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Rebel Nominet director calls for the heads of Chairman and CEO

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Dear Bob

Nominet Matters

I write in response to your letter of 28 October 2008, the recent Board Communiqué and also the letter from BERR of 15 October 2008.

It is disappointing that you chose to publish detailed, yet only partial, accounts of recent complaints made against me. Given that the BERR letter is also in the public domain, the debate about Nominet’s future has been moved from the Boardroom and out to a wider audience. Legitimate questions have been raised on the members' mailing list and it has been covered in the media. I am therefore making this letter open to the membership as well.

In summary, my response is:

  • You, most of the other directors and a number of others close to the then Board made clear your opposition to my candidacy. That opposition has been carried forward since my appointment, without any attempt to genuinely understand why the members chose to elect me; and

  • That opposition included hurtful and false allegations made both in writing and (as I understand it) verbally – including totally false claims that I had a criminal record for fraud and/or was at that time committing a crime. It also included misrepresentation of my position on the pricing/profit issue in the letter the Board distributed to all members – a misrepresentation that you failed to withdraw or clarify when I made it clear to you; and

  • The ongoing hostility is manifested in the way the formal complaints have been handled – not least since my declaration of interests was both known and accepted by both the membership and by Nominet at the relevant times. I made clear statements about the type of work and the type of clients that I had in my election statements. I initiated a meeting with you within a week of my election to discuss matters and I was working within the guidance received from you. As just one example, on June 18th, I asked you about my declaration of interests and your written response was "I think that is fine". Specifically, Nominet (through its acting CEO and others) knew about both the litigation matter and my working relationship with a large member long before any complaints were raised. I am not prepared to sign the undertakings that you have sent to me. We could allow the members to decide what legal work they are happy for me to do, in accordance with the Companies Act; although I would add that I think that they already have, since they elected me knowing the nature of my work; and

  • Likewise, the reaction to my obtaining independent advice (including from leading counsel) and seeking quite proper changes to the Non-Executive contract was simply a "take it or leave it" ultimatum. As it stands, I have not yet received any remuneration for my appointment as a Director nor have I received any expenses for several months. I consider my independence from the Executive Directors – who non-executives are meant to oversee – as being more important than any payments that might be due. It is quite clear that parts of that contract are not standard terms, despite your earlier assertions that they were, and you have now made it clear that your intention is to seek to use the provisions to remove any non-executives that you do not think are "satisfactory"; and

  • You appear to have ignored a serious question that was raised about the probity of the election process. I am now calling for an immediate independent inquiry into this, to be set up and managed by the four non-executive directors; and

  • I was surprised to read your public statements about corporate governance, which are directly at odds with you attitude to a matter we have been dealing with on the Board that is expressly covered in the Combined Code of corporate governance. Approving the matter concerned is in my view particularly inappropriate in the current economic climate. The refusal of the majority on the Board to accept that they should follow best practice resulted in Angus Hanton and me being obliged to seek independent legal advice. This indicated that your approach of refusing to put the decision for the members to decide was incorrect. Particularly given the nature of the issue involved, I think this attitude is disgraceful, especially when contrasted with the public statements about following best practice that you made last week; and

  • Likewise, the approach taken to a serious disciplinary matter in relation to the senior management team seemed to be so wrong to Angus Hanton and me that we sought first specialist solicitors' advice and, when that was summarily rejected, leading counsel's opinion. They both stated that the approach that the company was following was misconceived; and

  • There appears to have been an understanding reached between you and the CEO regarding your status as an Executive Chairman, so that you and she describe you as a Non-Executive Chairman. This is at odds with the requirements of the company’s constitution and also your contract. It has resulted in the Remuneration Committee being improperly constituted for about 18 months. You described this being drawn to the Board's attention as "buggering about".

Further details of the points made will be made available on request.

In short, I note that neither you nor the CEO have been appointed to your positions by the members. You are unelected. In my view, as an independent Non-Executive Director, you are both unsuited to carry on in your roles. I do not believe that it is in the best interests of the company – nor of the UK Internet – for you to remain on the Board.

I call upon you and the CEO to either resign; or to be put forward under a Companies Act s168 motion to remove you – so that the membership can review your records and decide whether they want to retain you. If the members decided to keep you and the CEO in situ, I would find it impossible to remain on the Board and would resign at that time.

Yours sincerely

Jim Davies

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