[Chapter-delegates] Message from Internet Society Audit Committee Chair
borka at e5.ijs.si
borka at e5.ijs.si
Sun Nov 8 23:23:32 PST 2020
+1
Borka
On Sun, 8 Nov 2020, sivasubramanian muthusamy via Chapter-delegates wrote:
>
> ( I don't fully understand the immediate context or trigger for this issue
> of a perceived conflict of interest in the BoT. Nevertheless sharing some
> observations, addressed to Andrew)
>
> Dear Andrew,
>
> There is a focus on conflict of interest arising when a serving Chapter
> President offers to serve the ISOC BoT, on the rationale that the Chapter
> (not the individual who has the role of the serving President) has received
> 2 or 3000 a year for funding which is used for projects which in effect
> further the positive interests of the Internet Society. This conflict of
> interest, if any, is dwarfed by the conflict of interest in the BoT which
> from time to time includes representatives from Business Organizations whose
> financial contributions to the IETF or to ISOC or to ISOC initiatives is in
> the order of millions of dollars, and whose businesses stand to make
> significant financial gains or losses from the directions that the ISOC
> public policy takes.
>
> As for the Chapter Officers conflict of interest, if there is a provision
> that allows a serving Chapter President to serve the BoT with conventions of
> recusing from Chapter funding decisions it would suffice. If ISOC is more
> insistent of perfection, the elected member, after confirmation of election,
> or before he or she opts to serve the BoT, could be presented with an option
> to pass on his or her role as Chapter President.
>
> Sivasubramanian M
>
>
> On Sun, Nov 8, 2020 at 9:37 PM Veni Markovski via Chapter-delegates
> <chapter-delegates at elists.isoc.org> wrote:
> Thanks from me, too.
> I agree with Richard’s observations and also would like to see the
> legal advice (if such exist) that became the driving force behind this
> strange CoI policy, which gives chapter leaders two choices:
> — run for the BoT of ISOC and give up the work they do in their own
> countries
> — never run foe the BoT, and keep work with their chapters foe the
> good of the national Internet.
>
> In the latter case, ISOC BoT is voluntarily getting rid of good
> candidates, national chapter leaders. In the former, the ISOC BoT is
> taking the leaders, and telling the chapter, what effectively would
> be, “We don’t cate about your needs”.
>
> None of these is good.
>
> On Sun, Nov 8, 2020 at 10:39 Olga Cavalli via Chapter-delegates
> <chapter-delegates at elists.isoc.org> wrote:
> Dear Richard,
> many thanks for the detailed analysis of the various comments
> shared in this email thread. Very interesting and useful.
>
> Please note that the Governance Reform Working group of the ISOC
> Board of Trustees will start its activities very soon.
>
> I will be charing this group and Mike Goodwin will be the vice
> chair.
>
> Comments and ideas from you and other colleagues will be an
> excellent input for the working group.
>
> Please stay tuned for the access details to the working group,
> which will be shared soon with the community.
>
> Best regards
> Olga
>
>
>
> ppoint Chair and Vice Chair of Governance Reform Working Group
> RESOLVED, that the ISOC Board appoints Olga Cavalli as Chair,
> and Mike Godwin as Vice Chair of the Governance Reform Working
> Group.
>
> El dom., 8 nov. 2020 a las 12:04, Richard Hill via
> Chapter-delegates (<chapter-delegates at elists.isoc.org>)
> escribió:
> I will comment here on several messages that are
> part of this thread.
>
>
> On 5 November, 18h50, Andrew wrote:
> -----------------------------------
>
> >Chapters are, legally speaking, separate
> organizations from the Internet Society (i.e. the
> corporation incorporated
> > in the District of Columbia in the US). The US
> Internal Revenue Service requires that Trustees
> disclose,
> > in the annual 990s we file with them, any case
> where they have an interest in another organization
> > that receives money from the Internet Society. In
> principle, any Chapter can be in receipt of money
> > from ISOC because of the admin fund, because of
> the money that flows through the Internet Society
> for Beyond
> > the Net, and because of the Chapterthon. If an
> officer of a Chapter were to be in a Chapter that
> receives
> > any of that money, then we would have to report it
> to the IRS and undergo a bunch of additional
> investigation
> > and audits and so on (because, as an officer of
> such a Chapter they have a fiduciary relationship
> ? to the Chapter and so are deemed to have an
> interest). It would be a risk to the organization
> >and our 501(c)(3) status. That is why it is
> important that nobody in a Chapter leader position
> be a
> > Trustee at the same time.
