In April 2008, then-Venezuelan president Hugo Chavez dispatched Venezuelan Ministry of Interior, Justice and Peace officials to visit counterparts in the technology hub of Shenzhen, China.
Their mission was to learn the workings of China’s national identity card program, said Anthony Daquin, who was a member of the Venezuelan delegation.
Chavez, a decade into his self-styled socialist revolution, wanted help to provide ID credentials to the millions of Venezuelans who still lacked basic documentation needed for tasks such as voting or opening a bank account.
Illustration: Constance Chou
However, once in Shenzhen, the Venezuelans realized a card could do far more than just identify the recipient.
There, at the headquarters of Chinese telecom giant ZTE Corp, they learned how China, using smart cards, was developing a system that would help Beijing track social, political and economic behavior. Using vast databases to store information gathered with the card’s use, a government could monitor everything from a citizen’s personal finances to medical history and voting activity.
“What we saw in China changed everything,” said Daquin, who was top information security adviser at the Justice Ministry at the time.
His initial amazement, he said, gradually turned to fear that such a system could lead to abuses of privacy by Venezuela’s government.
“They were looking to have citizen control,” he said.
The following year, when he raised concerns with Venezuelan officials, he was detained, beaten and extorted by intelligence agents, prompting him to flee the country Daquin said.
Government spokespeople had no comment on Daquin’s account.
The project languished, but 10 years after the Shenzhen trip, Venezuela is rolling out a new, smart-card ID known as the carnet de la patria, or “fatherland card.”
The card transmits data about cardholders to servers and is increasingly linked by the government to subsidized food, health and other social programs that most Venezuelans rely on to survive.
ZTE is at the heart of the program.
As part of a US$70 million government effort to bolster “national security,” Venezuela last year hired ZTE to build a fatherland database and create a mobile payment system for use with the card, contracts showed.
A team of ZTE employees is now embedded in a special unit within Cantv, the Venezuelan state telecommunications company that manages the database, four current and former Cantv employees said.
The fatherland card is troubling some citizens and human rights groups that believe it is a tool for Chavez’s successor, Venezuelan President Nicolas Maduro, to monitor the populace and allocate scarce resources to his loyalists.
“It’s blackmail,” Hector Navarro, one of the founders of the ruling United Socialist Party of Venezuela and a former minister under Chavez, said of the fatherland program. “Venezuelans with the cards now have more rights than those without.”
ZTE sold Caracas servers for the database and is developing the mobile payment application, Su Qingfeng (蘇慶峰), head of ZTE’s Venezuela unit, said in a telephone interview.
The company, he said, violated no Chinese or local laws and has no role in how Venezuela collects or uses cardholder data.
“We don’t support the government,” he said. “We are just developing our market.”
An economic meltdown in Venezuela is causing hyperinflation, widespread shortages of food and medicines, and a growing exodus of desperate citizens. Maduro has been sanctioned by the US and is criticized by governments from France to Canada as increasingly autocratic.
In that, critics say, Maduro has an ally.
The fatherland card, they argue, illustrates how China, through state-linked companies like ZTE, exports technological know-how that can help like-minded governments track, reward and punish citizens.
According to employees of the card system and screenshots of user data, the database stores such details as birthdays, family information, employment and income, property owned, medical history, state benefits received, presence on social media, membership of a political party and whether a person voted.
So far, the government’s disclosure of ZTE’s involvement in the fatherland project has been limited to a passing reference in a press release in February last year that credited the company with helping to “fortify” the underlying database.
The Venezuelan government did not respond to requests for comment for this article.
Cantv spokeswoman Nadia Perez declined to comment and Cantv president Manuel Fernandez did not respond to e-mails or text messages.
The Chinese Ministry of Justice and the country’s embassy in Caracas did not respond to requests for comment.
Although ZTE is publicly traded, a Chinese state company is its largest shareholder and the government is a key client. ZTE has run afoul of Washington before for dealings with authoritarian governments.
