Not so Smartmatic

Michael Alan Hamlin

Posted on June 23, 2010

“I wanna know his family, I wanna know what he’s been working, you know, for the country, stuff like that,” 2008 Miss Universe and Smartmatic “Ambassador for Transparency” Dayana Mendoza responded to reporters last week when asked why she wanted to meet with President-elect Benigno “Noynoy” S. Aquino III. According to reports, Ms. Mendoza was invited to the Philippines to congratulate Filipinos on the successful conduct of the first nationwide automated elections in May.

Smartmatic provided approximately 76,000 vote-counting machines used in the election, which it hopes to now sell to the Philippine government following the successful election for the fire-sale price of P2 billion. The company is headquartered in Venezuela, where Ms. Mendoza was born and lives when she is not traveling the world as an ambassador and model. According to Smartmatic president for Asia Pacific Cesar Flores, the company invited Ms. Mendoza to the Philippines “as a gesture of appreciation to the people of the Philippines.

“She’s being very active in different advocacies so we though she is the right person to be our ambassador of goodwill, and to congratulate the people of the Philippines for such clean, successful, and fast elections.” Ms. Mendoza told the chief executive through reporters, “Please just take a little bit of your time-I know you’re super busy to say ‘hi’ to me. Now that I’m in the Philippines, I’d love to meet you,” she said, adding, “Wanna have coffee?”

Ms. Mendoza’s short, awkward stopover in the Philippines illustrates just how little-I hope-Smartmatic and Mr. Flores really understand the Philippine culture. Although I have no first-hand knowledge, I suspect they badly underestimated Mr. Aquino’s political sense as well. The invitation to Ms. Mendoza to visit the Philippines in the hopes of meeting the President-elect could have doomed any chance Smartmatic had of selling its inventory of vote counting machines to the Philippine government. It may have doomed its chances to provide its equipment and services in the next election as well.

The Philippines spent approximately P11 billion to conduct the elections, but does not own the technology provided by Smartmatic. In a press conference welcoming Ms. Mendoza to the Philippines, Mr. Flores suggested that the Philippines can save up to P5 billion in each of the next four elections by purchasing the 76,000 once-used Smartmatic machines for P2 billion. The Philippines would theoretically save the cost of renting similar machines-for more than twice as much as Mr. Flores is willing to sell them-in the next four elections.

I’m assuming from Mr. Flores’ reported statements that the Commission on Elections (Comelec) preferred not to buy the brand-new Smartmatic voting machines until they had been used successfully in a national election, and paid a premium for its conservative approach to leveraging the technology. Either that or Mr. Flores is doing some “hocus-pcos” with his numbers. If not, it’s beginning to look like Comelec made the mother of all bad deals.

Whether or not that’s the case, the episode with Ms. Mendoza and Mr. Flores’ comments demonstrates how a company seemingly well-positioned to leverage a highly visible successful project to build new business can badly and even irreparably damage its brand virtually overnight. Confidential advisors to the incoming administration say that the mind-bogglingly crude attempt to influence the President-elect incensed many of his closest advisors.

Although Smartmatic and Comelec continue to be hounded by questions challenging the effectiveness of the vote-counting machines, overall positive perception of the Philippine national election made the Smartmatic technology a front-runner for the automation of national elections in Indonesia. Those elections are slated for 2014, and involve many of the challenges Smartmatic faced in the Philippines.

Mr. Flores’ publicity stunt with Ms. Mendoza as the centerpiece could raise eyebrows in conservative Indonesia, the world’s largest Muslim country. That’s not where the greatest damage was done, however. China’s ZTE Corporation demonstrated with dazzling overkill that playing to the Philippines’ less desirable qualities can be a dangerous gamble when it allegedly attempted to grease government procurement processes.

ZTE may have lost millions in that attempt, but the greatest damage was done to its international reputation, which could ultimately cost the company much more elsewhere. Mr. Flores’ seems determined to follow suit.

(Michael Alan Hamlin is the managing director of TeamAsia and a Manila-based author. His latest book is High Visibility: Transforming Your Personal and Professional Brand . Write him at mahamlin@teamasia.com and follow him on Twitter, Facebook and LinkedIn.). Copyright © 2010 Michael Alan Hamlin. All Rights Reserved.)

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