>
> US tax laws are notoriously complicated and
> difficult to understand. Here is how the IRS itself
> explains the matter:
>
> https://www.irs.gov/charities-non-profits/form-1023-purpose-of-conflict-of-
> interest-policy
>
> It seems to me that the key bit is: "A conflict of
> interest occurs where individuals’ obligation to
> further the organization’s charitable purposes is at
> odds with their own financial interests."
>
> I stress "THEIR OWN FINANCIAL INTERESTS".
>
> Most Chapters are non-profit associations, whose
> officers are not paid and don't benefit financially
> from any funds that ISOC might provide to the
> Chapters.
>
> So it seems to me that, in general, Chapter officers
> would not be in conflict of interest according to
> what the IRS says above.
>
> However, as I already said, US tax law is
> complicated. More detail applying for tax-exempt
> status are at:
>
> https://www.irs.gov/instructions/i1023
>
> I presume that ISOC has obtained expert legal advice
> on why having Chapter officers on the Board would
> violate US tax law. If that is the case, could the
> legal advice be posted to this list?
>
> >That is not to say, of course, that people who have
> been leaders in a Chapter should be excluded from
> selection
> > as a Trustee. We often have people who become
> Trustees while they are Chapter leaders. They
> simply have
> >to give one up or the other.
>
> I do not understand that. Some individuals have as
> much influence on a Chapter as members as they did
> when they were officers.
>
> So I don't see how excluding Chapter officers
> actually changes anything.
>
> On 5 November, 21h26, Andrew wrote
> ---------------------------
>
> >The old CoI policy is still available athttps://www.internetsociety.org/wp-content/uploads/2017/06/conflictofintere
> st-trustees.pdf .
>
> >My understanding is that, at least when I started
> as CEO, there was general agreement that serving as
> both a
> > Chapter officer and a Trustee at the same time
> created a violation due to an Affiliated Entity
> under section
> > II.A and possibly II.B of that policy,
>
> Here is what those sections said:
>
> "An Affiliated Entity is any corporation of business
> of which the Interested Party is a director,
> officer, partner,
> owner, or otherwise has business interest.
>
> "A. Financial Interests - A conflict may exist where
> an Interested Party or a Relative or Affiliated
> Entity directly or indirectly benefits or profits as
> a result of an action, policy, or transaction made
> by ISOC (referred to as a “financial interest”). A
> financial interest is not necessarily a conflict of
> interest. A conflict of interest exists only when
> the Board, the Chair of the Board, or the
> Interested Party decides the Interested Party has a
> conflict of interest, or the appearance of a
> conflict of interest.
>
> "B. Other Interests - A conflict also may exist
> where an Interested Party or a Relative or
> Affiliated Entity obtains a non-financial benefit or
> advantage that he or she would not have
> obtained absent his or her relationship with ISOC. A
> conflict of interest exists only when the
> Board, the Chair of the Board, or the Interested
> Party decides the Interested Party has a conflict
> of interest or the appearance of a conflict of
> interest."
>
>
> So, as I understand the above, if a Chapter officer
> is a Trustee (Interested Party), then the Chapter is
> an Affiliated Entity. Since Chapters receive
> financial aid and/or non-financial benefits from
> ISOC, there is financial interest.
>
> But that is not necessarily a conflict of interest.
> It is a conflict of interest only if the Board,
> Chair of the Board, or Chapter Officer decides that
> there is a conflict of interest.
>
> That is, there was no absolute prohibition on
> Chapter Officers being Trustees.
>
> >and that it would require that such a Trustee would
> be necessarily conflicted
>
> No, not "necessarily", see above.
>
> > on all matters related to the ISOC budget and
> possibly anything to do with Chapters, and so the
> only plausible remedy under section IV of that
> policy would be option (d) (i.e. resignation or
> removal).
>
> No, section IV provides that the Trustee could
> "Physically excuse himself or herself from
> participation in any discussions regarding the
> transaction or activity, except as requested by the
> Chair."
>
> On 6 November, Heather wrote:
> -----------------------------
>
> >The Conflict of Interest policy (CoI policy) is a
> Board policy that governs the members of the Board
> of Trustees,
> > not the chapters or other communities.
>
> Sorry, the new CoI policy explicitly prevents
> Chapter officers from being Trustees, so it does
> affect the chapters. Therefore, in my view, the
> Chapters should have been consulted. Furthermore,
> as I've said before, I think that the constituent
> bodies (Chapters, Organizational Members, IETF)
> should systematically be consulted for everything.