The company this year paid US$1 billion to settle with the US Department of Commerce, one of various penalties after ZTE shipped telecommunications equipment to Iran and North Korea, violating US sanctions and export laws.
The action was sparked by a 2012 Reuters report that ZTE sold Iran a surveillance system, which included US components, to spy on telecommunications by its citizens.
Legal experts in the US said it is unclear whether ZTE and other companies that supply the fatherland system are violating US sanctions on Venezuelan leaders by providing tools that critics believe strengthen the government’s grip on power.
Fernandez is one of the targets of those sanctions because of Cantv’s censorship of the Internet in Venezuela, a US Department of the Treasury statement said.
However, the prohibitions thus far are meant primarily to thwart business with Maduro and other top officials themselves, not regular commerce in Venezuela.
Still, US lawmakers and other critics of Maduro’s rule are concerned about ZTE’s role in Venezuela.
“China is in the business of exporting its authoritarianism,” US Senator Marco Rubio said an e-mail. “The Maduro regime’s increasing reliance on ZTE in Venezuela is just the latest example of the threat that Chinese state-directed firms pose to US national security interests.”
To understand how the fatherland card works and how it came to be, Reuters reviewed confidential contracts and internal government documents related to its development.
Reporters also interviewed dozens of current and former employees of ZTE, Venezuela’s government and Cantv.
They confirmed details of the project and the outlines of Daquin’s account of its origins.
ATTEMPT TO CONTROL
Maduro for the past year has urged citizens to sign up for the new card, saying it is essential to “build the new Venezuela.”
As many as 18 million people, more than half the population, already have, government figures showed.
“With this card, we are going to do everything from now on,” Maduro said on state television in December last year.
To encourage its adoption, the government has granted cash prizes to cardholders for performing civic duties, such as rallying voters.
It has also given one-time payouts, such as awarding moms enrolled in the card a Mother’s Day bonus of about US$2. The payment, in May last year, was nearly a monthly minimum wage — enough to buy a carton of eggs, given the pace of inflation.
Maduro is also taking steps to force the card’s adoption. The government says Venezuelans need it to receive public benefits including medicine, pensions, food baskets and subsidized fuel.
In August, retirees protested outside social security offices and complained the fatherland rule limits access to hard-won pensions.
Benito Urrea, 76, a diabetic, said a state doctor recently denied him an insulin prescription and called him “right wing,” because he has not enrolled.
Like some other Venezuelan citizens, Urrea views the card with suspicion.
“It was an attempt to control me via my needs,” Urrea said in his Caracas apartment.
The doctor could not be contacted.
Using the servers purchased from ZTE, the government is creating a database some citizens fear is identifying Venezuelans who support the government and those who do not.
Some of the information, such as health data, is gathered with card usage. Some is obtained when citizens enroll.
Cardholders and local human rights groups said that administrators ask questions about income, political activities and social media profiles before issuing the card.
Civil servants are facing particular pressure to enroll, more than a dozen state workers said.
When scanning their cards during a presidential election last May, employees at several government offices were told by bosses to message photos of themselves at polls back to managers, they said.
A Justice Ministry document reviewed by Reuters featured a list of state employees who did not vote.
After Chavez became president in 1999, he sought to empower “invisible” Venezuelans who could not access basic services.
In the following years, more citizens received documentation, but the cards were fragile and easily forged, a 2007 Justice Ministry report said.
The report recommended a new, microchip-enabled card that would be harder to counterfeit. No such effort was launched.
That December, after nearly a decade of soaring popularity, Chavez suffered his first electoral defeat, losing a referendum to scrap term limits. Oil prices plummeted shortly thereafter, hammering the economy.
Chavez worked to appease his working-class base, including throngs still lacking identity credentials. He sent Daquin to China.
The technology Daquin and colleagues learned about in Shenzhen underpinned what would become China’s “social credit system.”
The still-evolving system, part of which uses “smart citizen cards” developed by ZTE, grades citizens based on behavior, including financial solvency and political activity.
