I am a long-serving Director of DotAsia, having served since 2009. I am also the CEO for DotPH, and have operated the .PH Registry since 1990.
In the performance of my duties as a Director of DotAsia, I believe that I am morally and legally compelled to bring to your attention certain facts regarding Edmon Chung (EC), a director of ICANN and the CEO of DotAsia (hereafter referred to as DA) since 2007.
DA, under EC, has had going concern risk qualifications from DA’s previous auditor from 2012 to 2019, meaning a material risk of ceasing operations. From 2020 onwards, DA lost an additional $1.86M and audited statements for 2021 and 2022 have not yet been released by the new auditor.
As the financial records of DA and its current financial standing would show, DA has been severely mismanaged. In fact, due to DA’s poor governance several lawsuits for fraud against EC, DA and it’s subsidiary Namesphere (NS), were filed, one of which resulted in a settlement with Jason Chapnik that cost us $1.9M.
In the following portions of this letter, I will share some of the instances of mismanagement of DA with the ICANN board.
1. Of the $43 Million in Revenues of DA, only $165K has been spent on ccTLD Projects – supposedly its main purpose.
In 2007, the sponsored Top Level Domain “.ASIA” was awarded by ICANN to the company “Dotasia” (DA) on the promise that it would inject a “Guaranteed portion of Revenues” to Charities/Projects of its ccTLD Members. It has failed miserably in that regard.
The promise is made here:
https://archive.icann.org/en/tlds/stld-apps-19mar04/asia.htm
As of Oct 2023, only $165k has been injected into ccTLD Projects since 2008, despite over $43M in DotAsia revenues to date. This is approximately $10k/year or a paltry 0.4% of Revenues! The Public Interest Registry, in comparison, returns about 64% of its Revenues from .ORG to Charity.
https://www.dot.asia/sponsor-community-project-funds/.
The .Asia application was granted by ICANN based on promises made to various ccTLDs by its CEO Edmon Chung. Letters of support from ccTLDs were then written by ccTLDs and used by EC in support of the .Asia sTLD application. However after the TLD was issued, the ccTLDs were then largely forgotten.
Here for example is a letter of support from .TJ from 2006 supporting the formation of Dotasia:
https://www.dot.asia/wp-content/dotasia/docs/letters/LOI-tj.pdf
And last week they (.TJ) wrote to say that they were suddenly just pulled out of DotAsia. Needless to say, they received $0 for any of their charities/communities.
2. Due to years of mismanagement, based on audited financials, DA is at risk of ceasing operations.
DA, under EC, has had Going Concern Risk qualifications from DA’s two auditors from 2012 up to 2021, meaning there is a material risk of DotAsia ceasing operations. (The 2022 audited Financials have yet to be completed).
Under Edmon’s leadership, DotAsia has had operating losses in 13 of the past 15 years (figure A) and has had a cumulative loss of $3.9M (Figure B) despite generating $43M in revenue (Figure A) during the same period. Annual Revenues continue to decline.
Figure A
The latest unaudited Financial Statements show net current Liabilities of $5.4M (Figure B) with net Revenues of $1.216M. (Figure C 912k x 4/3 = 1.216M) This means that, even if all costs were cut to zero (wages, travel, legal, etc), it would take 4.4 years before the company becomes solvent! The company has eaten through its Registrar Deposits (typically 75% of annual revenues) and could go through a liquidity crisis at any moment.
Here is the basis for these numbers:
Dotasia Audited Financial Statements are here:
https://www.dot.asia/category/financials-and-reports/
These financial statements, when put in a spreadsheet, show $43M in sales (Figure A), and net current liabilities of $5.4M. (Figure B).
The unaudited June 30, 2023 financial statement below shows $3.912M in cumulative losses (Figure B)
Figure B
The figures posted below show Net Revenues of 912k for the first 9 months of 2023, which can be extrapolated to $1.216M in Net Revenues for 2023.
Figure C
DotAsia is creeping closer and closer to insolvency.
3. Primary Cause of Losses – a Disadvantageous Perpetual Contract
Through the directive of EC, DA entered into a perpetual contract for Back-end Registry Services that is 4x the Industry Rate. $19M has been paid to date in Back-end fees to Identity Digital (formerly Afilias) on revenues of $43M (Figure A). That is a staggering fee of $4.41/domain-yr. (Or $4.16/domain-yr w/o the ICANN fee). All attempts to change the Provider (and there have been several attempts), so that DA can enjoy better rates, have been met with stiff resistance from EC.
