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Nominet Board fight rolls on

Category : Internet governance, Journalism · by Jan 22nd, 2009

Yet another extraordinary statement has come out of Nominet – the .uk registry owner – today.

This time, the chairman Bob Gilbert lambasts a “number of false allegations” made in a resignation letter from former director Jim Davies.

The letter was posted on the Nominet members’ private mailing list, nom-steer, and contains “sensitive and confidential board and HR matters”.

In it, Davies provides details of an executive compensation package through which he accuses the CEO of unfairly profiting from the non-profit organization, and also alleges that the previous head of IT was kicked out the company for raising a concern about the CEO’s behaviour.

This is just the latest broadside in a war that has been raging at the heart of Nominet for almost a year.

Davies was voted onto the Board as a non-executive director in May 2008 by an increasingly well-organised group of domainers. It wasn’t long before he started criticising the organization, its CEO and the chairman, initially internally, then to its members and then in the press.

Nominet knew what was coming – it sent a letter to all of its members on 21 April effectively warning them off Jim Davies. It also actively canvassed against candidates. The letter asked for all the candidates to disclose:

  • Any previous occasions that they have stood for election to the Nominet Board and the platforms on which they stood.
  • How they would deal with the conflicts of interest that will arise from their current employment or roles.
  • All legal actions involving domain names, or Nominet DRS cases where they have been a respondent, or otherwise involved.
  • Any ongoing matters/ investigations of any nature to which they may be subject.

Those implicit accusations – that Jim Davies has conflicts of interest – has grown and grown and eventually enabled the Board of Directors to push Davies out because of his refusal to sign an agreement stating that he would act in the interests of Nominet’s stakeholders – the implication being that was acting in his own or other parties’ interest.

That was just the latest in an avalanche of public and private battles since Davies and to a lesser degree fellow non-exec director Angus Hanton started making things difficult following Davies’ election. The situation became so bad that chairman Bob Gilbert and CEO Lesley Cowley ended up paying a visit to the UK government – a close partner of Nominet – to discuss the problem. The result was a letter from the Department for Business, Enterprise & Regulatory Reform (BERR) – formerly the DTi. Its head honcho David Hendon suggested a corporate governance review.

This was of course a gentlemen’s agreement for how to deal with the fact that Nominet is genuinely concerned that the registry will be overrun by domainers and its status – and in many respects the UK online industry – will be damaged or undermined by those who profit from the quick sale and resale of domains.

Review! Review!

Quick as lightning, Nominet announced a corporate governance review on 29 October. At the same time, the Board upped its pressure on Davies to sign the conflict-of-interests agreement. He refused.

This led to the previous troublemaker-in-chief Hazel Pegg (who I should say I like very much) to immediately call on Davies to resign. Davies responded by calling on the CEO and chairman to resign, and also infuriated them further by disclosing details of Board discussions and making various accusations.

Nominet responded by taking legal action against Davies to “to require him to comply with his statutory duties and remove and avoid conflicts of interest”.

So Davies went public just a few days later, going to the press – my old and favourite IT news outlet The Register – making vague threats and accusations against both the chairman and CEO and calling for them to resign a second time.

The only resignation though was that of Angus Hanton just two days after that. Angus was clearly very unhappy about what had been happening and also turned the screws on Bob Gilbert and Lesley Cowley in his resignation letter. “I do not believe Bob Gilbert and Lesley Cowley are the right people to lead Nominet at this point and I agree that their positions should be put to an immediate member vote,” he argued.

Pressure builds

This caused Andrew Bennett – another domainer that has also stood for election – to set up a whole blog specifically to call on the Nominet members to vote off Gilbert and Cowley.

With the domainers adding this much pressure, others were prompted into action in favour of the management. No less than eight previous non-executives directors signed a letter just over a week later in support of Gilbert and Cowley. And the two current non-executives directors did the same. “We believe that you have both worked tirelessly to further the development of Nominet and the .uk domain in the interests of our members and all stakeholders since your appointment and to suggest otherwise is palpable nonsense,” they wrote.