>
> >There are a number of reasons to have a CoI policy
> - both simply because it’s an important aspect
> > of board governance, but also because the IRS asks
> about the existence of, and process of, a CoI policy
>
> True, but what was the driver for the recent
> changes? The IRS? Or somebody's idea of good
> governance? As noted above, it is not clear to me
> that the IRS requires the changes that were made,
> but I'm happy to stand corrected by a an expert on
> US tax law.
>
> > as I understand it, clarifications to the 2011
> policy were needed
>
> What was the driver for those clarifications?
> Specific situations? A general feeling that they
> were needed?
>
> >In the case of current discussion, there was some
> disagreement amongst Trustees as to how to interpret
> > the current policy -
>
> By "current policy", do you mean the old policy, or
> the new one that has just come into force?
>
> >That is not ideal. We can clarify based on
> learnings from those discussions.
> >We wanted to draw the community's attention to this
> while we work out what clarifications
> > to the policy might be needed.
>
> Does this mean that the new policy is open for
> comment and revision? If so, what is the process
> that will be used to allow comment and revision?
>
> >As I understand it, the CoI policy is intended to
> ensure that Trustees can participate in any number
> > of organizations or related activities - we want
> to be able to draw Trustees from a wide pool (of
> course,
> > as elected by members of the community). However,
> if a Trustee is part of the direct policymaking or
> > governance of multiple organizations, then that
> can create a conflict of interest
>
> How can being a Chapter officer create a conflict of
> interest, given that (1) Chapters are bound to
> adhere to ISOC policies and (2) most Chapters are
> membership organizations in which decisions are made
> by the members, not the officers? (As I noted above,
> an individual member might be more influential than
> an officer).
>
> > As I understand it, advising other organizations
> is not a conflict of interest, but determining
> policy
> > for an organization in the same areas of
> engagement as ISOC creates the potential for
> problems
> > (regardless of whether they are formally on a
> leadership team for that organization).
>
> To be clear, I have no objection to Heather being a
> Trustee. On the contrary, I think that we should
> have people who have backgrounds and roles similar
> to hers. Her profile is at:
>
> https://www.internetsociety.org/author/west/
>
> As you will see "At Mozilla, maker of the Firefox
> browser, Heather leads policy work for the Americas,
> with a global focus on data governance."
>
> So Heather is precisely a person who determines
> policy for an organization (Mozilla) in the same
> area of engagement as ISOC, regardless of whether
> she is formally on a leadership team for Mozilla.
>
> So there is something wrong with the policy, because
> it appears to be intended to exclude people like
> Heather from the Board, whereas it should be
> intended to facilitate bringing people like Heather
> into the Board.
>
> Note that other Board members have similar roles:
>
> Richard Barnes is Chief Security Architect for
> Collaboration at Cisco.
>
> Gonzalo Camarillo is the head of Data/IT
> standardization at Ericsson.
>
> Ted Hardie is Vice President in the Global Technical
> Standards team within Cisco's Emerging Technology
> and Incubation group (according to LinkedIn, which
> is not consistent with the profile published by
> ISOC, according to which he works for Google).
>
> John Levine is President of CAUCE North America
> (http://www.cauce.org), the leading grass roots
> anti-online-abuse organization.
>
> Robert Pepper helps lead Facebook’s connectivity and
> technology policy activities focusing on new
> technology development, deployment and adoption
> including being involved in Internet Governance
> issues.
>
> Laura Thomson is VP of Engineering at Fastly.
>
> Again, I don't have any problem with any of the
> above people being on the ISOC Board. My problem is
> that Heather's explanation of the intent of the new
> policy would appear to apply to them.
>
> > But it has been noted that the MAG Chair appears
> to make policy for the IGF.
>
> I'm not an expert on the IGF but, as I understand
> matter, the IGF does not make policy, the MAG does
> not make policy, and the MAG Chair does not have any
> authority to decide anything. But I'm happy to stand
> corrected by people who know more about the IGF.
>
> >Corporations generally do not have formal policy
> development bodies the way volunteer organizations
> do
>
> True, in corporations policies are usually made by
> management, on the advice of lower-level employees.
> So what? A senior advisor to a corporation probably
> has more influence on the corporation's policies
> than does an officer in most Chapters.
>
> >it is important not to have a conflict between any
> Trustee’s position with ISOC and their formal role
> within
> > another organization.
>
> Again, what sort of "conflict" are we talking about?
> Financial? Policy? And why restrict to "formal
> role"? As noted above, people who don't have a
> formal role can have significant influence on
> policies. And people without a formal role might be
> receiving money (e.g. as consulting fees).
