About Hostile Takeovers and FVC


I am busy passing a university course that has much to do with "the democratic deficit" and much useful info. When I am done it will keep me blogging and posting to this list about democratic reform for months.

But for now I can only take a short break from it to write something about a topic some people in Fair Vote Toronto are obsessing about. That is, the idea of legal challenges to the behavior of the "rabid rabbits" inside of FVC. I cannot give any support to the idea of taking the nasties to court. Courts are generally not a good way of solving problems.

hostile takeovers

Someone has looked into some legal cases involving "hostile takeovers" of non profit groups. The attempted takeover of the Sierra club in the states has been cited as an example of how courts will tend to side with the incumbents in such cases. I think the idea from this is to take the bunnies to court. At least, to be less intimidated by their legal threats.

Based on what I have been reading, I can give more support to the idea of not being so intimidated by the threats of the nastie bunnies to use legal actions. However, I think it is a bit dangerous to frame the dispute inside FVC in that way.

Besides the Sierra club squawkle, I also looked into the haroompha at the Royal SPCA in England. These were basically charities, not particularly political organizations. The insurgents programs were not something directly against the original mandate, but could be seen as a different way of framing a pertinent issue.

In the Sierra Club case, the insurgents wanted to reestablish an older Sierra club policy calling for restricted immigration. This is plausibly an environmental issue even though it will send present day politically correct people into conniptions. At the risk of having some "No One is Illegal" type of goons following me around calling me a racist, I find no problem with that. Restricting population to what a given area can support is a good idea.

Now I will get even more politically incorrect when I start talking about the bid to have RSPCA endorse fox hunting. I have no problem with lord tally-ho getting on his horse and chasing foxes on weekends. Some of you already know I like watching bull fights too. Eek!

So, some supporters of fox hunting tried to get RSPCA to endorse fox hunting as an environmental measure. Foxes have few natural predators in England and their numbers get out of control. They wipe out other non harmful species and start dining out in somebody's hen house.

But this was not really about killing animals so much as a class thing, attacking a symbol of the old rural aristocracy. So it is still okay for the local farmers to go out and hunt foxes, but they cannot use dogs anymore. This makes hunting foxy foxes much more difficult without a dog's sense of smell. The other option is to put out poison, with all the hazards of that.

The tally ho faction at RSPCA did not get very far, did not even get one of their members elected, but the over the top reaction of the established board caused concern in some quarters.

legal theory

The above mentioned questionable actions to stop insurgents lead to an article in the Brigham Young university law review. It seems Mormons are very supportive of freedom of speech and thought, and disapproving of efforts to entrench permanent hierarchies.

The thrust of the article is that charity organizations should be open to change over time. An obstacle may be the will of an original donor. But times change, and rules set up according to the circumstances of an earlier time may need to altered. A democratic process of electing new people with new ideas may facilitate that.

The Brigham Young article does not properly address the problem of dishonestly motivated takeovers. They seem to think that laws regarding fraud are a sufficient protection. They also do not address the problem of a flat out political attack on an organization to silence it as a threat to some powerful interest.

This really is what the FVC vs. RaBIT fight is about and it should be framed in that way. There are not too many cases like this on the net. I think the losers lose and are erased from history by the victors. Even if the incumbents fight off the attack they might want to keep it quiet in order not to disturb their funders and volunteers.

take downs

But I have found two very good example of a take down attack. One is that of by the scientologists on the "Cult Awareness Network". CAN was set up to help people trying to get their relatives out of the clutches of cults. They often made referrals to deprogrammers.

The scientologists sued them out of existence and then bought up their name and assets in bankruptcy court. To top it off, when the survivors of CAN tried to hold a meeting to discuss how to relaunch CAN, it was stormed by scientology thugs.

So now there is a "New CAN", which acts as a public relations arm for scientology and an alert mechanism for complaints about their recruiting. It is another system for routing complaints about an entity right back to the entity complained about. Also, to go after some other cults which scientology sees as rivals for the same human cattle. I wonder if I will get some nasty noise from Scientos about this when I put it up.

But the "New CAN" would likely be the future of FVC if the present members cannot get their ever luvin' shit together. FVC could easily become the information center for promoters of Alternative Vote and other bogus voting methods. The basic mistake of old CAN was to try to use the courts as the sword, not as the shield. FVC must not make this strategic error.

The other example of hostile takeover which might be useful to FVC is the failed, so far, attempt by the wonderful Koch brothers to take over the Cato institute. The Koch brothers are oil barons noted for funding the "tea party" type political movements in the U.S. The Cato institute is a libertarian think tank make up of people who actually believe in libertarianism as a philosophy. They do not really approve of crony capitalism, seeing it as an aberration of "the market", capitalism, and all that.

