IP: ICANN'S SMOKING GUN REVEALED

[Dave Farber <dave () farber net>]

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From: Randall <rvh40 () insightbb com>
Date: Thu, 08 Aug 2002 23:07:17 -0400
To: cyberia-l () listserv aol com
Cc: dave () farber net
Subject: ICANN'S SMOKING GUN REVEALED

From: "Judith Oppenheimer" <joppenheimer () icbtollfree com>


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Internet overseer takes wrong path on accountability



By MICHAEL GEIST


Thursday, August 8, 2002 – Print Edition, Page B12


In the age of the Enron and WorldCom scandals, it would be almost
unthinkable to try to impede board disclosure and transparency. Almost.
Last week, a court case involving the Internet Corporation for Assigned
Names and Numbers (ICANN) -- the Internet administrative agency -- and Karl
Auerbach, one of its most vocal directors, revealed that ICANN attempted to
do just that when it established an unreasonable policy that placed
conditions on board-of-director access to its own corporate records.

While Mr. Auerbach may not find any smoking guns within that documentation
now that he has been granted unconditional access, it turns out the real
ICANN smoking gun is out in the open for all to see.

Mr. Auerbach was elected to the ICANN board in 2000 as the public's
representative for Canada and the United States. He ran on a platform that
criticized ICANN and vowed reform. Soon after his election, he requested
access to the corporation's records, as was his right under California law.
ICANN took months to respond, eventually setting conditions on access that
Mr. Auerbach believed were contrary to the law. When neither side would
back down, Mr. Auerbach sued for the right to access the documentation
without any strings attached.

Mr. Auerbach's position was that California law granted him the right to
review ICANN's corporate records. He emphasized that the raison d'etre of a
board of directors is to function as an independent oversight committee
over management and it was therefore inappropriate for those inside to set
conditions on the gatekeeper.

Mr. Auerbach proposed an approach whereby ICANN would have up to seven days
to challenge his desire to disclose a confidential document. In response,
ICANN chief executive officer Stuart Lynn said it was "inappropriate to
force ICANN to vindicate its rights" rather than obliging Mr. Auerbach to
seek permission for the disclosures.

Following a brief hearing, the judge sided with Mr. Auerbach, adopting his
plan with one small modification that set the time limit to contest a
decision at 10 days rather than seven. She went on to order ICANN to
provide Mr. Auerbach with copies of all confidential documentation by Aug.
9.

While this aspect of the decision is obviously important, viewing this case
as merely about arcane corporate law is to miss its greater significance.
Far more important is what is revealed about the mindset of ICANN's board
and senior management.

First, the decision challenges the notion that ICANN's critics should be
viewed with suspicion. ICANN peppered its argument with inferences that Mr.
Auerbach was somehow dangerous. In fact, in its final memo to the court, it
argued that its conditions were particularly reasonable in relation to Mr.
Auerbach since he had publicly attacked ICANN.

The judge ruled that ICANN got the matter backward, noting that Mr.
Auerbach was elected to ICANN precisely because of his criticisms. The law
is particularly designed to protect directors such Mr. Auerbach, since its
very purpose is to assist critical or minority directors who might
otherwise be denied access to documents by management who are reluctant to
provide fodder for further criticism.

Second, the decision affirms the duty for ICANN to act on behalf of the
international public interest, a perspective that sometimes appears lost on
ICANN's management. During the hearing, ICANN argued that public companies
such as Microsoft and IBM do not post accounting data on the Internet and
that it was unfair to ask ICANN to do so. Once again, the judge responded
critically, noting that ICANN was a public benefit corporation with a duty
to the international community -- making it a much different entity than
from those corporate giants.

Third, the decision highlights the extent to which the current ICANN board
has been content to let management run the show without taking the active
approach expected of an oversight body. Referring to the fact that Mr.
Auerbach was the first ICANN director to request a review of its
documentation, the judge lamented that that was a "sad statement."

As ICANN races toward a reform process that will eliminate directors such
as Karl Auerbach, this legal saga suggests the reform is misplaced. It is
not ICANN's processes that are the problem -- it is a management that seeks
to curtail criticism and transparency along with a board that quietly
allows it to do so. That is ICANN's real smoking gun and no disclosure
agreement is needed to see it.
Michael Geist is a law professor at the University of Ottawa Law School and
director of e-commerce law at the law firm Goodmans LLP. His Web site is
http://www.lawbytes.com.
mgeist () uottawa ca



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Judith Oppenheimer
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212 684-7210, 1 800 The Expert
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