney General Bill Lockyer announced Wednesday a $2.6
million settlement with Diebold Inc., resolving a lawsuit alleging that the
company sold the state and several counties shoddy voting equipment.

  Although critics characterized the settlement as a slap on the wrist,
Diebold also agreed to pay an undisclosed sum to partially reimburse
Alameda, San Diego and other counties for the cost of paper backup ballots,
ink and other supplies in last week's election. California's secretary of
state banned the use of one type of Diebold machine in May, after problems
with the machines disenfranchised an unknown number of voters in the March
primary.

  Faulty equipment forced at least 6,000 of 316,000 voters in Alameda
County, just east of San Francisco, to use backup paper ballots instead of
the paperless voting terminals. In San Diego County, a power surge resulted
in hundreds of touch-screens that wouldn't start when the polls opened,
forcing election officials to turn voters away from the polls.

  According to the settlement, the North Canton, Ohio-based company must
also upgrade ballot tabulation software that Los Angeles County and others
used Nov. 2. Diebold must also strengthen the security of its paperless
voting machines and computer servers and promise never to connect voting
systems to outside networks.

  "There is no more fundamental right in our democracy than the right to
vote and have your vote counted," Lockyer said in a statement. "In making
false claims about its equipment, Diebold treated that right, and the
taxpayers who bought its machines, cavalierly. This settlement holds
Diebold accountable and helps ensure the future quality and security of its
voting systems."

  The tentative settlement could be approved as soon as Dec. 10.

  The original lawsuit was filed a year ago by Seattle-based electronic
voting critic Bev Harris and Sacramento-based activist Jim March, who
characterized the $2.6 million settlement as "peanuts."

  March, a whistle blower who filed suit on behalf of California taxpayers,
could receive as much as $75,000 because of the settlement. But he said the
terms don't require Diebold to overhaul its election servers -- which have
had problems in Washington's King County and elsewhere -- to guard them
from hackers, software bugs or other failures.

  The former computer system administrator was also upset that the state
announced the deal so quickly. Several activist groups, computer scientists
and federal researchers are analyzing Nov. 2 election data, looking for
evidence of vote rigging or unintentional miscounts in hundreds of counties
nationwide that used touch-screen terminals. Results are expected by early
December.

  "This settlement will shut down a major avenue of investigation before
evidence starts trickling in," March said. "It's very premature."

  A Diebold executive said the settlement would allow the company to spend
more money on improving software and avoid "the distraction and cost of
prolonged litigation." Diebold earnings plunged 5 cents per share in the
third quarter because of the California litigation, which could cost an
additional 1 cent per share in the current quarter.

  Diebold shares closed Wednesday at $53.20, up 1.22 percent from Tuesday in
trading on the New York Stock Exchange.

  "We've worked closely with California officials to come to an agreement
that allows us to continue to move forward," Diebold senior vice president
Thomas W. Swidarski said in a statement. "While we believe Diebold has
strong responses to the claims raised in the suit, we are primarily
interested in building an effective and trusting relationship with
California election officials."


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