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An ICANN board member's yearlong quest to review financial info
- Date: Tue, 04 Dec 2001 17:56:24 -0500
- To: email@example.com
- Subject: FC: An ICANN board member's yearlong quest to review financial info
- From: Declan McCullagh <firstname.lastname@example.org>
- Cc: email@example.com
[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:
>Date: Mon, 3 Dec 2001 13:52:32 -0800 (PST)
>From: Karl Auerbach <firstname.lastname@example.org>
>To: David Farber <email@example.com>
>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
>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
>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
>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
>Under the California corporations code that governs
>non-profit/public-benefit corporations (such as ICANN) those rights are
> 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
>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.
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