By Ian Hoffman, Oakland Tribune, November 11, 2004
California's attorney general and Alameda County endorsed a $2.68 million settlement with Diebold Election Systems Inc. on Wednesday, yielding a stock bump for Diebold's parent company that paid for the settlement 17 times over.
If approved by a state judge, the proposed agreement -- and few problems with Diebold's touch-screen machines in the Nov. 2 election -- lifted the market cloud that had gathered since last November over Diebold's voting business in California.
"In making false claims about its equipment," said Attorney General Bill Lockyer, Diebold treated California voters and taxpayers "cavalierly."
"This settlement holds Diebold accountable and helps ensure the future quality and security of its voting systems," Lockyer said in a prepared statement.
The company admitted no fault or violation of state law in the proposed agreement, which would end a False Claims Act lawsuit filed last November by two e-voting critics on behalf of state and local taxpayers. They vowed to oppose the settlement at a hearing tentatively set for Dec. 10.
"If it meant throwing Diebold out of the state, we'd gladly take it," said Jim March, a Sacramento-based e-voting activist and board member of BlackBoxVoting.org. "But Diebold gets a slap on the wrist and isn't required to do anything seriously new in terms of security? I don't think so. This stinks."
Under the settlement, Diebold would pay $1.6 million to the state and $475,000 to Alameda County, plus give $500,000 to the University of California, Berkeley's Institute of Government Studies for research on training poll workers for electronic voting.
The payment to Alameda County was not meant as reimbursement for any part of the $12 million in local and state money used to buy 4,000 Diebold touch-screens in 2002.
Rather, the settlement was intended to reimburse Alameda for extra personnel costs tied to widescale breakdowns in voting equipment during the March primary and the correcting of vote totals last fall, when a Diebold computer misawarded thousands of gubernatorial votes to the wrong candidate.
Diebold also agreed to several security measures, most of which already were implemented -- such as changeable passwords and encryption codes in its software -- or are required by state law. Diebold promised, for example, to share previously secret testing reports from its contractor laboratories with the secretary of state's office.
A new state law authored by Sen. Don Perata, D-Oakland, already requires the delivery of those reports.
March and BlackBoxVoting.org founder Bev Harris sued Diebold on behalf of California and Alameda County. March said the settlement was "steamrolled" by state officials and was "ugly."
Attorneys for the county and the state took over the case, left March and Harris out of settlement negotiations and rewrote their lawsuit to remove most of its claims of poor security in Diebold's central vote-tabulating software, known as GEMS.
"I don't know what Lockyer is thinking," said March. "I do know he's not paying attention to the core, structural problems with GEMS. And the timing of shutting down this case so close after the election sucks."
March plans to urge the judge to reject or postpone the settlement until more data is available on the performance of Diebold touch-screens in the presidential election.