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ICANN and Ethics

Philip S. Corwin

On September 2nd ICANN opened a one-month public comment period asking whether its Conflict of Interest Policy and related Bylaws should be altered. In light of recent heightened scrutiny of ICANN's policies regarding permissible employment options for departing Directors and key employees this announcement might have been welcome news. Instead, it's a narrow, cart-before-the-horse initiative that seems tone-deaf to predictable stakeholder, political and public relations fallout.

The purpose of these proposed revisions is to permit ICANN's currently uncompensated Directors to vote on whether they should be paid pursuant to the recommendations of an "Independent Valuation Expert". Only the Chairman of ICANN's Board presently receives compensation, $75,000 per year. Many ICANN stakeholders believe that its Directors deserve some meaningful compensation for the very considerable work that accompanies their service. Indeed, ICANN's Accountability and Transparency Review Team (ATRT), in its Recommendation 5, proposed that the Board implement a compensation scheme for Directors. But doing so in the near-term on a stand-alone basis seems quite ill-advised.

Just two days before this announcement, ICANN held an ATRT Activities Webinar to update the public in regard to progress on its commitments to improve transparency and accountability. In the course of that session ICANN staff made reference to this coming Bylaws ethics revision proposal. Being on the call, I inquired whether these revisions would address acceptable business activities during a defined period of time following service on the Board. No, came the reply, it would only address the Board's ability to vote on whether its members should be compensated — but, it was further noted that "the topic [of permissible post-Board service] is active" among Board members and within the broad ICANN community.

The Washington Post "Revolving Door" Story

Indeed, one would think that this is a very active topic within ICANN and its community, ever since the publication of a story in the Business Section of the Washington Post of Sunday, August 21, 2011. The headline of the Web version is "ICANN departures after Web suffix vote draw criticism". But the print edition, consumed with Sunday coffee, featured a more damaging heading — "A 'revolving door' at nonprofit keeper of domain names". Overall, it's not too difficult to close one's eyes and envision a member of the U.S. Congress referencing the Post story in a future ICANN oversight hearing — after receiving it in a closed door meeting with a concerned party affected by ICANN decisions.

Indeed, on September 14, 2011 Senator Ron Wyden, one of the more Internet-savvy members of the U.S. Senate, released a press release titled "Wyden Calls for Ethics Rules to Prevent Revolving Door for Internet Domain Name Regulators”. In a letter directed to the Department of Commerce Senator Wyden called for the same ethics rules in effect for its employees to be imposed on whatever entity is awarded the next iteration of the IANA contract in March 2012.

In Washington, the term 'revolving door' does not refer to a building entrance but to the practice whereby one serves in a government agency, gets one career ticket stamped, and then goes on to serve the entities one previously regulated at a much higher pay scale. This type of 'revolving door' carries the negative connotation that one is using public sector experience for private sector gain — or may even have tilted toward favoring specific private interests over a broader public interest in the hope that such leniency or favoritism will feather one's future occupational nest. There are various government ethics rule in place that seek to curb both the perception and the reality of such self-interested bias. More broadly, structural safeguards, voluntary practices, and the availability of internal ethics counsel are utilized at many organizations that have the good sense and requisite standards to require associated individuals to forbear from exploiting former relationships for at least a reasonable post-service period.

The author of the Post article may have developed the story on his own, or it may have been "pitched" by an ICANN critic. The suspect list of those who may wish to tarnish ICANN's reputation is as lengthy as the potential murderers in an Agatha Christie mystery. Regardless of the story's origin or motivation, from the perspective of the business sector, civil society, and the other parties who comprise ICANN's core "community" and support its basic organizational model it is important that ICANN, like Caesar's wife, strive to remain virtuous and beyond reproach. This is because, whatever its faults, the wisdom of its creation, or the adequacy of its enforcement tools for its mission (which are confined to agreements with the 'contracted parties' of registries and registrars), ICANN offers these non-governmental constituencies a safe harbor from a traditional regulatory regime, and a participatory role through its multi-stakeholder consensus process that would never be possible were support for ICANN to degrade and its functions shifted to the UN-affiliated International Telecommunications Union (ITU) or some other multi-governmental organization.

While ICANN surely has its own internal politics and external political considerations, and while its own Governmental Advisory Committee (GAC) has assumed a more influential policymaking role in the wake of the 2009 termination of direct U.S. oversight and its replacement by the Affirmation of Commitments (AOC), it still remains relatively free of big picture politics. Letting multinational politics become the deciding factor on critical decisions relating to the Domain Name System (DNS) would not be a positive development for the Internet. ICANN was created by a complex, multi-party consultative process accepted and implemented by one government, that of the United States. But its future survival and independence now depends on the continued support and good will of many governments and multiple stakeholders on a global stage.

