[Forwarded from Dave Farber's IP list; I invite ICANN representatives to reply. Background on Karl's relationship with ICANN (and campaign for a board seat last year: http://www.politechbot.com/cgi-bin/politech.cgi?name=Auerbach --Declan] >Date: Mon, 3 Dec 2001 13:52:32 -0800 (PST) >From: Karl Auerbach <karlat_private> >To: David Farber <daveat_private> > >Here's more on my now year-long quest to inspect ICANN's records: > >A Director of virtually any corporation in the US has several rights and >obligations. > >The obligation side of the equation is very strong - it's called a >"fiduciary" duty, which is one of most stringent obligations that our >legal system can impose on a person. As part of that duty, a Director is >compelled to exercise his or her *independent* judgement. The ability of >a Director to elect to rely upon the judgement of others is very tightly >circumscribed. > >As a Director I could be personally liable for corporate misdeeds. There >are laws that protect some directors, but they are largely really not much >more than rice-paper walls that may easily be pierced. > >In other words, there are big Swords of Damocleas that hang above >Directors. > >The legal system recognizes that it is useless to impose responsibility on >Directors without also giving them, each of them individually, the powers >to become informed so that they may make informed judgements. To that end >the law gives Directors strong powers to inquire into every aspect of a >corporation's operations. > >Under the California corporations code that governs >non-profit/public-benefit corporations (such as ICANN) those rights are >"absolute": > > 6334. Every director shall have the absolute right at any > reasonable time to inspect and copy all books, records and documents > of every kind and to inspect the physical properties of the > corporation of which such person is a director. > >It's not often that a legislature underscores that a right is "absolute". >;-) > >This right to inspect and copy not a collective power that may be >exercised only by the board acting in concert. Rather it is a distinct >power that exists in each and every Director - it may be exercised upon >the independent discretion of each Director. > >And a Director is not required to indicate to corporate management the >purpose of his or her inspection or what he or she is looking for. > >I have asked to inspect ICANN's financial records along with several other >documents (such as the employee handbook and proprietary rights >agreements, if any, that govern employee conduct). I have also asked to >review the billing statements and conflict waiver requests from those who >render professional services to ICANN - that's a natural part of my role >on ICANN's "conflicts" committee, but it is a request that I could make >even were I not on the conflicts committee. > >In my experience as a Director of various corporations, inspection of the >corporate financial records is a good way to inquire as to the efficiency >and behavior of corporate management. In most corporations, requests such >as mine are quickly and fully answered by management without stonewalling, >without demands for restrictive covenants that would force a Director to >surrender his or her rights of independent judgement, and without >statements from management that more than implicitly assert that the >Director has some nefarious purpose. > >One must remember that those fiduciary obligations that I mentioned impose >upon a Director an obligation of loyalty to the corporation. That >obligation generally requires that a Director keep confidential that >corporate information that is, in-fact, confidential. However, the >Director is not compelled to blindly and unthinkingly accept any >self-serving labels of confidentiality that corporate management may chose >to apply. > >I made my initial request to inspect the financial records - in particular >the general ledger - more than a year ago. Despite repeated efforts and >requests, I still have not been allowed to see those records. > >Oh, ICANN's management will say that they have afforded an opportunity; >that I merely need to sign away my duty of independent judgement, that I >merely need to allow corporate management to bind me in advance in how I >may review the activities of that very same management; that I allow >management to set conditions on the inspection that are so limiting that >they would render any such inspection marginal and superficial. > >To sign these agreements would be to abandon my Director's obligations of >independent judgement - I would be agreeing to allow my decisions to be >controled by ICANN's management - by exactly the same people whose actions >I am obligated to review. > >To add insult to injury the "agreements" that ICANN has demanded that I >sign are cast in the most condescending of language and contain unfounded >assertions against my personal integrity. > >All of this has occurred for the most part outside of the public eye. >And even if I do gain access to corporate records the information that I >review will almost certainly remain inaccessible to the public - My >obligation of loyalty to the corporation demands that I use the >information only to improve the corporation and it is unlikely that >disclosure would further that obligation. But one can not agree in >advance, as ICANN's management is demanding, that disclosure may never >occur. For example: In the unlikely event that I were to discover >information that must be disclosed - such as evidence of criminal activity >- then, of course, my duties would be affected accordingly. > >ICANN's management has demonstrated over the course of the last year that >it has an institutional hostility and an intent to preventing me from >carrying out my duties as a Director of the Corporation. > >My recourse is to either abandon my obligations as a Director or to >initiate such steps outside of the corporate boundaries as are consistent >with my obligation of loyalty to the corporation. > >Such steps cost money, potentially lots of money. > > --karl-- ------------------------------------------------------------------------- POLITECH -- Declan McCullagh's politics and technology mailing list You may redistribute this message freely if you include this notice. 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