Comelec defers P90M payment to Smartmatic pending breach probe

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ELECTIONS chairman Saidamen Pangarungan yesterday said the Commission on Elections (Comelec) will withhold its P90-million payment to elections technology provider Smartmatic until the issue on the supposed data breach involving one of its former employees is settled.

“I have not signed the voucher for the payment to Smartmatic in the amount of P90 million pursuant to our contract because we want to clear this matter about the leakage,” Pangarungan told senators during the hearing on election-related concerns conducted by the Senate electoral reforms and people’s participation.

The P90 million was supposed to be part of the third tranche of the poll body’s payment to Smartmatic which was due early last month.

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The Comelec awarded to the joint venture of Smartmatic USA Corp. and local partner SMMT-TMI 2016 or Smartmatic Philippines on May last year a P402.7-million contract for the provision of election software to be used in the May 9 elections.

Pangarungan said the Comelec will release the payment “once we are convinced that Smartmatic is innocent about this leakage of data.”

Sen. Imee Marcos, panel chairman, together with Senate President Vicente Sotto III and Sen. Aquilino Pimentel had previously held a closed-door meeting with Comelec and Smartmatic officials where they discovered the security breach in the elections technology provider’s operations after one of its former contractual employees allowed hackers to copy election data from a company-provided laptop.

The information gathered by the hackers was posted on a social media site by the group XSOS.

Last week, the National Bureau of Investigation raided the house of Ricardo Argana in San Pedro, Laguna. Argana was the former Smartmatic contractual employee linked to the security breach.

Seized from Argana’s house were computers, his smartphone and SD cards hidden in one of the room’s ceilings. The NBI agents also dismantled the wi-fi router Argana used to have access to the gadgets of other suspects. He was not present during the operation and remains at-large.

The NBI said charges of illegal access, qualified theft and “possible” obstruction of justice will be filed against Argana.

Smartmatic and Comelec assured the Senate that the data breach is not related to election data since what was leaked involved only the technology provider’s internal operations.

Pangarungan, during the Senate hearing, said if Smartmatic is proven to have committed violations in relation to the leakage, the poll body will terminate its contract with the firm and seek its inclusion in the country’s blacklisted companies, forfeit its performance of security, seek damages in relation to the Data Privacy Act and the Civil Code of the Philippines, and file appropriate criminal cases against its officials.

“So far, we have not (done) any of these except to withhold payment to Smartmatic,” Pangarungan said.

He said the decision to defer the payment was recommended by the Comelec Law Department until the official report from the NBI is released.

He said the Comelec does not see any adverse effect of the deferred payment to Smartmatic on the conduct of the May 9 polls.

NBI-Cybercrime Division chief Victor Lorenzo said Argana could not have acted alone when he reportedly allowed hackers to copy Smartmatic files since there were 726 logins recorded in a span of six days in the Smartmatic system from December 28, 2021 to January 2, 2022.

“Smartmatic was also able to retrieve 726 logins in six days, meaning, it will be physically impossible for the former employee to navigate the control of environment for 726 times in a matter of six days,” Lorenzo said during the same hearing.

Smartmatic legal counsel Christian Robert Lim said the company has put in place stricter measures in terms of screening employees and have required them to leave their laptops in the office.

Lim also agreed that there is no way to determine if any of the company’s employees is an ally or have conspired with Argana even as he assured that they are closely monitoring all their actions.

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