Does ICANN Have an Ethics Problem?

So, given the critical importance of the answer to its future, does ICANN have an ethics problem? As Bill Clinton might have opined, it all depends on how you define "problem". (For an operational definition of "ethics", we'll use that supplied by The New Oxford American Dictionary — "Moral principles that govern a person's or group's behavior; the moral correctness of specified conduct.")

If by ethics problem we mean any documented evidence that a member of ICANN's Board or decision-making staff has let the prospect of present or future monetary or other rewards corruptly influence their carrying out of official ICANN duties, then the answer is a resounding No. (But individuals can reach unwritten understandings that can never be documented, which is exactly why ethics policies must consider appearances as well as actualities.)

But if we mean a media-generated perception that some select members of the Board and senior staff may have let future career prospects influence official duties, then the answer (fairly or not) is, post-Post, an unfortunate and qualified Yes.

And if we mean a lack of adequate internal ethics rules relating to allowable business and professional activities subsequent to serving in senior posts at ICANN, then the answer is clearly Yes — given that no such rules presently exist.

The Reality of Perceptions Amidst Multiple Challenges

In politics and policy, negative assertions linger long and perception is reality — and any perception that key ICANN decision makers may have acted for self-interested monetary or career advancement reasons, or that it lacks sufficient internal ethics guideposts and safeguards, whether or not well founded, weakens ICANN as an organization and opens it to attack. This is particularly unwelcome in a period when:

• ICANN will commence to accept unlimited applications for new generic top level domains (gTLDs) in mid-January 2012. Informed parties estimate that 500-1500 applications will be received and, assuming that Murphy's Law is not repealed, unanticipated problems will arise in the vetting and authorization process, and far beyond — and every well-publicized problem will be used against ICANN by its detractors as well as by parties who believe they may be harmed, even if inadvertently.

• Major advertising trade associations are calling upon ICANN to abandon or rethink the new gTLD program, and have hinted at lawsuits if unheeded. They are but the first of many potential opponents to surface, and litigation filed in the 9th Circuit seeking to enjoin the program is well within the realm of possibility. Indeed, the $185,000 new gTLD application fee includes a component for anticipated legal defense costs. Whether these and other parties have standing to sue, much less justiciable claims, remains to be seen — but they certainly have the wallet to mount a major legal offensive, and lawsuits generate further troubling headlines and perceptions that mistakes were made. They can also lead to unanticipated and embarrassing revelations as documents unearthed in discovery make their way into the trial record, and some suits may be subject to voluntary dismissal after controversial settlements are made that raise entirely new questions.

• ICANN announced in August that its current CEO, Rod Beckstrom, will be leaving at the end of his current term in July 2012. The timing was unusual, as most organizations strive to make such announcements only when a CEO's departure is imminent or has just occurred, not eleven long months away. While ICANN's press release states "The Board of Directors fully supports Rod through the completion of his July 2012 term..." the reality is that, at a point at least several months before scheduled departure, every CEO heading for the exit becomes something of a "lame duck" — and that ICANN's Board must now conduct a search for a new CEO while also pushing to fill other executive vacancies, as well as new posts and arrangements related to the gTLD program launch, and simultaneously dealing with multiple additional issues and challenges. Further, while ICANN's Board is unusually detail-oriented, every CEO puts his own personal stamp on an organization, and uncertainty about leadership succession can take its toll on staff focus, morale, and retention.

• The US Department of Commerce has exercised its option to extend the current IANA contract from September 2011 through March 2012, thereby prolonging the uncertainty regarding whether and under what conditions the agreement will be renewed with ICANN and thereby allow it to continue overseeing the authoritative root server — with that core duty being the technical foundation for the entirety of its DNS policy role.