In Feb 2023, EC explained to the Board that the reason for the overpriced contract was that DA owed a debt of gratitude to Identity Digital. He says that in 2007, DA was lent $1.78M, interest free:
But in 2008, the company made at least $7M in auctions, and could have paid off this $1.78M loan many times over.
http://dot.asia/pressreleases/DotAsia-PR-HoN%20Final-2008-08-28_EN.pdf
Yet strangely enough, DotAsia did not pay this off. The 2008 Financial Statement shows only a partial payment of $1.032M towards the loan (Figure D). In addition, there was a $49,759 interest payment for said loan (so it appears that it wasn’t interest free as alleged by EC). (Figure D)
Clearly, gratitude was not a valid reason to maintain an overpriced contract, as DA actually made payments for the loan that was granted. If fact, within a year, the Company already had enough cash to pay the loan in full and with interest.
Then Note 10 of the 2008 FS reveals a shock: “Afilias will receive certain Percentages of the Company’s Gross Income”.(Figure D) . Did Identity Digital take more than the $4/domain fee that the contract specifies? What Percentages on Dotasia’s gross revenue did Identity Digital receive? What was the basis for this? Pool.com was the Auction Provider for Dotasia’s auctions. So why would Identity Digital profit from the Auctions?
Figure D
The 2008 Financial Statements show $3.495M (Figure E) booked as sales in 2008 (mostly from the auction), and a total of $3.831M in fees (Figure E) were collected by Identity Digital (plus a small amount to ICANN)!
The Cost of Sales ($3.831M) in 2008 paid to Identity Digital was higher than the Revenue ($3.495M)!
Note 2 shows that this boils down to a $10.96/domain-year fee being assessed by Identity Digital (less 25c/domain-yr by ICANN)!
Figure E
From the above cited data culled from the Audited Financial States of DA, it appears that the financial relationship between DA and Identity Digital is much more that what was purported or explained by EC.
This also raises the question of why was so much being paid off to Identity Digital, to the extent that DA, despite decent sales, operated at a loss? Why was the loan not fully paid off as early as 2008?
What was be the reason why Identity Digital was kept on as a service provider for several years, under a disadvantageous contract, when the loan obligations of DA could have been paid in just one year, and a more advantageous contract – at least one where DA can avail of industry rates – could have been obtained?
Furthermore why would EC want to saddle a new Registry with a Service Contract in Perpetuity? Where was the logic in this? Who would benefit from such a one-sided arrangement? Surely not DA which is now at a point of insolvency.
So what is a fair rate for Back End Registry fees?
In 2015, EC was aware of Backend Registry Fees of $1/yr from UniRegistry. Yet, inexplicably, no action was taken to switch DA away from Afilias or to at least negotiate for a better rate!
In 2021, I received a quotation that was substantially less than the Uniregistry fee above, but due to NDA restrictions, I am not at liberty to disclose.
So to get an idea of what other TLD Registries normally pay for Back-end Registry fees, let’s just cross over from Tsimshatsui to Victoria Harbour and look at the 2022 financial Statements of the good folks at HKIRC, who manage .HK:
https://www.hkirc.hk/en/discover_hkirc/annual_report/2022/
They too, like .Asia, wholesale their domains at $10/yr (actually HK$80/yr). You will see that HKIRC spent HK$1.7M in 2022 for IT fees (HK$1.285M in 2021).
Revenues from Domain sales in 2022 was HK$33.667M (HK$34,317M in 2021).
This means that back end fees (which are a part of IT fees) were no more than 1.7/33.667 = 5%, or no more than 50c per domain-yr in 2022.
(And no more than 1.285/34.317 = 3.7%, or no more than 37c/domain-yr in 2021).
That is a massive difference from the $4+ /domain-year dotasia has been paying! (It is 9% of what we have actually been paying!)
4. In the same vein, EC saddled other Registries, including .SPA and .BOX with overpriced $3/domain-yr contracts from AusRegistry (ARI), and refused to switch to a $1/domain-yr contract UniRegistry. This became the subject of a 2018 lawsuit in Ontario between Jason Chapnik of Intercap vs EC and DA.
Here is the heated exchange between Jason Chapnik and EC in 2016 regarding the UniRegistry vs the AusRegistry (ARI) contracts. Jason Chapnik seems to be of the belief that EC deliberately torpedoed the cheaper UniRegistry deal in favor of the expensive ARI deal.