>
> It seems to me that the policy should not specify
> general categories, such as Chapter officers, but
> should instead focus on what individuals have to be
> careful about, for example not accepting salaries,
> fees, etc that are paid pursuant to grants from
> ISOC.
>
> >Trustees do declare their potential conflicts on a
> regular basis, using a standard form;
>
> Good.
>
> > as Chair of the Audit Committee, I collect and
> monitor them. This is another thing that the IRS
> asks about
> > from a process perspective. There have been
> discussions about whether to post these publicly,
> > there has not been agreement about whether this is
> always possible.
>
> Surely it is possible. Whether it would be advisable
> is a different question. Personally, I would
> encourage the Board to decide to make all the forms
> public.
>
> >There is a very narrow set of circumstances wherein
> the conflict is structural in nature;
>
> Sorry, but the new policy contains a very broad set
> of circumstances: being a Chapter officer.
>
> >in this case, the policy instead requires the
> person to choose between their role on the Board or
> within
> > the other organization, as recusal would not
> adequately protect ISOC.
>
> As noted above, I disagree that recusal would not be
> sufficient for Chapter officers.
>
> >The goal is to make these circumstances as rare as
> possible while remaining responsible, as Trustees,
> to ISOC.
>
> In my view, the new policy totally fails to meet its
> goal.
>
> On 6 November, 15h00, Andrew wrote:
> -----------------------------------
>
> >Organizational Members are not Chapters, though.
> Chapters are independent organizations that have
> > a direct affiliation with the Internet Society,
> which is why Chapters are eligible for financial
> support
> > and certain programs, can use a derivative logo,
> and so on. Organizational Members can't do any of
> that.
>
> True. But I don't see how any of that requires that
> Trustees cannot be Chapter officers.
>
> On 7 November, Andrew wrote:
> ----------------------------
>
> >One might want to make an argument that ISOC
> shouldn't have been organized under US law, but it's
> too late
> > to do very much about that: we already are.
>
> As I understand it, there will be (hopefully soon) a
> forum to discuss potential changes to ISOC's
> governance. Would a move outside the US be an
> acceptable topic to discuss? Or is that off-limits?
>
> >But I am aware that there are some who feel that
> either the Trustees or the staff or both are too
> exclusive
> > of the community. I will continue to do what I
> can to counter that drift while still pursuing the
> Mission
> > as directed by the Board.
>
> I'm sure that the staff is doing what the Board
> tells it to do. However, I think that the staff can
> make suggestions to the Board.
>
> In this particular case, I think that the staff
> could have advised the Board to consult the
> community, in particular the Chapters, before
> changing the policy.
>
> It would have been a good example of bottom-up, as
> opposed to top-down, governance.
>
> Best,
> Richard
>
>
>
> > -----Original Message-----
> > From: Chapter-delegates
> [mailto:chapter-delegates-bounces at elists.isoc.org]
> On
> > Behalf Of Andrew Sullivan via Chapter-delegates
> > Sent: Saturday, 7 November, 2020 15:34
> > To: chapter-delegates at elists.isoc.org
> > Subject: Re: [Chapter-delegates] Message from
> Internet Society Audit Committee
> > Chair
> >
> > Hi,
> >
> > Several of the items in your mail are about bigger
> governance changes
> > than I could do anything about, so I'm just
> eliding those from my
> > response. This isn't because I don't think
> they're worthy of
> > discussion, but because I'm the wrong person to
> talk to them about!
> > The Board has to adopt Bylaws changes.
> >
> > On Fri, Nov 06, 2020 at 06:02:44PM +0000,
> Christian de Larrinaga wrote:
> > >
> > >For instance Chapters elect ISOC Trustees.
> >
> > Well, 1/3 of them, yes.
> >
> > >Firstly if ISOC determines how a chapter is
> governed then that potentially
> > can
> > >influence how ISOC is governed via influencing
> (corruptly) the chapter
> > electoral role.
> >
> > To be clear, though, the Internet Society does not
> in fact determine
> > how Chapters are governed, right? There
> definitely are minimum
> > requirements for governance, of course, but those
> were (1) worked out
> > with the Chapters and the ChAC and (2) are really
> the minumum we can
> > get away with under US law. One might want to
> make an argument that
> > ISOC shouldn't have been organized under US law,
> but it's too late to
> > do very much about that: we already are.
> >
> > >Secondly ISOC pays money to Chapters. A perceived
> conflict could occur if
> > >it could be inferred ISOC or some part in ISOC
> was using that to
> > >influence Chapter candidate selection / voting
> for the board. (for example)
> > […]
> > >There are other potential things to look out for.