• Finally, and perhaps of greatest concern, governmental criticism of ICANN is mounting. First, a series of European Commission (EC) policy papers that have recently become available propose the assertion of unprecedented governmental control over ICANN — including government vetoes over any proposed new gTLD, significant structural changes to ICANN's Board and the nature of the IANA contract, and the establishment of two new bodies to oversee ICANN decision-making and finances. One of the EC papers addresses the ethics issue directly, reciting a series of facts it contends "raise real and substantive problems of conflict of interest that are not addressed adequately by ICANN's current governance rules", and going on to suggest that the proper remedies include having a compensated Board with no outside employment permitted, and banning any Board member from working for a contracted party for two years after Board service. While it is not yet clear to what extent these proposals enjoy support from individual European nations, that will likely come into focus at the October ICANN meeting in Dakar, Senegal where these proposals will be advanced in the context of the GAC's on-site deliberations. Overall, these EC proposals constitute the greatest challenge to ICANN's independence since the World Summit on the Information Society (WSIS) negotiations of 2005. As if that wasn't worrisome enough, the governments of Brazil, India, and South Africa have just called for the establishment of a "new global body… located within the UN system" to "integrate and oversee" the activities of ICANN, the ITU, and the Internet Engineering Task Force (IETF).

This mix of highly problematic issues stems in significant part from ICANN's decision to implement recommendations that it establish a program for the acceptance of an unlimited number of applications for new gTLDs. That decision and its ongoing implementation, strongly resisted by trademark owners, some business sectors, and other interests, led to a negative narrative from program opponents that goes roughly as follows: ICANN has elected to do what is in its own self-interest of enhanced revenues and increased scope of authority, rather than acting in the global public interest. Further, this is occurring as it acts to implement a policy that emerged from a process controlled by those contracted parties — registries and registrars — who stand to benefit financially from new gTLDs. Meanwhile, the considerable negative externalities of hundreds or thousands of new gTLDs and their attendant costs will be foisted upon brand owners and a general public that did not ask for them and will not reap any substantial benefits from them.

This narrative is viewed by many others, including the author, as narrow, self-serving, and incomplete. It ignores ICANN's longstanding mandate to expand the gTLD space, and it neglects the reality that there was no demand for the Internet or anything connected with it (ranging from Google to Facebook to Wikipedia to Opentable, to insert your favorite device, app or Web service) until they became available to the public. Further, it has been disseminated in conjunction with apocalyptic predictions of massive trademark infringement, and packaged with suggested "rights protection' proposals that were wholly unbalanced (but nonetheless embraced by influential members of the GAC after intensive lobbying, notwithstanding the fact that the new gTLD Applicant Guidebook (AG) already contained rights protections going far beyond the present rules for .com and other incumbent registries). Yet it's a fairly easy sell to a legislator or minister who understands little of ICANN or DNS policy but who can't ignore major interests and can readily grasp that 1,000 new gTLD applications will generate $185 million in application fees alone, or nearly triple ICANN's current annual budget — and that this is just a fraction of the tsunami of cash that will accompany the unleashing of new gTLDs. (Whether that massive investment will fund a beneficial Internet paradigm shift or a wasteful .anything "bubble" is a subject for future reckoning — the likely answer is a mix of both.)

In sum, given these multiple challenges, this is a particularly inopportune time for ICANN's ethics rules and practice to be under any cloud. In this context, a decision by ICANN's Board to amend its ethical structures to allow it to vote itself compensation, while neglecting to address other outstanding ethics issues, would seem myopic, especially as critics will likely characterize it as helping themselves to a slice of the new gTLD revenue stream.

The Post Specifics and ICANN's Board Code and Conflicts Policy

Let's now turn to the facts cited in the Post article and their implications.

The first and more noteworthy was the July 18th announcement that Peter Dengate Thrush, former Chairman of ICANN's Board, had accepted the position of Executive Chairman of Top Level Domain Holdings, Ltd. (TLDH), the parent company of Minds + Machines (M+M). M+M was perhaps the most visible and vocal proponent of expedited approval of the new gTLD program during the three year development of the AG. According to TLDH's official announcement, Mr. Thrush now has the possibility of becoming a very wealthy man if its new gTLD initiatives are successful and its share price appreciates substantially as a result:

"The Company has today awarded options over 15,000,000 Ordinary Shares to Peter Dengate Thrush at an exercise price of 8p per Ordinary share (total 15,000,000 Ordinary shares under option following this grant). The options granted above will vest over three years from the date of grant at the rate of 1,250,000 per quarter provided that Peter Dengate Thrush remains an employee of the Company and will expire unless exercised on or before 15 July 2014."

According to the article, TLDH approached Mr. Thrush on the afternoon of June 24th at the ICANN meeting in Singapore, just hours after his term as Chairman ended and but four days after he led the ICANN Board to a historic 13 to 1 (with 2 abstentions) vote in favor of launching the new gTLD program. Negotiations were concluded and a contract signed within three weeks.

