The International Anti-Counterfeiting Coalition has been forced to kick out Alibaba Group Holding Ltd out of the group barely one month after the Chinese e-commerce giant was admitted into its ranks under a newly-created category. In a letter to the group's 250 members, the group's board said it had decided to suspend the category under which Alibaba was admitted in April "in consideration of some of the concerns raised by our membership."

Fashion brands Michael Kors and Gucci America Inc pulled out of the coalition after Alibaba was welcomed into the group. According to the Wall Street Journal, Michael Kors said in a letter to the coalition's board that Alibaba's admission provides "cover to our most dangerous and damaging adversary."

Barbara Kolsun, the former coalition's board chair and professor at Cardozo Law School welcomed the suspension of Alibaba's membership, describing it as a "prudent decision". She said that it was however "unfortunate that it was made only after a revolt by members."

High end brands have been complaining that although Alibaba has put in place several measures to tackle the issue of counterfeits, they claim that the e-commerce's sites still offers fake goods for sale. Jennifer Kuperman, Alibaba's head of international corporate affairs said the company plans to continue its productive partnerships with brands and governments to solve the complex counterfeiting issue, regardless of whether it remains a member of the International Anti-Counterfeiting Coalition. The spokeswoman added that the company will spare no expense in fighting counterfeit goods, WSJ reported.

International AntiCouterfeiting Coalition
Robert Barchiesi continues to be strongly backed by the board of the International Anti-Counterfeiting Coalition IACC

There are also concerns over how the coalition is run, with members noting the lack of consultation with members before Alibaba was allowed to join. The Associated Press also reported on 13 May over the conflict of interest involving the coalition's president Robert Barchiesi and Alibaba.

The AP reported that Barchiesi had stock in Alibaba, had close ties to an Alibaba executive and had used family members to help run the coalition. In a letter sent to members, the coalition said that the conflicts were not disclosed to the board "because of a weakness in our corporate governance procedures" and bot because of "inaction on Bob's part."

It staunchly defended Barchiesi in the letter. Barchiesi has been leading the IACC over the past eight years. The coalition said that under his leadership, its membership had nearly doubled and its programmes have expanded internationally.

The IACC has hired an independent firm to review, develop and recommend corporate governance measures, internal controls, policies and by-laws. In suspending the newly-created General Membership category, two other members, and The RealReal have been suspended.

"This will not affect our existing relationship or joint initiatives with them. We continue to stand by our inclusive approach to working with intermediaries," the letter added.

However, Deborah Greaves, a partner at Brutzkus Gubner law firm and a coalition board member from 2011 to 2013 said of the coalition: ""It's crossed the line ethically." She said she was not aware that the coalition's chief Barchiesi held stock in Alibaba until told by the AP. "Everything the IACC does that makes Alibaba look better potentially drives up the price of the stock. As a board member, I would never have bought stock in Alibaba."

The IACC board of directors however are backing Barchiesi, saying that his leadership has been exemplary and that he has their full confidence and support. The AP said that the IACC is scheduled to hold its spring conference in Orlando next week.

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Alibaba Executive Chairman Jack Ma in January. Reuters

Alibaba's founder Jack Ma is scheduled to speak at the conference. Its website says: "Join IACC and BASCAP [Business Action to Stop Counterfeiting and Piracy] in Orland to hear him [Ma] and other distinguished speakers discuss how intermediaries and rights-holders can collaborate to address counterfeiting and piracy."