Cato's mandate is to foster "scholarship and research" and to avoid direct involvement in politics. As such, they are more dangerous to the Koch brother's kind of politics than all the "left-progressive" chicken shitters in the U.S. of A. But they have a nutty kind of governance system in which a few people own "shares" in Cato and can control some things to do with Cato, including appointment of the president, which seems to be a life time position.

The Kochs owned a block of these shares and sued, claiming that this entitled them to a biggersay in running Cato than they were getting. They also have an extreme dislike of the incumbent president of the Cato institute. Some "compromise" was reached whereby the Kochs dropped their law suit, the old director will be replaced by somebody the Kochs like, and the board of directors remained majority non Kochite.

This seems to be the sort of false compromise that brings the takeover faction a step closer to their goal where they would likely have been eliminated if their opponents had held their ground. Their lawsuit was shaky but would have harmed Cato's image if it went on a long time. The best hope or Cato seems to be in the staff revolt against Koch influence.

take aways

One of the take aways of these two cases is that courts are not really good places to solve this kind of thing. Another is that what makes organizations vulnerable to hostile takeovers, or entryism, is an incumbent faction which is dug into power and has no real connection to a membership or a movement, yet have to be elected periodically. In other words, a "representational" model of democracy.

There are two basic defenses a non profit organization can take against entryism/ hostile takeover. One is to be a self perpetuating dictatorship, with the governing group choosing its own successors. This is not an option for a group like Fair Vote. However FVC is stuck with a representational model which makes it vulnerable.

It needs to go to the other model for a group likely to be targeted for entryism/hostile takeover; a strong grass roots structure. A really active membership is needed, really committed to the group's principles. To a degree, we have this in FVC. But the membership also needs tight control over the executive from below.

best defenses

The thing is, FVC is really a fairly hidebound group. It is locked into the idea of representational democracy when the world is going toward more deliberative/participatory models of democracy. Just electing a bunch of people, many of them not really well known, and letting them run things for a term of office, was never a good system.

This is what I am learning in my very interesting "democracy in Decline" course. New modes of democracy are being developed which ensure more direct control over government, or the governance of non state institutions, by citizens and members. I do not have time here to go into this topic in any depth, but I have written before and will again that FVC needs to be restructured as a coalition of local chapters. As well, membership criteria needs to be stronger.

The only other alternative is to turn into a form of dictatorship, such as the democracy watch group, where the core group basically appoints and replaces itself. This is a democracy of the feet and the wallet; if it does what its supporters want, it gets money and volunteers. Otherwise, these go somewhere else. In the reality of continual shut down and entryism attempts, this may be the best way to run a political reform movement, however paradoxical that may be.

The grass roots option is harder to get started; you need grassroots there to start with. With Fair Vote, you have had the fortune to develop local groups which can form the basis for a bottom up, grassroots structure. But people opposed to the present entryism are very slow to get on with it. They seem locked into a representational model which has been shown to be non viable.

Even if the present RaBIT insurgency is put down, another entryist group will soon be around. The structure of FVC is vulnerable to them, and must change. To repeat, It is either a self selected group, which would alienate many people, or it is a federated structure, which would attract more people.


To wrap this up, I should explain the term "entryism" which better describes what the RaBIT people are about than "hostile takeover". The term was originally used in the U.K. to describe the attempts by the Troskyites to take over the labor party from within. This eventually failed and the "Trots" were expelled.

However, the joke on the labor party was that a couple of generations later they were taken over by a successful "entryist" campaign, that of the neo liberal Blairites. This was facilitated by the representationalist and basically authoritarian structure of labor and most political parties. Once entryists grab control, it is very hard for the membership to get rid of them.

The membership often does not realize what is going on, and have no way of knowing who they are really voting for, and have limited means of control over representatives once in office. This is the situation with the membership of FVC.

the point

So, legal action to get rid of them will be futile and may backfire. Attempting to persuade or win over opportunists and the gutless will also go nowhere. The FVC entryists need to be opposed by engaging the membership and by getting a commitment to a more interactive and deliberative democracy, within FVC and in Canada.

Now, get on with it. Enough said.


Nonprofit Coup d'Etat - CharityLawyer http://charitylawyerblog.com/2010/10/25/nonprofit-coup-detat/

BBC News | UK Politics | Hunt issue raises RSPCA hackles http://news.bbc.co.uk/2/hi/uk_news/379013.stm

Business | It's A Hostile Takeover Of A Nonprofit | Seattle Tim... http://community.seattletimes.nwsource.com/archive/?date=19961201&slug=2362655

Nonprofit Takeovers: Regulating the Market for Mission Control http://lawreview.byu.edu/archives/2006/5/2REISER.FIN.pdf