In response to questions raised about the propriety of this rapid transition, Mr. Dengate Thrush told the Post: "There are no ethical or contractual prohibitions on moving on from ICANN to work in the industry, and, in fact, that's what many people have done."

Likewise, ICANN's General Counsel, John Jeffrey, told the Post: "There's been no evidence supplied to me or the board to show [that Mr. Dengate Thrush] violated our conflicts of interest policy. Should such information be made available, that would be considered." The article then notes that Mr. Jeffrey added that ICANN's Board Governance Committee was looking at the question of whether "post-service" ethics policies are needed.

These explanations are technically correct. But, to a public official or a member of the public, and to many within the ICANN community, the scenario appears indistinguishable from the head of a regulatory agency leading it to vote for a controversial policy and then promptly joining one of the leading firms to benefit from that vote. The PR optics are awful. And legalistic parsing that the situation is not addressed by the conflicts policy just raises questions about the adequacy of that policy — which, upon examination, turns out to be inadequate.

ICANN's Board of Directors' Code of Conduct broadly states: "The good name of ICANN depends upon the way Board members and staff members conduct business and the way the public perceives that conduct. Unethical actions, or the appearance of unethical actions, are not acceptable." (Emphasis added) This is a praiseworthy standard but is not self-executing.

The Code in turn requires Board members to comply with ICANN's Conflicts of Interest Policy. Yet that Policy is quite narrow in its effective coverage. It applies to "Covered Persons", which is defined as "an Officer, Director, Board Liaison, or Key Employee of ICANN" (and all those covered positions are defined in turn). While the scope of covered individuals is somewhat broad, the categories of Board decisions subject to the Code are narrow. The stated purpose of the Policy is "to ensure that the deliberations and decisions of ICANN are made in the interests of the global Internet community as a whole and to protect the interests of ICANN when ICANN is contemplating entering into a transaction, contract, or arrangement that might benefit the private interest of a Covered Person." The Policy requires that, in regard to "any proposed transaction, contract, or arrangement being considered by ICANN", a Covered Person disclose any Potential Conflict that might give rise to a Conflict of Interest. When a Covered person discloses such a Potential Conflict:

[T]he Board, shall determine by a majority vote of the Disinterested members whether the transaction, contract, or arrangement is in ICANN's best interest, for its own benefit, and whether it is fair and reasonable to ICANN. In conformity with those determinations, the Board Governance Committee or the Board, as applicable, shall make its decision as to whether ICANN should enter into the transaction, contract or arrangement.

As can be discerned from a review of this language, the Singapore Board vote on the policy question of launching the new gTLD program is not the type of "transaction, contract, or arrangement" contemplated by this Code; rather, it covers business arrangements entered into by ICANN with contracted parties or for other purposes. Even if it did cover a policy vote like that on new gTLDs, the Code does not appear to provide any available sanction against a Covered Person who fails to disclose a Potential Conflict.

The Code also requires a Board member to abstain from voting "on any matter in which he or she has a material Financial Interest that will be affected by the outcome of the vote". The critical definition of Financial Interest reads as follows:

A "Financial Interest" exists whenever a Covered Person has, directly or indirectly, through business, investment, or Family: (i) an ownership or investment interest in any entity with which ICANN has a transaction, contract, or other arrangement; (ii) a compensation arrangement with any entity or individual with which ICANN has a transaction, contract, or other arrangement; and (iii) a potential ownership or investment interest in, or compensation arrangement with, any entity or individual with which ICANN is negotiating a transaction, contract, or other arrangement. Compensation includes direct and indirect remuneration as well as gifts or favors that are not insubstantial. Transactions, contracts, and arrangements include grants or other donations as well as business arrangements. A Financial Interest is a Potential Conflict but is not necessarily a Conflict of Interest. A Financial Interest does not become a Conflict of Interest until the Board Governance Committee, following the procedures set forth in Articles II and III of this COI Policy, determines that the Financial Interest constitutes a Conflict of Interest. (Emphasis added)

So, under this definition, even if an ICANN Board member was approached for the purpose of discussing a lucrative future business or employment arrangement by an entity with a substantial stake in an upcoming policy vote, this potential benefit would not constitute a Financial Interest unless ICANN was negotiating a transaction, contract or other arrangement with the entity at that point in time.

