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A day after Nominet decided to sue one of its own directors, a senior civil servant warned that the domain industry must be better behaved to avoid government intervention.

Department for Business, Enterprise and Regulatory Reform official David Hendon was speaking on Wednesday at the not-for-profit's annual registrars' meeting, where recent infighting over the future of the .uk registry took top billing. He said Nominet and the domain industry need to take more heed of the government agenda on phishing, spam and "bad content".

Hendon said: "These are all internet problems and [internet users] think someone should do something about it. Although many internet users think the government should keep out of the internet, I suggest to you that most ordinary people who just use the internet like they use the banking system or the trains think that the government should make sure it all works properly for them and that bad things get stopped from happening."

In response to a worried letter from Hendon, Nominet will imminently appoint an independent reviewer to examine whether its corporate structure is able to represent government and wider concerns, as well as those of its members. A boardroom split has emerged in recent weeks; two elected non-executive directors have called for the CEO Lesley Cowley and Chairman Bob Gilbert to resign, saying the views of members on issues such as pricing are not properly considered and alleging mismanagement of discipline and executive pay.

Hendon said: "It is hard to find another example like the DNS where such a vital aspect of the critical national infrastructure is left in the hands of a private company which is unlicensed and unregulated. I have to say that my searchlight has swept round to Nominet because I am not certain that my previous confidence in the way the board runs the company will continue to be well founded in the future."

It is assumed by many in the domain industry, including Nominet's dissident non-executive directors Angus Hanton (who resigned last week) and Jim Davies, that the government wants to install its people on the board. Hendon denied any such desire. "This is certainly not what I am thinking. My sincere hope is that Bob Gilbert will tell me that any problems can be resolved by the company for the company," he said.

Following a meeting of the board, Nominet said on Tuesday it would take legal action against Jim Davies, alleging that he had failed in his duties as a director by not resolving conflicts of interest arising from his day job as a solicitor for domain industry companies. It said it was "taking steps to commence legal proceedings against Jim Davies" on advice from lawyers that his alleged conflicts of interests were a breach of the Companies Act.

Davies told The Register: "I was only given one working day to respond to a threat of litigation. I responded by saying I needed a reasonable amount of time to get advice.

"I also said that the proper way to deal with the alleged conflicts was to put it to the membership to decide, in a motion under s180 of the Companies Act. That is the prescribed and proper way to deal with this issue." He said he had not received a reply.

Cowley and Gilbert have rejected the calls for their resignations, and also rejected a further call from Andrew Bennett, an elected member of Nominet's Policy Advisory Board, to hold an Emergency General Meeting.

In a telephone interview after his speech, Hendon said he expects Nominet to present the findings of its structural review to him once it is completed at Christmas and that he hopes Nominet's members will accept its recommendations. "This is about the development of self regulation and being more responsible," he said.

"The problem with the internet is that it evolves so quickly it's impossible for the government to effectively regulate. This is not a fashionable position within government. Many [ministers] are not knowledgeable about how the internet works." ®

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