Slobo.eth stepping down as steward due to conflict of interests - can't be Steward and recipient of funds at the same time

🗳️ Meta-Governance
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Hey all, I would like to add the following item to the agenda on the upcoming metagov call, as well as raise this point for a broad discussion. Metagov was supposed to do something about it and nothing happened. Tagging @AvsA @estmcmxci @5pence.eth

@slobo.eth’s company namestone.xyz is the recipient of “service provider stream”, moreover his company was awarded the the largest sum of money among others.

Being a Steward his job is to oversee work of “service provider stream” recipients. In that capacity he cannot oversee himself, that is a direct conflict of interest.

By now Slobo.eth had at least a whole month to make some sort of statement regarding that matter, to clarify his position - so far silence. This is complete no brainer, for example @cap in his stewardship application being also “service provider stream” applicant made it very clear, that he would resign, should he win both of the voting processes.

@lefterisjp in one of his twitter posts, commenting on recent voting window (being an external observer that is) already highlighted conflicts of interests, directly stemming from the process of ENS DAO distributing sizeable grants such as “service provider streams”.

For example in traditional finance investment bankers would be forbidden by law to trade securities. Those public protection laws are so severe that people get decades of jail time for violating those rules.

Recently during some other discussion @Coltron.eth was arguing that “if it’s not in the rules, then we don’t have to do it”. Clearly common sense doesn’t have to be in the rules to be applied.

This situation is not even about @slobo.eth per se, it’s bigger - it’s about setting precedent on self regulation. While certainly there is no traditional law regulating this situation, and there is no internal ENS DAO rule prohibiting him being a steward, there is simple thing called “Court of public opinion”.

It is especially relevant now that ENS is getting so much publicity, in the light of GoDaddy integration. ENS broadly as a collection of agents should be seen in public eyes as an “organisation with integrity”. Allowing this conflict of interests to go on would enable people like UD to pour even more dirt on ENS.

It is especially dissapointing, that @slobo.eth himself decided not to raise this subject, and someone else had to do it. To reiterate, you cannot be running public hospitals and oversee process of fund distribution for those public hospitals. My suggestion is for @slobo.eth to step down as Steward voluntarily, or have him removed as per ENS DAO rules which actually exist.

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I feel like a lot of assumptions are made in this post.

How do we know that Slobo hasn’t already spoken to Metagov about this topic?
How do we know that Metagov hasn’t already reached out to Slobo?

Also cap didn’t specifically say “I will step down” It was “if necessary” which slobo also made a similar comment

Avsa’s original comment on the stream and conflicts of interest:

What ENS DAO rule has Slobo broken?

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@SpikeWatanabe.eth - I’d prefer if you begin a conversation about Slobo like this that you to start by identifying what he has done wrong.

Otherwise, we could certainly begin a conversation about conflicts of interest with stewards that are somehow beneficiaries of DAO grants, funds, streams, etc. - But, let’s please discuss in those types of terms, not terms that begin to focus on individuals, that is if the complaint is truly about DAO policy.

Simple recusal on conflicting decisions is always possible when the need arises.

I’m not sure this is accurate. Technically, ENS Labs is the largest recipient of a DAO stream, and we’ve never had strict policies against ENS Labs employees in steward seats.

If there is a valid concern about conflicts, let’s talk it out and make sure that we’re intentional and careful about policy.

Are you suggesting a new policy here that you would like the DAO to consider?

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@SpikeWatanabe.eth It’s not a productive way to make such accusations. I’ve had multiple conversations with Slobo since the very inception of the program about these issues. Slobo has stated he will abstaining from any debates on the Stream provider as an ecosystem steward and he has so far followed through. It’s a learning exercise and we can further detail the rules as we go. Slobo is a valuable steward and I believe ResolverWorks will be a valuable developer.

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Well, I speak about what I see, which is - you made a public promise that conflict of interests will be managed and addressed somehow. Where was it addressed before I made this post except for some non-public discussions of which you are making people aware only now? I’m not saying that you didn’t have them, we are all grown up reasonable people, I’m sure noone is going to make up things here.

It is also a question of communication between the stewardship institute and the public or general ENS stakeholders for that matter. The question is who is it stewards are serving? If you are serving small closed community of stewards, then I guess it’s ok to ignore everyone else. I hope that this is not the case.

Similar situation is happening around a number of other question raised in public, and I think those were pretty simple questions tbh. Like what was the process around ByLaws provider - it was simply ignored.

So the general dynamic is to keep everything within the “closed circle of stewards”, and when asked reasonable questions either ignore them or get offended. I think this dynamic is somewhat off the mark.

I think that as a person who is in the center of conflict of interests it is @slobo.eth’s responsibility, to address that issue.

Let me give you an example how it managed in investment banking industry. We have something called “Chinese walls”, which means it’s not that you are not allowed to trade securities, you are not even allowed to talk to people who are in possession of sensitive information. People get real serious jail time for breaking the rules. Here we have admitely a different type of conflict of interests, but all the same a private individual can profit from his position as “public servant”. I think that situation deserves a bit more than “chat behind closed doors” isolated from general public.