Good behavior can earn citizens discounts on utilities or loans. Bad marks can get them banned from public transport or their children blocked from top schools.
ZTE executives showed the Venezuelans smart cards embedded with radio-frequency identification (RFID), a technology that enables monitors through radio waves to track location and data. Other cards used so-called Quick Response (QR) codes, the matrix barcodes now commonly used to store and process information.
After the trip, Venezuela turned to Cuba, its closest ally, and asked for help creating its own version of RFID cards.
“The new goal was big data,” Daquin said.
In June 2008, Venezuela agreed to pay a Cuban state company US$172 million to develop six million of the cards, a copy of the contract showed.
Cuban government officials did not respond to questions about the agreement.
By 2009, Daquin grew uneasy about the potential for abuses of citizens’ privacy.
He said he expressed those concerns to officials, including then-general Vladimir Padrino, who is now the Venezuelan minister of defense.
The Venezuelan Ministry of Defense did not respond to telephone calls, e-mails or a letter.
On the morning of Nov. 12, 2009, six armed officials in Bolivarian Intelligence Service uniforms awaited Daquin at his local Caracas bakery, he said.
They showed him photographs of his daughter and forced him to drive east toward the town of Guatire. Off a back road, Daquin said, they beat him with pistols, forced a handgun into his mouth and dislodged several teeth, which are still missing.
“Why are you betraying the revolution?” one asked.
They demanded US$100,000 for his release, Daquin said.
Daquin, who said he had been saving for years to buy property, went home, pulled cash from a safe and delivered it to the men. That evening, he booked a flight for himself, his wife and their three children to the US, where he has lived since, working as an information security consultant.
His brother, Guy, who also lives in the US, confirmed Daquin’s account.
Documentation corroborates his role at the ministry, and people familiar with Daquin’s work confirmed his involvement in the card project.
After Daquin fled, the Cuban contract went nowhere, another former adviser said.
In March 2013, Chavez died. Maduro, his heir as party candidate, was elected president the next month. The lingering oil crash dragged Venezuela into recession.
‘WE’LL FIND OUT’
With hunger increasing, the government in 2016 launched a program to distribute subsidized food packages. It hired Soltein SA de CV, a company based in Mexico, to design an online platform to track them, documents showed.
The platform was the beginning of the database now used for the fatherland system.
Soltein’s directors, according to LinkedIn profiles, are mostly former Cuban state employees.
A person who answered a telephone listed for Soltein denied that the firm worked on the fatherland system.
A woman at the company’s registered address in Cancun, Mexico, said she had never heard of Soltein.
The system worked. Nearly 90 percent of the country’s residents now receive the food packages, a study published in February by Andres Bello Catholic University and two other universities showed.
More satisfied with its ability to track handouts, the government sought to know more about the recipients, so it turned back to ZTE, people involved in the project said.
The Chinese company, now in Venezuela for about a decade, has more than 100 employees working in two floors of a Caracas skyscraper. It first worked with Cantv to enable television programming online.
Like many state enterprises in Venezuela, Cantv has grown starved for investment. ZTE became a key partner, taking on many projects that once would have fallen to Cantv itself, people familiar with both companies said.
ZTE is helping the government build six emergency response centers monitoring Venezuela’s major cities, a 2015 press release said.
In 2016, ZTE began centralizing video surveillance for the government around the country, current and former employees said.
In its final push for the fatherland cards, the government no longer considered RFID, as the location-tracking technology was too costly, people familiar with the effort said.
Instead, it asked ZTE for help with QR codes. ZTE developed the codes, at a cost of less than US$3 per account, and the government printed the cards, linking them to the Soltein database, the people said.
In a telephone call in September, Su confirmed the company’s card deal with Cantv. He declined to answer follow-up questions.
Maduro introduced the cards in December 2016.
In a televised address, he held one up, thanked China for lending unspecified support and said “everybody must get one.”
The ID system, still running on the Soltein platform, had not yet migrated to ZTE servers. Disaster soon struck. In May last year, hackers broke into the database.