Overall, ICANN's Conflicts Policy does not appear to cover Board votes on critical DNS policy matters, like the new gTLD program, in which the entity has a direct stake in the outcome but is not in present negotiations with ICANN — and that lack of coverage would be just as true if a Board member was tempted by a future interest or compensation arrangement with an entity that wanted to see the policy delayed or voted down. In sum, this Code does not seem adequate for a world in which ICANN Board votes can have broad ramifications far beyond the contracted parties or other entities with which ICANN has direct relationships.

There is absolutely no evidence that Mr. Dengate Thrush pushed the ICANN Board to a final vote on the new gTLD program, or voted "yes", for unethical reasons. Based upon his actions and statements throughout his Chairmanship, he sincerely believes that the launch of new gTLDs will provide multiple benefits to the global Internet community — and his reasons for pushing to complete this stage of the process before the conclusion of his term may well have included such laudable factors as maintaining ICANN's credibility after three long years of AG refinement, as well as taking a controversial matter off the table so his successor would not be burdened by it.

Nor should ICANN Board members or employees be flatly barred from future work for contracted parties or other entities with a significant stake in ICANN decisions and transactions, because doing so would detract from ICANN's ability to attract the best staff and Directors. Mr. Dengate Thrush is a well-regarded and well-connected intellectual property attorney and, given the prominence of trademark protections in the AG's development and his inside understanding of ICANN, one would expect that he'd do quite well financially as new gTLDs file applications and launch even had he not accepted the TLDH position.

The question, then, appears to be whether his decision to accept the Chairmanship of one of the most vociferous adherents of new gTLDs absent a "decent interval" following his Board service — rather than quietly accepting "under the radar" work from clients with a stake in new gTLDs and other ICANN-related matters — created, to paraphrase the Board Code, a public perception of unethical conduct, or an unacceptable "appearance of unethical action". In this regard, the Post was able to find several individuals willing to raise questions about his actions, including spokespersons for the Center for Responsive Politics and Public Citizen. Now these are organizations that are predictably ready to find ethical fault in almost any scenario. The more important comment came from Assistant Secretary of Commerce Larry Strickling, who told the Post that "the conflict of interest issue was raised to NTIA in public comments [on the IANA contract renewal]. Based on that input, we will consider whether the contract should contain additional provisions to guard against conflicts of interest by whomever is chosen to perform the work." The public comments referred to by Secretary Strickling were submitted prior to the announcement of Mr. Thrush's affiliation with TLDH, so the Post story just adds one more ingredient to an already-existent simmering stew.

So, fairly or not, Mr. Thrush's migration to TLDH has raised public perceptions about the adequacy of ICANN's ethics policies that have reached all the way to the U.S. government agency that will decide the future award and accompanying conditions of the IANA contract. While it may not be appropriate to include ethics provisions within a renewed contract that have no direct relationship to the narrow technical functions performed under it, that may well be the case if ICANN's Board does not move swiftly to address the ethics matter head on. Unaddressed, the implications of inadequate conflicts policies will not likely "blow over" but rather fester. Indeed, the EC policy papers demonstrate that the ethics question has resonated from Washington to Brussels.

The other development cited by the Post seems far less problematic and less liable to negative public perception. This was the migration of Craig Schwartz, formerly ICANN's Chief gTLD Registry Liaison, from ICANN to the Financial Services Roundtable (FSR). It's not clear whether Mr. Schwartz was considered a Key Employee and therefore a Covered Person under ICANN's Conflicts Policy. Regardless, his role within the AG development process was a technical one, and he had no ability to bring finalization of the new gTLD program before the Board nor did he have a vote on that matter. The FSR, unlike TLDH, is not a speculative for-profit investor in or developer of new gTLDs but a financial services trade association representing the banking, securities and insurance sectors. Further, FSR was not a strong proponent of the new gTLD program but was on the record expressing numerous concerns about it, most specifically whether questionable parties could obtain control of potential gTLDs like .bank or .insure, and whether such gTLDs would be subject to high level security standards against such plagues as phishing and malware. The one eyebrow-raising aspect of this transaction is that Mr. Schwartz reportedly accepted the FSR position in May but did not depart ICANN until June 30th, with his service encompassing the Singapore meeting and Board vote — although his imminent departure and future employer was well known in Singapore. One wonders if and when he advised ICANN that he was in discussion with FSR (and the present Conflicts Policy appears deficient in making clear to ICANN employees what their obligations are to make such disclosures about potential employment, so clarification would benefit them as well). He will now presumably assist FSR in preparing an application(s) for one or more financial-related gTLDs and, if approved, will be involved with their operation; and his past service with ICANN will not confer any clear benefit to FSR if it faces competing bids for .bank or other "strings". A .bank gTLD operated by a consortium of financial trade groups that successfully addressed cybersecurity and consumer fraud problems would in fact constitute a proof of concept of the benefits derived from the new gTLD program.