Why would Edmon Chung do this?
This same accusation is formalized in the Statement of Claims filed by Intercap/Jason Chapnik in Toronto, June 14, 2018.
Why does EC, the CEO of DA, who is supposed to look after the interest of DA, favor ARI and its expensive Backend Registry Contracts over Uniregistry, or other similar service providers that offer cheaper rates?
And why did he do this repeatedly for all the Registries under his influence and control? For me, as a concerned director, this matter has never been adequately explained by EC, and I believe that his failure to justify the one-sided contracts is a serious cause for concern that needs to be fully addressed owing to EC’s position in DA and the precarious financial situation of DA.
5. Three lawsuits have been filed against EC and DA for Fraud and Negligence. Two in HK and one in Canada. The company settled but lost over $1.9M in the Canadian lawsuit (vs Jason Chapnik/Intercap); this was the price for dropping the charges of fraud and negligence against EC. (The HK lawsuits are from my company, DotPH. They are whistleblower lawsuits against Mr. Chung, asking for the return of Assets to DA and DotPH).
Rebecca Chan, the common-law wife of EC has stated in an Oct 31, 2023 email to the DA Board that “Edmon has never been charged with Fraud or Negligence”.
And yet the 2018 Statement of Claims filed in Ontario by Chapnik/Intercap contradicts this:
“The defendant [Edmon Chung] made negligent, or in the alternative, Fraudulent Misrepresentations”. (items 47-55)
And
“The defendant [Edmon Chung] made negligent and fraudulent misrepresentations in Ontario.” (item 67)
And the lawsuit filed in HK by Dotph, HCA 1767/2020, charges EC with breach of contract for not issuing both DotPH’s and Dotasia’s subsidiary’s shares in .SPA.
In a letter sent by EC’s lawyers on Jan 17, 2020, EC’s lawyer states: “the Board Resolution [of Sept 2019] does not in any way signify that our client has any intention to abandon its rights in respect to the .SPA Arrangement, but merely is a reflection of the practical approach of the Board .. in light of the ongoing dispute with DotPH”
In other words, EC will eventually get around to issuing DotPH and Dotasia’s subsidiary’s shares in SPA, but he will probably do so in exchange for certain demands/concessions. (eg when it is “practical to do so”).
In the meantime, .SPA remains 100% delegated to EC’s associate’s company, William Ng’s company – ASWPC, and is currently operational and pocketing profits that belong to Dotph and NS (the DA subsidiary). Since 4 years have passed since the issuance of .SPA, it is arguable that EC has no intention of ever issuing the shares of DA and DotPH in .SPA, which then would support the allegations of fraud.
6. $550k was given outright to the founders of AusRegistry (ARI) in 2015 for an IDN TLD that the ARI Founders never paid for (and thus did not own). The purported reason was that Mr Chung was “buying back” the 50% equity of ARI in the IDN TLD as a buyer had emerged that was willing to pay $750k for this IDN TLD. Mr. Chung has refused to explain why he paid $550k to the ARI founders when they had paid $0 for their 50% “equity” in the IDN TLD.
In March 2012, Namesphere (NS), a subsidiary of DA, of which DotPH was an investor, agreed to apply for two IDN TLDs, .网站 (website), and .网店 (web store). ARI agreed to shoulder half of the $185k application fee for each IDN TLD.
The 2012 contract between NS and ARI specified that 4 TLDs would be applied for, but only 2 TLDs were actually applied for. It was clear though that the application fees would be shared 50-50:
Then if the application fee were not paid by “NSL” (Namesphere) or “ARG” (AusRegistry Group) as of April 8, 2012, the party that failed to pay its portion of the ICANN application fee of $185k would lose its share of the IDN TLD.
In a DA Board Meeting on Aug 21, 2023, EC revealed that ARI had never paid the $185k fee for either .website IDN or .webstore IDN.
So as such, per the contractual agreement, ARI should have had zero equity in the IDN TLDs.
So the question is – why did EC pay the ARI founders $550k in 2015 to “buy back” their equity in .website IDN?
7. There are no checks and balances within Dotasia. Dotasia employs EC, his wife, and his sister. They are 3 of the top 4 highest paid employees in DotAsia. EC’s wife is CFO, Chief Compliance Officer, and Corporate Secretary.
