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'Strong basis' to claims Nominet board breached duties - legal top gun

Registry's members hire barrister in row over running of UK's web overseer

Internet Security Threat Report 2014

Directors of UK domain-name registry Nominet have come under fire from a group of Nominet members who have also threatened to take legal action against the board. The group commissioned a legal opinion in connection to claims that certain recommended changes to the non-profit's governance had been deleted from an "independent" review.

The group hired barrister Alex Barden to form an opinion on events surrounding the dismissal of Nominet's legal and policy director Emily Taylor.

According to Barden, who based his findings in part on material that emerged during an employment tribunal that followed Taylor's sacking, "there would be a strong basis for a court to conclude there were breaches of fiduciary duty". He also claimed that there may have been breaches directly related to Taylor's termination but "it would be difficult to identify them with any clarity".

Nominet told The Reg in a statement that, as Barden admitted, this opinion is based on "limited and incomplete information".

"It also contains factual errors," the registry said without elaborating on what those errors could be.

"As such, we do not consider its conclusions to be valid. Commissioning this report is a further attempt by a small group of members with their own agendas, to derail business as usual and resuscitate claims against Nominet which have already been addressed."

The group challenging Nominet told The Reg that it will call an Extraordinary General Meeting (EGM) to discuss its barrister's report.

"We've also got court action which is in addition to the EGM," said a spokesman for the group, which has at least 210 members and eight per cent of voting power within Nominet. The spokesman said the group hopes to use company cash to sue the registry's board of directors.

The corporate review of Nominet kicked off in 2008 when so-called "domainers", a group that speculatively registers web addresses to sell them on for profit, called for the resignation of chief executive Lesley Cowley in a row over top-level pay.

It appeared that the UK government then instigated an independent corporate governance review of the registry against the board's wishes. But documents that came out during Taylor's tribunal suggested that Nominet's directors were involved in launching the "independent" review right from the start.

In Cowley's witness statement, and quoted in the barrister's opinion, she said that Nominet "developed the initiative which became known as Plan G".

"This was essentially a scheme to involve [the UK government's Department for Business, Enterprise and Regulatory Reform] in applying for pressure for constitutional changes [to Nominet's governance]," she said.

'Amendments made were not simply stylistic'

It's alleged that a first draft of the review by Professor Bob Garratt in early 2009 supported the view that executive pay and rewards should be subject to a membership vote; directors' legal fees should be reimbursed; and the director of legal and policy should be made a full board position.

However, when the final report was finished in March that year, these proposals had been dropped. It is alleged that the board did not want high-pay employees' salaries to be decided by a company vote nor did it want the legal and policy job as a full board role.

Nominet's board claimed that the only changes it made to Prof Garratt's recommendations were "factual inaccuracies and/or stylistic", but Taylor disputed that. Ex-Nominet chairman Bob Gilbert also claimed that the board's feedback went considerably further than a few corrections.

The employment tribunal said it was satisfied "that the amendments made were not simply factual accuracies or stylistic".

Barden said the tribunal's decision to find in favour of Taylor, and award her £101,000 in compensation and unnamed costs for disability discrimination, should not be taken as the end of the matter.

"While it is an end to the employment claim, to the extent that the evidence and the tribunal's factual findings raise issues about the corporate governance review process and the conduct of individuals within Nominet, those remain proper considerations for the board in relation to Nominet's own internal affairs," Barden stated.

But Nominet said it had examined and acted on the tribunal's findings.

"Far from failing in its duties, the board has at all times taken tribunal findings and members’ concerns seriously, including conducting a review into the events of the 2008-2009 period, commissioning a disability audit in the aftermath of the tribunal and offering to review any new evidence supplied to support ongoing accusations, although none has been forthcoming," it said.

"While some would prefer us to continuously re-examine the events of several years ago, Nominet remains focused on delivering a great service and exploring the opportunities ahead." ®

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