In regard to these two departures, the Post reported:

ICANN doesn't restrict what employees, executives, or directors do after they leave, though they are subject to confidentiality agreements, said John Jeffrey, the group's general counsel.

This paraphrase of Mr. Jeffrey's response contains an admission that ICANN presently has no policy regarding whether any post-ICANN employment should be off-limits, or at least subject to a cooling-off period. As for confidentiality agreements, they are hardly even within the realm of ethics but are more akin to restrictions on post-employment revelation of internal trade secrets — they protect ICANN and its contracted parties, not the general public.

Needed: A Broad and Proactive ICANN Ethics Initiative

As noted, ICANN approaches the opening of the new gTLD application window facing myriad challenges. These include the EC proposals to subject it to much tighter governmental controls, the deferred U.S. decision on renewal and modifications of the IANA contract, and the prospect of one or more high-profile lawsuits. Potential litigation may come not just from new gTLD program opponents but from disgruntled applicants (notwithstanding ICANN's attempt to insulate itself from such actions by requiring applicants to forswear litigation, which courts may choose to override). Meanwhile, ICANN confronts other decisions that affect the security, stability and resilience of the Internet, so its effective functioning is actually important. Its ethical reputation is a critical foundation for carrying out the totality of its functions.

At the same time, ICANN's present Board Code and Conflicts Policy seem designed for a simpler and more naïve era, before every significant business had an online presence, when it was presumed that ethical issues could only arise in the context of contracts or other arrangements to which ICANN was a direct participant. The authorization of the new gTLD program has crossed the policy Rubicon and set in motion a process that will vastly multiply the possibility of thorny ethical questions. In a world with thousands of gTLDs, there will be thousands of potential ICANN conflicts. If most of the world's major corporations eventually establish .brand TLDs, then each will be a registry operator and thereby a contracted party — so what rules if any should restrict their future employment of or representation by former ICANN executives or Directors?

The new gTLD process itself will generate many questions whose answers will determine which investments will pan out or be wiped out. It already appears that many standard applicants will likely confront competition for the same string by self-proclaimed "communities" — and the AG seems vague on how those disputes will be resolved, a critical issue since a "community" bid automatically trumps a competing standard bid and thereby avoids the choice between collaboration or auction. Further, since even the most enthusiastic new gTLD proponents concede that some registries will fail down the line, ICANN will surely be faced with multiple future requests for the repurposing of those gTLDs, with the registry operator and its registrants on one side and trademark interests and aggrieved competitors on the other — this situation has already arisen with .jobs, which raises the question of whether Monster.com or other companies opposing its repositioning should be permitted to employ any ICANN-associated individual involved in any way with that ongoing dispute. These are but some of the many potential situations in which ICANN decisions will decide future winners and losers in the new gTLD space, and which the present ethics rules fail to address. Remarkably, such ethical questions received scant discussion during the three year development of the AG.

Rather than focusing on the narrow issue of amending its Board Code to permit a Board vote on Director compensation — which could be a self-inflicted PR debacle in isolation — ICANN's Board should proactively launch a broad initiative to update relevant ethical strictures. This initiative should be led by an "Independent Ethics Expert", a respected organization with recognized expertise in corporate and public sector conflicts issues. It should take into account ICANN's unique attributes of being a private, non-profit corporation with many quasi-governmental and regulatory attributes, and should look to a variety of model ethics provisions from the public, private, and non-profit sectors in fashioning proposals for updated guidance for ICANN directors and key personnel. It should review all of ICANN's critical functions, including those arising under the new gTLD program, and should strive to identify scenarios in which potential conflicts may arise. Also, as has been proposed to its President's Strategy Committee, it might consider whether ICANN should employ an Ethics Counsel in addition to its General Counsel as there may well be times when its corporate interests are at odds with its broader responsibilities.

