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Legal review highlights risk to the internet across Asia Pacific

Legal opinion: APNIC Director General has ultimate legal power to close APNIC and remove elected Executive Council Recommendation for Australian courts to review the current structure of APNIC Urgent amendments to APNIC’s governance needed now

(Hong Kong, 01 March 2023) An international legal opinion commissioned to consider the governance structures of Regional Internet Registries (RIR) has revealed serious concerns in the governance of the Australian based Asia Pacific Regional Internet Register (APNIC) as established by the corporation APNIC Pty Ltd. The review raises questions about the security of governance of the entire internet across Asia Pacific’s 1 billion plus internet users.

CI and LARUS Limited's business has been in an extended business partnership where LARUS provided IP Management Service for CI to provision its number resources to their customers. In all of these years, CI has been professionally offering its number resources. We have never noticed any misconduct or infringement done by CI with the AFRINIC policy with regards to its operation of the concerned number resources.

The legal opinion, provided by Dr Peter Felter LLM PhD (Cantab), has highlighted a systemic failure in the governance of the Brisbane based RIR that provides internet governance for the entire Asia Pacific region. Dr Felter considers that APNIC stands alone with “a grotesque structure” when compared to other RIRs.

Dr Felter said: “APNIC’s legal structure should raise a number of red flags, in the first instance to the other RIRs, ICANN and Australian Federal authorities, let alone internet customers of APNIC in the Asia-Pacific Region”.

APNIC is ultimately controlled by one person and authorities in Australia now need to step in to review whether APNIC’s structure is fit for purpose. APNIC is an important organisation, and its governance is open to abuse. Ultimately the sole Director of APNIC Pty Ltd can do away with APIC’s Executive Council and it is legally questionable what, and to what extent, an Executive Council could do anything effectively about targeted changes in the Bylaws or even dissolution of the Council amongst other matters.

The legal investigation has uncovered that:

APNIC Pty Ltd’ s own corporate documents and public registry details brought to light that, astonishingly, APNIC Pty Ltd. is a proprietary company, which has been and is 100% owned, operated and controlled by just one man, Mr Paul Byron Wilson, for 25 years.

‘APNIC’ as the public and visible entity (with members, elections, Executive Council, Director-General, Secretariat etc.) is an artificial, carefully crafted construct (a “Special Committee”), resting entirely upon Article 9:3 of the Articles of Association of the corporation APNIC Pty Ltd.

APNIC relies on a poorly drafted Deed of Trust [only recently disclosed in APNIC’s corporate documents]– that is a 25 years old hangover from Seychelles, where APNIC was originally set up. It is poorly drafted and open to abuse by the Director General and the Executive Council.

There are questions to what powers the Executive Council would have available to them to take back control of APNIC if the current, or future, sole Director of APNIC Pty Ltd dismissed them.

Members of APNIC had previously raised concerns with APNIC about their poor governance and demanded the release of the Deed of Trust. After twenty-five years, APNIC finally made the Deed of Trust public via their website in February 2023.

The legal opinion advises that even with a Declaration of Trust in place the structure of APNIC means that the power to amend By-laws still sits with the sole director of APNIC Pty Ltd.

change the Bylaws of APNIC, dispose of and/or transfer all APNIC assets at will, change the earnings model and also discontinue/dissolve APNIC;

change APNIC Pty Ltd to be a “with-profit” company, issue and sell shares at will, transfer moneys at will and freely relocate APNIC Pty Ltd to any other jurisdiction in the world - to the ultimate benefit of the Shareholder;

change the company’s Articles, structure, financial models, dispose of the company.

make changes to the Special Committee (i.e. ‘APNIC’) Bylaws, or the ‘Executive Council’ members/structure(s), or any other change(s), are matters wholly within the control of the Directors of APNIC Pty Ltd;

Dr Felter said: “In my legal opinion, APNIC’s Declaration of Trust does not do what is claimed. It is poorly written, open to abuse and does not provide the necessary protection for an organisation with the global importance of APNIC. It is time to reincorporate APNIC into a proper not-for profit structure that gives real and proper control to the membership. APNIC lawyers themselves should be concerned about the structure, which begs the question as to why they have hidden the true arrangements for so long”.

Dr Peter Felter was instructed by LARUS Limited. LARUS CEO, Mr Lu Heng was provided information by a whistle-blower who requested further investigations into APNIC.

Lu Heng said: “for many years the RIR community had question marks over the governance of APNIC. APNIC now need to come clean with the community, clean up their governance and reincorporate giving control to the membership. That is why I have suggested re-incorporation in Singapore, preferably with a structure similar to ARIN’s structure. I have expressed those concerns publicly and commissioned this investigation in the public interest. The APNIC membership now need to step in and ask the Australian courts and authorities to review the situation with APNIC quickly.”

Lu Heng, CEO of LARUS who is standing as a candidate for APNIC Executive Council, added:

“This governance issue is why I am standing for election. All members of the Council need to be aware that they do not have the power they thought had and that the Council and Membership is vulnerable. I had already suggested solutions to APNIC which they dismissed out of hand. If I’m lucky enough to be elected to the Executive Council, APNIC’s restrictive NDA I am forced to sign will silence me. These revelations must be first on the agenda for the new Executive Council and they need to take responsibility and hold the Director-General to account. Those who wish to continue to personally attack me for exposing this scandal need to ask themselves some serious questions.”

Current members of APNIC Executive Council, as well as newly elected members of the Executive Council are now urged to explore to what extent APNIC issues and/or activities may run afoul of Australian federal or Queensland law.

The legal opinion advises that the Australian Courts are asked to rule where it could be found that either APNIC structures are fully legal under Queensland law and Australian federal law, and there is nothing legally objectionable in the “one-man”- structure meaning that one individual does legally control the RIR for all of Asia Pacific Region or that there are matters of reasonable legal concerns to address with Australian authorities and/or courts.

APNIC Executive Council members are currently constrained by a restrictive NonDisclosure Agreement (NDA) meaning that they are unable to speak publicly. APNIC Pty Ltd sole Director, or APNIC’s Director-General, who is the same person, must remove this restriction with immediate effect in the public interest.

The legal review undertaken by Dr. Felter consisted of the five RIRs: ARIN: covering Canada, many Caribbean and North Atlantic islands, and the United States of America

RIPE NCC: covering Europe, the Middle East, Central Asia

LACNIC: covering Latin America, portions of the Caribbean

AFRINIC: covering Africa, portions of the Indian Ocean

APNIC: covering portions of Asia, portions of Oceania

ENDS
About LARUS

LARUS Limited is headquartered in Hong Kong and provides global customers with a full range of IP address solutions, including IP address management, IP addresses provisioning, RIR membership application and management.

Attachment 1 Company_extract_APNIC_PTY_LTD.pdf

Attachment 2 Legal_Opinion_on_Regional_Internet_Regis.pdf