Van: Erik Bais <ebais@a2b-internet.com>
Datum: donderdag 19 september 2013 14:00
Aan: "org-l@ams-ix.net" <org-l@ams-ix.net>, 'AMS-IX tech-l mail list' <tech-l@ams-ix.net>, "exec-l@ams-ix.net" <exec-l@ams-ix.net>
Onderwerp: My concerns about AMS-IX plans to open an entity in the US under US  law ...


Dear fellow AMS-IX members and AMS-IX Exec. Board,

I would like to express my concerns about the plans that the AMS-IX Management has to open an office and an entity in the US under US law and specifically the impact this will have on the Dutch association and B.V.

Secondly I find the way that how the call for an extraordinary on-line AMS-IX GM on Sept. 27th 2013 was done (and the news in the days after) shows a lack of respect for the members on input in this procedure.

I will explain both in this email and hope to get more discussion on the topic and the plans within the association, prior to the next GM.

The most concerning thing of the reason for the call for the extra GM is to ask permission to be able to setup a new entity (under the current AMS-IX B.V. whom is 100% owned by the association) under US law.
Having an US entity within the (AMS-IX org. structure) association / B.V. will directly bring the B.V. and indirectly the association under the influence of the infamous Patriot Act and FISAA.

The effect of this is the following and I will not sugarcoat this more than I might usually do, in order to be crystal clear in where my concerns are:

If the US government thinks it is required to wiretap or gain additional information of a foreign government owned telecom operator (think about Belgacom, Etisalat, DU or similar… ), it could go to a FISC court (http://en.wikipedia.org/wiki/United_States_Foreign_Intelligence_Surveillance_Court)  to get an ex-parte ‘hearing’ and get the official order (paperwork) to do this.
These hearings are not open to the public for obvious reasons AND the opposing party is represented by an empty chair…

For the AMS-IX US entity (under US Law) they will receive the official request for the information, which they are required to send through to their holding company (which is AMS-IX B.V.) as the information or connection isn’t on US soil, but in Amsterdam.
Denying such request means that they US Entity will most likely be in contempt of court, bringing the US entity and its management in a situation where they can’t deny the request of the US Government and the AMS-IX Management. It is a very difficult split between 1 party whom doesn’t want to provide the information (Let’s assume the AMS-IX B.V. doesn’t want to provide the information) and the US Government who has the right to request and all the paperwork and laws at hand to request it.
Information in this case could mean: Information about, but also information from (data).

There is a case known of Bank of Nova Scotia with a US entity which came in the exact same situation. The US entity of the bank denied provide the information requested and to forward the request to the holding company for access to the  information and the US entity was fined in US court for contempt of court for 1.8 milj. US$.

Looking at this information, this will result in the following in our situation:
A)     The US Government will gain access via the US AMS-IX entity through their democratic approved laws to request all operational and financial information and most likely that will include the option to wiretap the platform.
B)     Business impact for some AMS-IX members who have customers that have specifically requested them to state on paper they don’t do ANY business with a company that will fall under the Patriot Act. (Think about local public/private cloud providers ,public sector ((semi)-Government) customers or companies that manage privacy sensitive information.)

If you want to deny such US government requests, prepare to do battle and prepare to be disregarded by a judge in the US for contempt of court or something alike and be fined … Is that the best way of spending the AMS-IX funds?

Having anyone from the current AMS-IX B.V. actively involved in this US entity or the AMS-IX B.V. and the association to hold stock in it, is in my view a very bad decision.
Thinking that creating a separate entity will shield the Dutch BV and Association from US law influence is false and in my opinion ill-advised.

We have all seen the news coverage of what the US Government has done in the past years and what came out after the information that became public through Edward Snowden.
The US government will seek all options gather intelligence and has the laws already in place to do whatever they like and more.

On the topic of WHY the AMS-IX is opening a new entity in the US, the project itself is noble and even if I personally fail to see the benefits for us as a Dutch ISP why I should fund (indirectly) such efforts on the other side of the world, I can understand the idea and why people might say ‘for the good of the Internet’ which is in this case a nice way of saying ‘for the good of some local US ISP their bottom-line’ … but let’s stick with the ‘Good of the Internet’ idea for this discussion.
The amount of money they estimated to get started isn’t the largest amount in the world and could very easy be donated by 1 or more similar AMS-IX/not-for-profit parties.
One of the benefits of donating the funds, is that we don’t risk any of the US Government law influence within our current AMS-IX org entity… There is no risk … (it’s a donation, you know you don’t get the money back … there might even be a tax benefit.. )

In the original email from the secretary of the board ( Wednesday Sept. 4th 2013 ) it was presented as that this idea that the AMS-IX management and Exec Board wants to put forward during the extra Online General Meeting, that it is purely a formality and that the board and management are already unanimous in the decision to move forward ….

Why are you suggesting the idea of a voting procedure if you only present the information that it is the best idea for an AMSTERDAM Internet Exchange to start a company on the other side of the globe… ?
The wording of the email invitation, shows imho a clear disrespect to the members and their ability to form their own opinion on such topics and ANY leading wording in a voting procedure or a call to a GM to have a vote, should be avoided.

From the discussions that I had with some of the members, the idea that the chosen leading wording in the invitation to the GM, followed by a public announcement on the AMS-IX website that Henk Steenman (CTO of AMS-IX) as a chairman for the OPEN IX IXP project in the US, painfully shows the roadmap that some people already have decided. And this is all still without ANY formal approval of the members or input.

Also I have a strong indication that the executive board wasn’t correctly informed on the above topics and was, to my opinion, too quick to agree, without asking the proper questions.
·        What are the risks (and not only financial risks)
·        Did we consult an international lawyer with a specialization in US Law and the impact on international companies?
·        What is the impact for the current membership/members on this?

Personally I think that the topics that need to be discussed should be discussed in a regular GM meeting (not an online extra-ordinary GM), with a proper introduction to the members prior to the meeting on what the general idea/plan is.
During the GM, it could be voted on (in this order):

A)     Do we (AMS-IX members) agree with the overall plan and move forward.
B)     If we move forward, how do we want to move forward
a.      Option of donation funds in full or partial (shared with other EU IXP’s or like-minded non-profits?)
b.      Option of entity under the AMS-IX B.V.
C)     Optional:  If participation of AMS-IX people is desired in a new venture, what is the best way to structure their involvement?

My apology for the lengthy email and if I stepped on anybody his/her toes in it, this is not a personal flame to anyone. This topic has a slightly larger impact than simply trying to help out the US ISP community with the AMS-IX knowledge and funds imho.

Regards,
Erik Bais
A2B Internet