In carrying out that task, the principal question that may arise is exactly who is ICANN responsible to? While it is a non-profit corporation there are no shareholders. And, while it has regulatory attributes, it is not (directly) beholden to elected officials, notwithstanding the enhanced role of the GAC as well as the growing influence of non-western nations within it. The September 2009 Affirmation of Commitments (AOC) entered into between the U.S. and ICANN states that ICANN's "decisions made related to the global technical coordination of the DNS are made in the public interest and are accountable and transparent" and affirms the U.S. "commitment to a multi-stakeholder, private sector led, bottom-up policy development model for DNS technical coordination that acts for the benefit of global Internet users”. Similarly, the Conflicts Policy states that "The purpose of the Conflicts of Interest Policy (the "COI Policy") is to ensure that the deliberations and decisions of ICANN are made in the interests of the global Internet community as a whole." (Emphasis added.) But when it comes to ensuring that these laudable goals are met, the AOC speaks mainly in terms of process. And when one is accountable to "the public interest", "global Internet users", and "the global Internet community as a whole", one is really accountable to no one — or at least to no constituency that has common interests and views. The multi-stakeholder process accommodates the voicing of divergent views but provides no clear guidance on their reconciliation — and the new gTLD process demonstrated that they are sometimes irreconcilable. Further, that very process involves "the regulated" in every aspect of ICANN's policy process, raising uniquely challenging issues for any ethics policy review and initiative.

As if this task isn't daunting enough, given ICANN's quasi-regulatory role any ethics reforms should probably be accompanied by some effort to create an internal analog to the U.S. Administrative Procedures Act and other statutory models that establish a clear and predictable framework for the development and finalization of ICANN policies. The three-year development process for the new gTLD AG often had an undesirable ad hoc quality, with several unpredictable twists and turns, that left both proponents and opponents wondering exactly what the rules were and whether there would ever be finality. Such procedural vagueness is a fertile field for additional ethical dilemmas.

The June 2008 Board vote taken in Paris to proceed with new gTLDs occurred in a world that no longer exists. Three months later the world financial system teetered on the brink of collapse, and three years later tens of millions of struggling families wonder whether they have been permanently demoted from the middle class as governments struggle with massive debt loads and currency debasement. This new world of economic insecurity has little tolerance for an ICANN that, fairly or not, may be characterized by myriad critics as a "Club Med for geeks”, traipsing around the world to exotic locales to devise rent-seeking arrangements that benefit those who operate within the ICANN bubble while failing to provide broader economic and other benefits to the world at large. Such charges are false, as anyone who seriously participates in an ICANN meeting spends long, jet-lagged days in often tedious back-to-back sessions. But, again, perception is reality, all those charges are already in circulation, and ICANN's public response has arguably fallen short.

The Machiavellian perspective is that ICANN is ultimately accountable to the U.S. government which created it and which contracts out the IANA root zone authorization function, and to governments generally — since a multi-governmental consensus that ICANN has proven too dysfunctional, problematic or embarrassing could lead to abandonment of support for its multi-stakeholder model and forced migration of ICANN's DNS functions to an organization dominated by governments and largely shuttered to the private sector and civil society.

That does not mean it would be appropriate for the U.S. to impose a Code of Ethics through the IANA contract. Nor does it mean that simplistic formulations such as those suggested in the EC papers should be adopted — because a ban on outside employment for ICANN Directors would restrict eligibility to the rich or the retired, and a ban on post-ICANN employment or affiliation with a contracted party would be both too narrow (given that parties who benefit from particular ICANN decisions may have no contractual ties to it) and too broad (as we envision a world of hundreds or thousands of .brand and other new gTLDs and the prospect that ICANN Directors and key employees would be barred for two years from joining any of the companies that control them).

What it does mean is that it is incumbent for ICANN's Board — and for its many stakeholders — to recognize that those who raise questions about the adequacy of its current ethical standards are just as likely to be ardent ICANN supporters (as is this author) as dedicated detractors. And, further, to realize that expeditious movement toward a more nuanced and comprehensive code of ethics may well be the key to its continued independence as well as its long-term survival and success.

ICANN's current ethics rules are neither adequate nor defensible. It would be far better for responsive reforms to be initiated by the Board, with stakeholder support, than imposed upon it. Certainly, any proposed ethics reforms should be open to public comment. But this is a subject on which the Board should not wait upon ICANN's standard "bottom up" policy process but act decisively and expeditiously from the top down.

(Note: The views expressed in this article are solely those of the author and not those of any client of the government relations and law firms with which he is associated.)

By Philip S. Corwin, Founding Principal of Virtualaw LLC, a Washington, DC Law and Public Policy Firm – He also serves as Of Counsel to the IP-centric law firm of Greenberg & Lieberman. Views expressed in this article are solely his own. Visit Page
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ICANN Board actions on conflicts and Ethics Bruce Tonkin  –  Sep 22, 2011 8:33 PM PST

Hello Philip,

Thanks for contributing such a thoughtful article on conflicts and ethics issues.

