As someone who has served as a Director or senior staff of various Canadian non-profit organizations, including Canada's largest (larger than ICANN in terms of budget or membership, including the AtLarge), I wholeheartedly agree with everything Karl says, except I fail to see why Karl's second option (his first implies resignation) should require lots of money. I can't imagine it being a difficult or drawn out process to get a court order that compels the staff to act properly, at least unless the staff opposes it, which strikes me as not a good career move. Unless CA law is far different than .ca law or I've missed something in the Bylaws, even the rest of the Board would have trouble opposing it, and again it would be suicide. I say get on with it, and would be only too happy to lend a hand."

Following is Karl Auerbach's letter, modified only by removing quote brackets and reformatting for linebreaks...

----
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.

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--

Date: Wed, 5 Dec 2001 14:01:31 -0800
To: David Farber , "Declan McUllough" [sic]
From: "M. Stuart Lynn"
Subject: Response to Karl Auerbach's note

The postings from Karl Auerbach to your lists regarding access to records were forwarded to me. I thought each of you might be interested in my response below. Feel free to post or not, of course, as you see fit.

Many thanks
Stuart

_______

Karl is free to examine ICANN records any time he is ready to comply with established procedures that apply to him and any other Director -- in complete accordance with California law. Karl is not being singled out.

Among other reasonable provisions, these procedures are designed to protect confidential records, such as personnel files. Karl wishes to set himself above the direct or delegated authority of the ICANN Board of Directors, in declaring himself as the sole determinant of what is confidential and what is not. That is not his prerogative according to California law or ICANN bylaws.

The procedures to which he objects were endorsed by the Audit Committee of the ICANN Board, to whom the Board has delegated responsibility for this general area. He is always welcome to take his objections to the full Board should he wish. So far, he has not chosen to do so.
--

__________________
Stuart Lynn
President and CEO
ICANN
4676 Admiralty Way, Suite 330
Marina del Rey, CA 90292
Tel: 310-823-9358
Fax: 310-823-8649
Email: lynn@icann.org

I was going to wait until after the archives are posted to report on the recent CIRA [administrators of the Canadian .ca ccTLD] General Meeting here, but will cover a few relevant points now. CIRA's meeting was webcast (in two languages, English and French, Canada is officially a bilingual country), and included a mechanism for online voting. Any .ca registrant is considered a voting general member of CIRA (the general membership also elects nine of the twelve CIRA BoD members, one of the remaining three is appointed to represent end-user interests). The general membership votes on the appointment of the external auditors.

Compare and contrast. CIRA is only a year old yet somehow has managed a number of things that ICANN has spent a few years promising will happen real soon now. It was Mr. Roberts at the helm of ICANN for most of that time whilst it went in circles, floundered, and reversed course. The most polite thing that can be said is that he lacks credibility. Less politely, one could muse whether he knew exactly what he was doing. If not, he was in the wrong job. If so, who was he really working for? -g