School testing firm faces inquiry on free trips for officials
NEW YORK — New York State's attorney general is investigating whether the Pearson Foundation, the nonprofit arm of one of the nation's largest educational publishers, acted improperly to influence state education officials by paying for overseas trips and other perks.
The office of the attorney general, Eric T. Schneiderman, issued subpoenas this week to the foundation and to Pearson Education seeking documents and information related to their activities with state education officials, including at least four education conferences — in London, Helsinki, Singapore and Rio de Janeiro — since 2008, according to people familiar with the investigation.
At issue is whether the activities of the tax-exempt Pearson Foundation, which is prohibited by state law from engaging in undisclosed lobbying, were used to benefit Pearson Education, a for-profit company, according to these people. Pearson sells standardized tests, packaged curriculums and Prentice Hall textbooks.
Specifically, the attorney general's investigation is looking at whether foundation employees improperly sought to influence state officials or procurement processes to obtain lucrative state contracts, and whether the employees failed to disclose lobbying activities in annual filings with the attorney general's office. The inquiry follows two columns about the conferences by Michael Winerip in The New York Times this fall.
If there is evidence that the foundation engaged in substantial lobbying and failed to disclose it, it could face fines and lose its tax-exempt status under state and federal laws. No subpoenas were issued to state education officials, the people with knowledge of the matter said.
In a statement Wednesday, a Pearson Education spokeswoman said, "As a matter of policy, Pearson does not comment on government inquiries or potential legal proceedings." A spokesman said the foundation "does not currently have a comment" about the inquiry, and added, "nor is it our practice to offer comment on legal proceedings or government inquiries."
In New York, Pearson Education most recently won a five-year, $32 million contract to administer state tests, and it maintains a $1 million contract for testing services with the State Education Department, according to state records. The last contract was awarded after David M. Steiner, then the state education commissioner, attended a conference in London in June 2010 that was organized by the Council of Chief State School Officers and underwritten by the Pearson Foundation.
Steiner, currently a dean and professor at Hunter College, said on Wednesday that his trip had been cleared by an ethics officer at the Education Department. "I am sure that there was no sales pitch," he said, adding that "given the many attendees and presentations, I cannot be sure that there was nobody speaking at some point in the conference who was from Pearson rather than the Pearson Foundation or other organizations."
But Steiner said "there is zero link" between his trip and the state's subsequent contract with Pearson. He said that he had no direct involvement in the decision to select Pearson and that his role was to report the recommendation to hire Pearson, made by the department's staff, to the Board of Regents. "I followed exactly our rules and protocols," he said. "I still believe it was a useful and informative and professional activity that had been properly cleared."
Tom Dunn, a spokesman for the Education Department, said that state officials selected Pearson after a competitive bidding process in which the department's staff members scored and ranked each bid. He added that the attorney general and the state comptroller both reviewed and approved the contract.
"Our contracting process is always followed to the letter," he said, "and the Pearson contract was no exception."
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