Gevers to play key role in settling Tezos dispute

Johann Gevers is in charge of a Tezos treasure chest worth around $500 million Reuters

In the coming weeks, the Tezos Foundation will decide how to resolve a serious governance dispute. President Johann Gevers, who has alleged a plot to illegally oust him from the board and has himself been accused of misrepresenting the size of a bonusExternal link, will take an active role in that process.

For a month, the foundation spat has pitted Gevers against Tezos creators Arthur and Kathleen Breitman in a public – and very personal – row. It has set the blockchain project back at least two months and resulted in three class action law suits in the United States.

Just how this dispute will be resolved could well be revealed in the coming weeks. The first stage involved an audit of the foundation by an independent third party. Next comes the review of that report by none other than Gevers and the two other foundation board members, Guido Schmitz-Krummacher and Diego Olivier Fernandez.

“Once the board has reviewed the results of the findings, we will determine next steps, as appropriate,” read a statement from the London-based PR company Edelman, which has been appointed to handle communications.

Edelman did not directly answer a question from swissinfo.ch on how the foundation will avoid a conflict of interest by including Gevers in this review stage, but confirmed that Gevers will be part of the jury that deliberates the evidence presented by the auditor.

The protocol for resolving conflicts within Swiss foundations is at best vague, according to Professor Dominique Jakob, a professor of law at the University of Zurich. But conflicts of interest should be avoided wherever possible.

“Where there is an allegation of financial misconduct, foundation board members should not really be allowed to vote on their own liability,” he told swissinfo.ch. “They should step out of the room or, if necessary to ensure a conflict-free process, a guardian should be appointed to represent the foundation during the process against its board members.”

Guido Schmitz-Krummacher says the Swiss Foundation Supervisory Authority, the Swiss financial regulator FINMA, banks and the media (hence the public) will all be informed of the board’s decision once it is made.

He also explained why the foundation ignored a demand from the Breitmans to suspend Gevers. “In accordance with the presumption of innocence, which is a corner stone of Swiss law, all claims require evidence before a decision about the claim can be taken,” he wrote in an email.

Arthur Breitman did not respond to swissinfo.ch questions about the resolution process, but there are no signs that the warring parties want to kiss and make up.

Supervisor “lacks energy”

According to Swiss law, the Foundation Supervisory Authority, could step in if it has concerns about a foundation’s governance. It has the power to revoke board decisions, issue criminal complaints, or in extreme cases, remove board members. 

But such instances are few and far between, according to Professor Jakob, founder of the Center for Foundation Law at Zurich university. “The supervisory authority has traditionally been reluctant to take action against foundations,” he said. “It often lacks the energy to act in a dominant manner.”

Its first response is always to let the foundation directors sort out any conflicts amongst themselves. As a last resort, interested third parties can complain to the supervisory authority and appeal its decisions in the courts if they are unhappy with the way both directors and the supervisory authority have dealt with a case. 

But Jakob insists that the “rather liberal” Swiss foundation law has come a long way in recent years. Whilst articles governing foundations set up 20 years ago would only be a few paragraphs long, in more recent years “Switzerland has set a benchmark” in developing foundation governance structures.

These days it is common for more creditable foundations to be bolstered with checks and balances, such as articles dealing with conflicts of interest, how board members should be elected, how long they should stand and how they should be compensated for their work.