With respect to your concern that the ICANN Board is only concerned with updating its conflicts approach solely to address the issue of Board compensation, I can assure you that the Board is looking much wider than that.  The topic will be a area of discussion in the ICANN meeting in Dakar, Senegal.

The Code of Conduct is being reviewed by the Baord Governance Committee, which separately publishes its minutes.

e.g from:  http://www.icann.org/en/minutes/minutes-bgc-15aug11-en.htm

"5.Ethics and Conflicts of Interest –

The BGC began a discussion on the issues surrounding Board and staff ethics issues.  The BGC discussed that as a private sector organization, ICANN is limited in its ability to place restrictions on future employment, though there are many things that ICANN can do to address these concerns, such as continued strict adherence and enforcement of confidentiality provisions.  The BGC noted that the conflicts/ethics discussion has been going on within ICANN prior to the approval of the new gTLD program.  The BGC agreed that community discussion should occur in Dakar about this issue.

Action:

Staff to draft proposed guidelines for Board members and staff members, to provide additional information and guidance through the use of examples, for BGC consideration at its September workshop, in preparation for community discussion in October. "

Further action was also taken at the Board Governance Committee meeting last week, and minutes will be posted to the ICANN website once approved.

Regards,
Bruce Tonkin
Chair, ICANN Board Governance Committee

Re: ICANN Board actions on conflicts and Ethics Philip S Corwin  –  Sep 27, 2011 10:01 AM PST

Bruce:

Thank you for your comment on behalf of the BGC, as well as for your kind remarks regarding my article.

I am of course pleased to learn that the Board is conducting a broad review of the Code of Conduct, Conflicts of Interest Policy, and related ethics issues, and that this will be a significant topic of discussion in Dakar.

While I am not clear on why ICANN's status as a private, non-profit corporation would limit its ability to establish post-service employment restrictions, I look forward to learning more about ICANN's legal analysis and its proposed guidelines. I certainly plan to contribute to the community discussion next month, and look forward to seeing you at that time.

Regards,
Philip

Re: ICANN Board actions on conflicts and Ethics Bruce Tonkin  –  Oct 05, 2011 5:46 PM PST

The minutes from the Board Governance Committee meeting of 15 September are now public.

See: http://www.icann.org/en/minutes/minutes-bgc-15sep11-en.htm

The relevant resolution relating to Ethics and Conflicts of interest is:

"Ethics and Conflicts of Interest – The Committee held a long and detailed discussion about the nature of conflicts of interest, including the requirements relating to disclosure of existing, future or potential future conflicts of interest, as well as abstention from voting in particular circumstances.  The Committee also discussed in detail how ethics guidelines compliment a Conflicts of Interest Policy, and the need for ICANN to establish a formal Ethics regime.  The BGC approved a motion leading to the following actions:

Actions:

* The CEO and the General Counsel are to review and propose revisions to the Conflicts of Interest Policy to clarify issues, including disclosure and abstention requirements, surrounding future interests or potential future interests.

* The CEO and the General Counsel are to engage an external firm with expertise in advising on ethical issues, to advise and help develop an ICANN Ethics Regime or set of Guidelines for the Board, the staff and the community.

* A work party of Cherine Chalaby, Bill Graham and Ray Plzak as current members of the BGC to review and guide staff efforts to revise the Conflicts of Interest Policy and development of the Ethics Regime or set of Guidelines.

* Staff to provide BGC with progress report, and BGC to further discuss process and timeline in Dakar."

Note also that the BGC has asked the staff to schedule a 90 minute public session in Dakar to provide the community with a briefing on the current conflicts policy and possible changes, and to seek community input.  I will provide further details once the details are public.

Regards,
Bruce Tonkin

Bruce:Thanks for the update on the BGC's Philip S Corwin  –  Oct 07, 2011 8:07 AM PST

Bruce:
Thanks for the update on the BGC's discussion of September 15th. I am particularly gratified that it has recommended the hiring of an external firm with expertise on ethics issues, as that tracks closely to my suggestion that "ICANN's Board should proactively launch a broad initiative to update relevant ethical strictures. This initiative should be led by an "Independent Ethics Expert", a respected organization with recognized expertise in corporate and public sector conflicts issues."
I look forward to seeing you in Dakar and to participating in the 90 minute session scheduled on this subject.
Beat regards, Philip

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