On top of this the CEOs of no less than six other registries soon signed another letter in support of Gilbert and Cowley: Australia, Canada, France, the Netherlands, Norway and PIR – the people that run .org.

But still Jim Davies refused to budge. That was November, and Nominet hired a new non-executive director to fill Angus Hanton’s post just before Xmas. Maybe it was the lack of support from a fellow Board member, very possibly the management upped the pressure a third time internally. But finally this Monday, Davies realised the game was up and resigned.

But not without posting a resignation letter and throwing out the worst accusations he could muster against Gilbert and Cowley in a last-ditch effort to bring them down. All that prompted the chairman’s response today, accusing Davies of “false allegations” and “a clear breach of his duties”.

The end game?

So, the big question is: is it all over?

Well, it has been a very shaky year for Nominet and the management team has been sorely tested. They have done what they felt was necessary to prevent Nominet from falling into the hands of individuals who did not have the organizations best interests at heart. And it is all too probable that in the heat of battle a number of things were done that will be regretted in retrospect.

Angus Hanton was a troublemaker but the right sort of troublemaker. And Jay Daley is as sweet and honest a bloke as you will ever come across. He is also extremely talented as made clear by his recent appointment as chief executive of New Zealand’s .nz registry operator NZRS.

But Gilbert and Cowley do appear to have staved off the threat of a Nominet with a strong domainer influence. It is a threat that a large number of registries worldwide are concerned about as domainers have the profit incentive and hence the will to get on the Boards of companies created in a much more gentle time by Internet pioneers and idealists.

Threat: real or imagined

Is this threat real? At the moment, yes. Domaining remains a very young industry led by cyberpunks in search of quick and easy profits. There are clear signs of that industry maturing and it wouldn’t surprise me at all if in just a few years the Nominet Board was seeking a representative from the domaining community to be on the Board. But at the moment that’s not the case.

Is there a risk that the domainers will rise again, infuriated by the tactics used by Nominet’s management to defeat them and this time breach the barricades? Well that all depends on Nominet’s members – companies that have been defiantly lazy and unbothered by all the drama over the past three years. Just so long as they get cheap domains, the rest of it is a hassle. And with Nominet’s member structure as it is, it does remain susceptible to capture by apathy.

That is almost certainly what Professor Bob Garratt is looking at revising in Nominet’s Corporate Governance review. So, the window of opportunity for domainers to muscle their way in is rapidly diminishing. And when the door is closed, they will have to come in the front way like everyone else.

Which, in the long run, is good for the Internet and for the .uk registry in particular.

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(14) comments

Andrew Bennett
6 years ago ·

Kieren,

Thanks for taking time from your busy ICANN job to write about this most concerning ‘power struggle’. However for three Nominet directors to resign; one a millionaire tree hugger, one a Cambridge trained lawyer and one IT director highly respected the world over….surely you can’t blame the “domainers” entirely for that?

I would also like to point out my full CV is here http://www.andrewbennett.co.uk which includes Domains Manager at the Largest .uk registrar, Masters student in Multimedia and elected member of the PAB.

I suggest ICANN takes a closer look at your so called “cyberpunks”:
http://domainnamewire.com/2008/12/17/go-daddy-to-shut-down-standard-tactics-llc/

Cheers,
Andrew Bennett

Hazel Pegg
6 years ago ·

Interesting take on developments.

Hazel

kierenmccarthy
6 years ago ·

Hi Andrew,

I think you’re misreading the term “cyberpunk” to mean “punk but on the Internet”. The term cyberpunk has a much more interesting meaning, it implies alternative style and approach. Someone who enjoys the disruption that the Internet can cause to the status quo.

In the same way that “punk” has largely positive, anti-establishment tones for a certain UK generation – Sex Pistols, Buzzcocks, revolution in self-publishing music etc.

