How ZTE helps Venezuela create China-style social control
By Angus Berwick in
Caracas, Reuters
In April 2008, former
Venezuelan President Hugo Chávez dispatched Justice Ministry officials to visit
counterparts in the Chinese technology hub of Shenzhen. Their mission,
according to a member of the Venezuela delegation, was to learn the workings of
China’s national identity card program.
Chávez, 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 like voting or opening a bank account. Once in Shenzhen, though, 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 the member of the Venezuelan delegation, technical
advisor Anthony Daquin. 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.”
The following year,
when he raised concerns with Venezuelan officials, Daquin told Reuters, he was
detained, beaten and extorted by intelligence agents. They knocked several
teeth out with a handgun and accused him of treasonous behavior, Daquin said,
prompting him to flee the country. 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 ID transmits data about cardholders to computer servers. The card is
increasingly linked by the government to subsidized food, health and other
social programs most Venezuelans rely on to survive.
And ZTE, whose role in
the fatherland project is detailed here for the first time, is at the heart of
the program.
As part of a $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, according to contracts reviewed by Reuters. A team of ZTE
employees is now embedded in a special unit within Cantv, the Venezuelan state
telecommunications company that manages the database, according to four current
and former Cantv employees.
The fatherland card
is troubling some citizens and human-rights groups who believe it is a tool for
Chávez’s successor, President Nicolás Maduro, to monitor the populace and
allocate scarce resources to his loyalists.
“It’s blackmail,”
Héctor Navarro, one of the founders of the ruling Socialist Party and a former
minister under Chávez, said of the fatherland program. “Venezuelans with the
cards now have more rights than those without.”
In a phone interview,
Su Qingfeng, the head of ZTE’s Venezuela unit, confirmed ZTE sold Caracas
servers for the database and is developing the mobile payment application. 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 United States 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.
The database,
according to employees of the card system and screenshots of user data reviewed
by Reuters, 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.
Venezuela’s
government didn’t respond to requests for comment for this article. Nadia
Pérez, a spokeswoman for Cantv, the state-run telecoms firm, declined to
comment, and Manuel Fernández, the company’s president, didn’t respond to
emails or text messages from Reuters. China’s Justice Ministry and its embassy
in Caracas didn’t 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 $1 billion to settle with the U.S. Commerce Department, one of
various penalties after ZTE shipped telecommunications equipment to Iran and
North Korea, violating U.S. sanctions and export laws. The Commerce action was
sparked by a 2012 Reuters report that ZTE sold Iran a surveillance system,
which included U.S. components, to spy on telecommunications by its citizens.
Legal experts in the
United States said it is unclear whether ZTE and other companies that supply
the fatherland system are violating U.S. sanctions on Venezuelan leaders by
providing tools that critics believe strengthen the government’s grip on power.
Fernández, the Cantv president, is one of the targets of those sanctions
because of the telecom company’s censorship of the internet in Venezuela,
according to a U.S. Treasury Department statement. But the prohibitions thus
far are meant primarily to thwart business with Maduro and other top officials
themselves, not regular commerce in Venezuela.
Still, U.S. 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,” U.S. Senator
Marco Rubio told Reuters in an email. “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 U.S. national security interests.”