> For instance if an
> > >ISOC staff member or board member or contractor
> or other benefactor
> > >takes on a senior chapter roll and uses the
> chapter processes to
> > >influence ISOC in a way that falls outside
> community consensus.
> >
> > Yes, which is _precisely_ why the Board has this
> as a hard conflict.
> > You can serve in one capacity or another, but you
> can't serve in both.
> > We don't allow chapter leadership to be ISOC staff
> or Trustees to
> > avoid this kind of problem. Upthread some seemed
> to be suggesting we
> > should relax this stance, but I think you have
> argued pretty
> > persuasively that we need to be on our guard here.
> >
> > >Mostly grants to chapters are for services to the
> community.
> >
> > Some are administrative funds, but yes. And there
> are substantial
> > funds set aside every year reserved exclusively to
> Chapters so that
> > they can achieve those things. Historically, we
> seem to have had
> > difficulty getting enough Chapters to apply for
> those funds, but we
> > continue to reserve them in any case.
> >
> > >Organizational members in my experience depend on
> an inside ISOC
> > >champion but ISOC has never managed to extend
> that support in those
> > >organizations to include their brand values with
> ISOC's core values nor
> > >encourage direct engagement by them directly with
> chapters around the world
> > in
> > >areas they are doing business or charitable
> activities. Some very
> > >simple things could be done to join these dots
> and turn every $1 into
> > >$10.
> >
> > I think you are right about this, and it is one of
> the areas of high
> > priority work in the coming year. I feel our
> disconnect with
> > Organizational Members acutely.
> >
> > >I've introduced several orgs to ISOC and some
> have joined and
> > >subsequently left because they "don't see the
> point". i.e, the "benefit".
> >
> > Correct, that is the central point.
> >
> > >It has too often been a case of "us" and "them"
> when it comes to ISOC
> > >and its chapters and organisational communities.
> >
> > Speaking for myself, I don't think there is even a
> possibility of "us"
> > and "them" as regards the Internet Society and its
> Chapters or
> > Organizational Members, because I believe both of
> those are part of
> > the Internet Society. But I am aware that there
> are some who feel
> > that either the Trustees or the staff or both are
> too exclusive of the
> > community. I will continue to do what I can to
> counter that drift
> > while still pursuing the Mission as directed by
> the Board.
> >
> > >Incidentally we've had a very tough year. Let's
> be kind in realisation
> > >people here are here to further the open
> Internet. It's pretty amazing
> > >really. Despite everything being thrown at it the
> Internet can still be for
> > Everyone.
> >
> > In this I think we are in complete agreement.
> >
> > Best regards,
> > A
> >
> > --
> > Andrew Sullivan
> > President & CEO, Internet Society
> > sullivan at isoc.org
> > +1 416 731 1261
> > _______________________________________________
> > As an Internet Society Chapter Officer you are
> automatically subscribed
> > to this list, which is regularly synchronized with
> the Internet Society
> > Chapter Portal (AMS):
> >
> https://admin.internetsociety.org/622619/User/Login
> > View the Internet Society Code of Conduct:
> >
> https://www.internetsociety.org/become-a-member/code-of-conduct/
>
> _______________________________________________
> As an Internet Society Chapter Officer you are
> automatically subscribed
> to this list, which is regularly synchronized with
> the Internet Society Chapter Portal (AMS):
> https://admin.internetsociety.org/622619/User/Login
> View the Internet Society Code of Conduct:
> https://www.internetsociety.org/become-a-member/code-of-conduct/
>
> _______________________________________________
> As an Internet Society Chapter Officer you are automatically
> subscribed
> to this list, which is regularly synchronized with the Internet
> Society Chapter Portal (AMS):
> https://admin.internetsociety.org/622619/User/Login
> View the Internet Society Code of Conduct:
> https://www.internetsociety.org/become-a-member/code-of-conduct/
>
> --
>
> Best regards,
> Veni Markovski
> http://www.veni.com
> pgp: 5BA1366E veni at veni.com
>
> The opinions expressed above are those of the author,
> not of any organizations, associated with or related to
> the author in any given way.
> _______________________________________________
> As an Internet Society Chapter Officer you are automatically
> subscribed
> to this list, which is regularly synchronized with the Internet
> Society Chapter Portal (AMS):
> https://admin.internetsociety.org/622619/User/Login
> View the Internet Society Code of Conduct:
> https://www.internetsociety.org/become-a-member/code-of-conduct/
>
>
>
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