After putting up with more than a year of stalling, ICANN's At-Large Representative for Canada and the United States today filed suit against ICANN in California Superior Court seeking to get full access to its financial records. California law creates for directors of non-profit corporations an "absolute right at any reasonable time to inspect and copy all books, records and documents of any kind"; ICANN CEO Stuart Lynn sought, amidst an amazing series of delaying tactics, to impose all sorts of extraneous conditions on this right.
The right of directors to inform themselves is an essential element of corporate governance; the failure of directors to take this duty seriously is often cited as one of the prime causes of the Enron debacle. One really has to wonder what it is ICANN has to hide here. Not to mention once again appreciating the irony of the start of Article III of the ICANN By-laws: "The Corporation and its subordinate entities shall operate to the maximum extent feasible in an open and transparent manner and consistent with procedures designed to ensure fairness."
Director Sues Organization that Oversees Internet
Incidentally, this item inaugurates a new IANNWatch 'topic' on "lawsuits and judicial decisions," one I suspect that will get quite a bit of use. The graphic at the top is a small section of Hammurabi's laws.
ICANN Broke Law, Refused to Disclose Documents
Los Angeles - The Electronic Frontier Foundation today
helped a member of the ICANN Board of Directors file a
lawsuit forcing ICANN management to grant him some
reasonable access to corporate records.
Karl Auerbach, the North American Elected Director of the
Internet Corporation for Assigned Names and Numbers (ICANN)
began asking for corporate records in December 2000,
shortly after he was elected to the Board. ICANN management
dragged its feet for nine months, then issued a new
"policy" -- never brought before the Board for discussion
or vote -- requiring Auerbach to sign a non-disclosure
agreement that placed Auerbach's ability to discuss the
records at the discretion of ICANN management.
"California nonprofit law requires a corporation to provide
its directors the information required to make informed and
intelligent decisions," said Auerbach. "ICANN management
has denied me the tools I need to exercise independent
judgment and fulfill my duties as a director."
"Directors, not management, have the ultimate
responsibility and authority to oversee the operations of a
corporation like ICANN," explained Auerbach's attorney
James Tyre. "ICANN staff's arbitrary and changing policy
regarding access to corporate records is not only
disturbing, but unlawful in the state of California."
"The Electronic Frontier Foundation finds ICANN
management's apparent abuse of power disturbing," added EFF
Legal Director Cindy Cohn. "The Internet community relies
on well-informed ICANN directors like Mr. Auerbach to
administer the corporation appropriately."
Because ICANN is a non-profit California corporation, the
organization must comply with a California statute giving
any director of the corporation an "absolute right" to
inspect and copy corporate records.
In addition, ICANN's bylaws provide that: "Every Director
shall have the 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. The
Corporation shall establish reasonable procedures to
protect against the inappropriate disclosure of
For documents related to the Auerbach v ICANN case:
For this release:
ICANN Articles of Incorporation:
The Electronic Frontier Foundation is the leading civil
liberties organization working to protect rights in the
digital world. Founded in 1990, EFF actively encourages and
challenges industry and government to support free
expression, privacy, and openness in the information
society. EFF is a member-supported organization and
maintains one of the most-linked-to websites in the world at