Re: Articles (was: IAB Last Call on new IANA Statement)

[Jim Dixon <jdd@vbc.net>]

On Tue, 1 Sep 1998, William Allen Simpson wrote:

> As I requested in the open plenary, I reiterate that I would like a
> minor change to article 3 of the Articles of Incorporation.
> 
> Please divide the overlong paragraph into separate sections, numbered
> (a), (b), etc., as they are in article 4, and fix the typos.  Drop "In
> furtherance of the foregoing purposes" and other rambling.  Start a new
> paragraph break with the enumerated purposes beginning with (a).
> ...

While many of these changes will improve the quality of the articles,
they do not address the major deficiencies in the IANA draft.  Among
these are the fact that the articles, including of course the purposes 
set out in those articles, can be changed by a majority of a quorum
of the directors.  This means that 25% of the directors can decide to 
change the fundamental objectives of the new corporation.

It is also possible for the same number of directors to make large
loans to virtually anyone and to contract to transfer large sums of
money to other ostensibly non-profit corporations.

This is part of a general pattern throughout the articles and bylaws:
lack of accountability.  The articles and bylaws both define a small
closed group that is in the end accountable only to itself.  This is
against a fundamental requirement of the US government White Paper,
the requirement that it be difficult for a small group to capture the
new corporation(*).  Unfortunately, the corporation specified by the 
IANA draft articles and bylaws has exactly the opposite quality: it
will always be under the control of a small, closed group.

This is not a minor flaw which is likely to be corrected in time.
It is fundamental.

Correcting this problem is not that difficult.  It can be corrected
by creating a broad and diverse membership, and then making key 
provisions of the articles and bylaws changeable only by the action
of a large majority of that broad and diverse membership, and by 
having the board selected by that membership.  This is, incidentally
the corporate model described by the consensus documents of the
European Commission's Brussels conference of 7 July.

The IANA drafts ignore these possibility: they describe a corporation
without a membership, where in large part the board selects itself
or is selected by external bodies having similar problems with
accountability.

NOTE:

>From the White Paper: "The organizing documents (Charter, Bylaws,
etc.) should provide that the new corporation is governed on the
basis of a sound and transparent decision-making process, which 
protects against capture by a self-interested faction, and which
provides for robust, professional management of the new 
corporation."

--
Jim Dixon                  VBCnet GB Ltd           http://www.vbc.net
tel +44 117 929 1316                             fax +44 117 927 2015