I think you’re seeing the word “punk” in the more American-mainstream movie way – as someone who is useless or inexperienced.

Re: the resignations. I don’t “blame” the issue on domainers at all. That really is your filter on the information above. There is a whole bunch of reasons and they are all above: Jim Davies’ conflict of interests; Nominet’s and the UK government’s concern and fears about the impact of domainers; internal Board fights and accusations; legal actions. It’s all there.

Kieren

kierenmccarthy
6 years ago ·

@ Hazel: Is that a polite way of saying you completely disagree with me?

Kieren

Andrew Bennett
6 years ago ·

Kieren,

If you read Hazel’s site you will notice a statement from Jim Davies:

“I am not refusing to sign a contract – but I am not prepared to sign un-amended the contract provided by Nominet. It is not a standard contract. I am proposing only two amendments, which bring the contract more into line with a standard non-executive director’s contract. Both suggestions have been rejected.”

That is because this contract:
http://www.nic.uk/governance/board/nonexecdirectorscontract/

Was purchased from the Practical Law Company however somethings are missing from it:
http://www.practicallaw.com/2-200-3901

Cheers,
Andrew Bennett

kierenmccarthy
6 years ago ·

@ Andrew: Yes, I saw that and decided to leave it be. As soon as you get into people proposing amendments – on either side – to a contract, it becomes very difficult to decipher what the real intent is. Particularly since Davies is a lawyer and Nominet’s contract would also have been drawn up by a lawyer.

I think it’s more telling that there was any talk of amendments and that a contract became the focal point of dispute. It means that trust had completely broken down and that both sides felt the other was going to use whatever was signed against them.

You’ll never get an accurate read on what was going on because a contract is intended to deal with future behaviour and we have no way of knowing what either party intended to do in the future, or feared that the other would do in future.

Kieren

[...] To read Kieren McCarthy’s account of the saga and how Nominet forced Jim Davies off the board, see: kierenmccarthy.com/2009/01/22/nominet-board-fights-roll-on/ [...]

Hazel Pegg
6 years ago ·

I don’t disagree with your ‘take’ Kieren. I genuinely found it interesting.

Hazel

Simon Bezant
6 years ago ·

Hi Kieren,

Your link to Jim’s resignation letter no longer resolves to a web page with it available to see, you may wish to use this link to a copy I have provided in its place:

http://www.nominetnews.com/jim_davies/jim_davies_nominet_director_resignation_letter.html

Regards,

Simon.

kierenmccarthy
6 years ago ·

@ Simon: Thank you for this information Simon, I will remove the dead link above.

Kieren

[...] juridische stappen tegen Davies heeft ondernomen om hem te dwingen aan dit document te voldoen, schrijft Kieren [...]

[...] The suggestion from other bloggers is that that the dispute represents a fight between the old guard who see Nominet as a not for profit public service and the new guard of “domainers” (those who seek to profit from commerce in domain names).  For a very helpful review of the background see Kieran McCarthy’s blog. [...]

Peter Farrow
6 years ago ·

Nominet is a badly run, poorly administered organisation that really needs kicking into touch.

As a Nominet member I find it abhorrent the way it is run and how I was “told to vote” in that letter last year, Nominet money was spent by the existing board trying to keep other potential board members from being voted in, this is as bad as the claims currently being made. They need to be deregulated like elsewhere in the world.

When you analyse the figures of Nominet expenditure the IT budgets and expenses are HUGE, they make a huge huge profit each year and have accrued millions in the bank over the years. The directors we were told to avoid voting in by nominet were those who wanted to hand the huge profits back to the members.
Q:Why does a non-profit organisation accrue millions of pounds in its bank account?
A:Because they are making a profit and the people running it appear to be on a very cushy number.

[…] while reconsidering how to update its structure, the company was then pulled into a difficult and unpleasant Board fight, then eventually ended with the resignation of two Board members. And the combination of the failed […]

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