I sincerely hope that this conversation does not imply that being “valuable” means different standards will be applied to a person. There was no public coverage of conflict of interests - that is a fact.

What I meant to say here, is that there is actually a mechanism inside DAO to remove Stewards.

Again as I pointed above, there was no coverage of the situation. Either way, discussion behind closed doors is not how you really manage the conflicts of interests. You design a policy in a such a way, so that participants cannot profit from their position. As we can clearly see from this discussion, a lot of sensitive information flow is actually happening behind closed doors. General public doesn’t have access to that information flow and cannot influence it, whereas @slobo.eth does. How is it current state of affair provides guarantees to the general public that he is not going to exploit his position?

When you are designing conflict of interests policy, in my mind it should be based around the notion that individual “can’t be bad”, not on “chooses not to be bad”. If it is the latter, then effectively there is no policy. Think about investment banker not being allowed to trade stocks, or government officials not being allowed to run own business. It is simple - you either run your business or work in the government. I admit that I was always on the receiving end of compliance rules, not the designing end, but you don’t have to be compliance officer for this, it’s common sense.

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@SpikeWatanabe.eth, please, focus on policy suggestions if you feel the DAO needs to make changes or iterate on our process. Dramatic supposition that requires people to prove their innocence from hypotheticals isn’t constructive.

This reads more like a personal vendetta than a proposal to improve the DAO.

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Look, I’ve grown in a professional environment, which implies that I have certain level of proper conduct.

I think my point is very clear to be honest, which is the only way to claim to have a policy here is to design it around the principle “can’t be bad”, otherwise there is no policy. From that follows that the most straight forward way to do it is for Steward to decide whether he wants to run own business or stay in a position of authority and be a Steward. I haven’t invented this approach, this is how world is run in general - bankers, gov officials and so on.

What else is there to tell, unless you can reinvent the wheel, what other options are there except for him to step down?

I think you misunderstand what management of “conflict of interests” means. In a variety of scenarios where conflict of interests exists, agents do not wait for the problem to manifest itself, it is tackled at the initial point. People just don’t sit and wait for something bad to happen.

I’m going to quote here like really trivial site - Investopedia, but seems like it’s appropriate.

Some examples of a conflict of interest could be:

** Representing a family member in court*
** Starting a business that competes with your full-time employer*
** Advising a client to invest in a company owned by your spouse*
** Hiring an unqualified relative or friend*

When such a situation arises, the party with the conflict of interest is usually asked to remove themselves, and it is often legally required of them.

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Slobo approached me to ask my opinion on this, with a view to stepping down if necessary. I told him, and will reiterate here, that I don’t see a problem with a fund recipient serving as a steward, so long as they recuse themselves from any decisions that constitute a conflict of interest - namely, anything involving the service provider program. He agreed to remain on that basis.

Most of the decisions Ecosystem stewards take are on matters other than the streaming program - and in fact, Metagov is the one administering the actual payments. Expecting someone to stand down entirely, rather than removing themselves from any decisions where they would be conflicted, seems unwarranted.

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I’ll be honest with you guys, I’m out of arguments, if you refuse to acknowledge that white is white, what else can I do?

If we are building here world class organisation it should adhere to global best practices, this is hardly a best practice.

The fact of the matter is that as a steward @slobo.eth can exercise influence over stream providers. The only line separating him from wrong doing is his promise, which is not going to hold in any other scenario.

For the sake of the argument lets take some extreme example, lets say you were seriously assaulted, you pressed charges, the matter’s been taken to the court, and there is a panel of jury to pass the verdict. Among the jury is the brother of a person who assaulted you. Coincidentally you’ve been promised that this guy would be objective and will pass the right judgement by his brother. Are you guys going to take that chance? I bet you my skin, that you won’t, you will object to him being in the jury and ask to replace him on the grounds that he has a conflict of interests. Brother will not convict own brother simple as that.

Same principle applies here, why should @slobo.eth be among the jury in any capacity?

And again it is especially disappointing that @slobo.eth is clinging to his seat, instead doing the right thing.

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Recusing oneself is the global best practice for a conflict of interest, and that is exactly what Slobo has agreed to do.

We cannot expect stewards to be totally free of conflicts on all possible decisions they may be asked to make; that’s why it’s important they disclose them and recuse or abstain when appropriate. I expect the same of delegates; that’s why I abstained on the vote regarding Brantly’s directorship.

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In the event of a disclosure ( in any instances of interest conflict ), then what is the appropriate subsequent action or step to take? Should an individual have such conflict of interest --what does the disclosure effectively present in terms of their effective position? Does just simply declaring a conflict absolve the conflict of interest?

This is another area of ENS Governance that requires clarification for the our by-laws. We need to establish explicit documentation that provides procedural ans actionable motion. The instruction should include conflict of interest defined, examples of, a prong test to measure whether or not a conflict exists, mitigation reference and should also present guidance for and if and when there should or should not be included in the next calendar voting window,