8. Information to the Board is blocked. Messages to board@dot.asia are censored. By whom, we do not know. The Chair, Jordan Carter, has gagged DotAsia staff from revealing who is approving or censoring Mail to the Board. Communications by Directors to the auditors are outlawed as well (by Mr. Carter). Requests for financial information, such as bank records, have been denied for years. We have had to resort to lawyers to remove some of these blocks.
And below is DA Chair Jordan Carter instructing DA CTO Kelvin Truong to not answer who is responsible for approving/rejecting mail to the board from Mazars, who are the auditors of DotAsia. This is an especially critical email responding to my attempt to alert Mazars to Fraud within Dotasia.
9. Because of the dissatisfaction of several ccTLDs, the previous DotAsia Board voted to end Edmon’s contract and search for a new CEO in late 2022.
The part about “Edmon enjoying the right to participate in the competitive process” was just an Asian way of saving face for EC. For reasons too long to explain, this Open Tender has been blocked.
10. EC repeatedly misrepresented ICANN policies to his investors for his personal benefit and to frustrate the claims of his investors.
A) Edmon used ICANN gTLD Applicant Guidelines as the justification for not issuing shares in SPA for 8 years. (Likewise for BOX, but for less years)
In 2012, Edmon invited my company, DotPH, to invest in a Dotasia subsidiary, Namesphere. Namesphere applied for several TLDs, including BOX, SPA, and INC. When Jason Chapnik sued Edmon Chung in 2018 for, among other things, not issuing HIS shares in BOX, I began to wonder about MY shares in Namesphare and in SPA. To my shock, I discovered in 2019, 7 years after I had paid for my shares, that NEITHER DotPH shares in Namesphere nor shares in the holding company for SPA had been issued! When cornered, Edmon would falsely claim that he was prohibited from issuing the shares , blaming ICANN procedures in the Applicant Guide Book!
On Feb 13, 2019 Edmon wrote the Board:
“any update on shareholding will need to have ICANN’s consent which involves [an] application and fees for [a] background check[s] on each shareholder…”
On Feb 14, 2019 Edmon wrote the Board:
“There are rules in the Applicant Guidebook (AGB: the new gTLD process) that disallows such changes [to the shareholders of an Applicant]. In short, ICANN could potentially disqualify the application (in particular Section 1.2.1 and 1.2.7), therefore we do not believe it was prudent to make such change [to the Shareholdings in Namesphere or SPA] until the ICANN process is complete. […] the AGB requirements explains why we have not made the shareholding change yet. .”
I later discovered that Edmon had also used the same arguments to justify NOT issuing the BOX shares of Chapnik! So I asked the former Chair of ICANN, Peter Dengate Thrush, to write the Board of DotAsia on May 2019 to comment on this.
PDT says:
So essentially there is a process to change control of the applicant entity, which implies there should have be no problem issuing shares! (Be it in BOX or NS). But despite being now informed
of the Change of Control Process, Edmon STILL did not issue the shares in Namesphere! Nor did he rectify his mistakes with BOX!
Finally, in 2020, in frustration, DotPH sued Edmon Chung for fraud and negligence in the High Court of HK. (HCA 469/2020) Then and only then, after a long delay were the Namesphere shares issued in 2021. (At the same time, Edmon issued shares to himself in Namesphere, without providing any audited proof of payment).
The shares in SPA have yet to be issued, and one wonders if they will ever be issued at all.
B) In the Ontario lawsuit, Chapnik says EC saddled BOX with an expensive Registry Backend Contract with Ausregistry (ARI) by not informing Chapnik of a critical ICANN deadline.
The defendant above is primarily EC and vicariously charged are DA, and NS.
The .BOX lawsuit in Canada was eventually settled but at a great loss to both DA and NS. In exchange for dropping the charges of fraud and negligence against EC, we have had to sell our $1.5M stake in .box for a paltry $345k. And the companies (DA and NS) needlessly spent $750k in legal fees in Canada ( I say needlessly because 1) HK law prohibits HK companies from paying for legal fees when its directors or officers are charged with fraud or negligence and 2) DA and NS did not have a separate lawyer from EC who could have argued that both DA and NS were unaware of EC’s actions.).
Edmon Chung does not belong on the Board of ICANN.
As some of these accusations may seem fantastic to you, I will be more than happy to share whatever information you need to backup these allegations.
Sincerely
Joel Disini
Director, Dotasia
CEO, DotPH
jed@dot.ph
Whatsapp: +1-818-288-1383