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As we consider IANA Transition work in the context of accountability and transparency to the stakeholder community I would encourage all to review the current structure of ICANN’s compliance functions. What ICANN has at the moment is an inherent conflict of interest in the management of compliance. Early in his arrival, CEO Fadi Chehade moved the compliance department out from under ICANN legal and had it report directly to the CEO. This was done following various concerns from the community about the independence of the compliance department. However, now there is a curious situation of the compliance department actually reporting to the business division. See the screen captures below from ICANN’s portfolio management page:

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Akram Atallah is ICANN’s Global Domain Division President. His core function is in overseeing the commercial aspects of ICANN and specifically in “Relationship Management” for the contracted parties. This is in complete contradiction to his additional portfolio role which includes Contractual Compliance Functions and Initiatives. Even on an optical level, this presents a poor image. In fact, there is no firewall inside of ICANN that ensures compliance truly serves the public interest. Additionally, the domain business president functions appear far-reaching in comparison to other top-level ICANN officers.

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In looking at the budget we find a number of discrepancies between structural fact and the current organizational chart. The last budget showed compliance funding completely under the control of Akram Atallah.

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Another smaller portion of the compliance budget still comes from Legal.

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This places the $6.8M compliance budget under the control of Akram Atallah with $157K for reporting coming from Legal.

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While we have seen an increase in general compliance activity in recent years, the effects are marginal. The 24 registrars breached so far in 2015 represent about 0.46% of the domain market. The 5 registrars terminated so far in 2015 represent about 0.0043% of the domain market. One of the registrars only had 4 .COM domains and another only 38. The motivation for enforcement appears to be financial. Registrars with breaches have something in common, they owe fees to ICANN. Combine the two factors (tiny portfolios and debt) and compliance appears to be a bill collector for registrars who are not contributing enough to the pot. While ICANN must watch its bottom line and remove inefficient contracted parties, this seems to be the only trigger for enforcement. 

4. Recommendations for ALAC

ALAC should issue a clear statement supporting the reorganization of the compliance department outside of ICANN's domain business. Having the GDD President oversee compliance and controlling the compliance budget does not engender trust within the community. A compliance department which is truly independent of ICANN's business better serves the entire community. 

4.1. At-Large Accountability and Transparency Review

4.2. CWG Accountability Work

4.3. ICANN AoC

4.4. ICANN Bylaws

4.5. ICANN as California Non-Profit

4.4. Addressing Structural Conflicts of Interests

5. Historical Information on this work

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