The hack was carried out by anonymous anti-Maduro activists known as TeamHDP. The group’s leader, Twitter handle @YoSoyJustincito, said the hack was “extremely simple” and motivated by TeamHDP’s mission to expose Maduro secrets.
The hacker, who spoke to Reuters by text message, declined to be identified and said he is no longer in Venezuela.
A Cantv manager, who later helped migrate the database to ZTE servers, confirmed details of the breach.
During the hack, TeamHDP took screenshots of user data and deleted the accounts of government officials, including Maduro.
Screenshots of the information embedded in various card accounts, shared by TeamHDP, included telephone numbers, e-mails, home addresses, participation at United Socialist Party events and even whether a person owns a pet.
People familiar with the database said the screenshots appear authentic.
Shortly after the hack, Maduro signed a US$70 million contract with Cantv and a state bank for “national security” projects. These included development of a “centralized fatherland database” and a mobile app to process payments, such as the discounted cost of a subsidized food box, associated with the card.
“Imperialist and unpatriotic factions have tried to harm the nation’s security,” the contract said.
It said an undisclosed portion of the funding would come from the Venezuela China Joint Fund, a bilateral financing program.
A related contract assigned the database and payment app projects to ZTE. The document did not disclose how much of the US$70 million would go to the Chinese company.
ZTE declined to comment on financial details of its business in Venezuela.
Neither the Venezuelan nor the Chinese governments responded to queries about the contracts.
In July last year, Soltein transferred ownership of fatherland data to Cantv, project documents showed.
A team of a dozen ZTE developers began bolstering the database’s capacity and security, current and former Cantv employees said.
Among other measures, ZTE installed data storage units built by US-based Dell Technologies Inc, one ZTE document showed.
Dell spokeswoman Lauren Lee said ZTE is a client in China, but that Dell does not sell equipment to ZTE in Venezuela.
Dell reviewed its transactions in Venezuela and was not aware of any sale to Cantv, either, she said.
“Dell is committed to compliance with all applicable laws where we do business,” Lee said in an e-mail. “We expect our customers, partners and suppliers to follow these same laws.”
In May, Venezuela held elections that were widely discredited by foreign governments after Maduro banned several opposition parties.
Ahead of the vote, ruling party officials urged voters to be “grateful” for government largesse dispensed via the fatherland cards.
They set up “red point” kiosks near voting booths, where voters could scan their cards and register, Maduro himself promised, for a “fatherland prize.”
Those who scanned their cards later received a text message thanking them for supporting Maduro, according to several cardholders and one text message reviewed by Reuters.
However, the prizes for voting were never issued, cardholders and people familiar with the system said.
Current and former Cantv employees said the database registers if, but not how, a person voted. Still, some voters were led to believe the government would know.
One organizer of a food handout committee in the city of Barinas said government managers had instructed her and colleagues to tell recipients their votes could be tracked.
“We’ll find out if you voted for or against,” she said she told them.
State workers say they are a target.
An internal Cantv presentation from last year said the system can feed information from the database to ministries to help “generate statistics and take decisions.”
After the vote, government offices, including state bank Banco Bicentenario del Pueblo sent Cantv lists with employees’ names to determine whether they had voted, the manager who helped set up the servers said.
Banco Bicentenario did not respond to a request for comment.
With personal data now so available, some citizens fear they can lose more than just their jobs, said Mariela Magallanes, an opposition lawmaker who headed a commission that last year investigated how the fatherland card was being linked to the subsidized food program.
The government, the commission said in a report, is depriving some citizens of the food boxes, because they don’t own the card.
“The government knows exactly who is most vulnerable to pressure,” she said.
Additional reporting by Adam Jourdan in Shanghai, Ben Blanchard in Beijing, Eric Auchard in London, Sarah Marsh in Havana, Ivan Alonso in Cancun, Christine Murray in Mexico City, Francisco Aguilar in Barinas and Andreina Aponte in Caracas. Editing by Paulo Prada.
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