Court orders ICANN to open its books

A California superior court ruled Monday that the Internet Corporation of Assigned Names and Numbers (ICANN) must hand over corporate documents requested by one of its board members, marking the latest chapter in an ongoing legal scuffle between the much maligned Internet regulatory body and ICANN North American Elected Director Karl Auerbach.

Auerbach took ICANN to court for the right to see the documents after his earlier efforts to obtain them from ICANN’s management were thwarted.

The director said he first requested to see the corporate records in November 2000 and was granted access to them nine months later on the condition that he sign an agreement that left his ability to access and copy the works at ICANN’s discretion.

Auerbach refused to sign the document, saying that it set unacceptable limitations on his rights as a director. The Los Angeles Superior Court agreed with that position Monday, ruling that ICANN could not impose restrictions on Auerbach’s access to the documents.

The case raises questions regarding ICANN’s transparency, which has been under fire almost since the group’s inception. Critics claim that the body, which is charged with regulating key technical matters related to the Internet, functions too much like a bureaucracy and fails to represent the public’s needs.

The documents at issue include ICANN’s financial ledger, its contracts and agreements with employees, and documents related to the body’s law firm, such as engagement letters and invoices.

Auerbach said he made initial requests to see the documents shortly after he was elected to the board, with the intention of familiarizing himself with how the body was being run.

“I have been on boards of directors before and it’s generally a good idea to follow the paper trail, see if something smells and how was the whole thing handled,” Auerbach said.

Although Auerbach said that he didn’t expect to find any significant irregularities in the corporate records, he expressed surprise that no one else on the board, including members of ICANN’s internal auditing committee, had ever requested to see the documents.

“How can you run a corporation if the audit committee doesn’t even make sure that the corporation is accountable?” Auerbach said. “Look what happened with Enron,” he added, referring to fallen energy trading firm Enron Corp., whose unchecked accounting caused the company’s collapse.

This isn’t the first time ICANN has been criticized for its operational methods. The group has come under increasing pressure from both the U.S. government and the Internet industry at large to crack open up its inner workings.

Acknowledging the group had operational problems, ICANN President Stuart Lynn proposed a complete overhaul of the body earlier this year. Lynn’s proposal soon came under attack, however, for its suggestion to do away with at-large elections, which are used to elect public representatives to ICANN’s board of directors.

Instead of guaranteeing more representation, Lynn’s proposed reforms further serve to insulate the group, critics said. Despite these complaints, the ICANN board unanimously voted to approve the proposed blueprint for reform last month.

Auerbach was elected as an at-large director and he and his lawyers believe that this may be the source of his difficulties with the board.

“[The ICANN board] was quite threatened by the fact that they had a board member critical of them, who had a reform agenda,” said Cindy Cohn, legal director at the Electronic Frontier Foundation, the group handling Auerbach’s case.

ICANN still has an opportunity to appeal the decision, Cohn said, and the case could drag on throughout the remainder of Auerbach’s term which ends later this year, preventing him from ever examining the documents.

ICANN representatives were not immediately available for comment.