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Murdoch Education Affiliate's $2.7 Million Consulting Contract Approved By New York City

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The New York City Comptroller’s office has approved a $2.7 million consulting contract with Wireless Generation -- an education technology company purchased by Rupert Murdoch last November -- The Huffington Post has learned.

Wireless Generation, a company that tracks student performance on tests, is an independent subsidiary of News Corporation, the parent company of the embattled News of the World and the Wall Street Journal.

The news comes as Murdoch's involvement in the News of the World hacking scandal is raising red flags about his involvement and interest in the education sector.

But Wireless Generation, which already has access to New York City student data, stresses that it's an independent subsidiary, Joan Lebow, a spokeswoman wrote in a statement. She said:

Wireless Generation has absolutely no involvement in the events in question – which took place years before the transaction with News Corp. Wireless Generation is an independent subsidiary and does not share student data with News Corp. or any other News Corp. subsidiary or entity. As for our own business, especially as it relates to data security and personal privacy, we have a long and successful track record of safeguarding user data, in accordance with the highest standards and industry regulations, in New York and nationwide.

Murdoch's first general move in the education sector was in November 2010, when he hired Joel Klein, the marathon chancellor of New York City's schools, to lead his education ventures. His next move came a few weeks later with the acquisition of 90 percent of Wireless Generation for about $360 million.

“When it comes to K through 12 education, we see a $500 billion sector in the U.S. alone that is waiting desperately to be transformed by big breakthroughs that extend the reach of great teaching,” Murdoch said in a statement at the time, according to GothamSchools, an independent blog that covers New York City schools.

He also discussed education at his G8 speech in Paris this May. "Our schools remain the last holdout from the digital revolution," he said, according to the Wall Street Journal, which noted at the time that "Murdoch's comments come as his own company joins an expanding group of corporate investors looking to invest in technology that helps teachers teach and students learn."

The recently-approved contract first surfaced in October 2010, when the city's Panel for Educational Policy voted to extend the consulting contract of six employees in running the "School of One," a Wireless Generation-partnered program that customizes teaching with an online component.

In mid-June, the city's comptroller John Liu rejected the contract, saying it was incomplete. According to Liu's spokesman Mike Loughran, the application package lacked some background information requested by a New Jersey attorney general, as well as a letter from Klein, saying he recused himself to avoid a conflict of interest.

When last reached before the time of publication, Loughran said the recusal either involved Klein saying he would "not be directly involved with this company [Wireless Generation]" or that "he had recused himself in the past from the rewarding of this specific contract."

"The comptroller rejected the contract on the basis that the package was incomplete when it was submitted," Loughran told HuffPost. Once the full package was submitted, the comptroller approved the contract. "At this point, the comptroller’s Bureau of Contract Administration is continuing to closely monitor the contract as it proceeds," he added.

Leonie Haimson, who heads Class Size Matters, a nonprofit organization that advocates for smaller class sizes, is circulating a petition to encourage the New York State comptroller's office and other authorizing agencies to revoke another, larger contract awarded to Wireless Generation: a $27 million no-bid contract from the state, derived from money it won through the federal Race to the Top competition.

"With Rupert Murdoch and the widening scandal of News Corp., any contract with a company that’s owned by Murdoch should have to undergo especially close scrutiny," Haimson said.

The contract raised alarm when the Daily News first learned of its approval, because Klein was intimately involved in crafting the application that landed the RTTT funding in the first place.

The New York State comptroller has until early fall to reject the contract. "It's still under review," Mark Johnson, a spokesman for the comptroller, told HuffPost. He said he can't comment on specifics, but that the review includes an assessment of "vendor responsibility," which could include a probe of a division's parent company. "It looks at a company's track record," he said, adding that the timeline could be expanded if more information is needed.

Wireless Generation insisted that it is entirely separate from Murdoch's seamier acquisitions. "There is no involvement between Wireless Generation and that scandal," Lebow told HuffPost. "There is nothing to do with it."

Still, Klein's critics said they worry about the funds. Murdoch appointed Klein, a former trust-busting attorney, to advise News Corp.'s handling of the News of the World episode.

"This is a corporation that we are seeing has no sense of what the appropriate boundaries are in corporate behavior," said Susan Lerner, president of Common Cause New York, a nonpartisan group that advocates for citizen participation in government. "What impact that has on Wireless Generation ... we just don’t yet know."

It is unclear whether the scandal and its aftermath will taint Murdoch's education ventures. "I haven’t a clue whether it’ll affect his bottom line or education initiatives," said Tim Knowles, director of the University of Chicago's Urban Education Institute. "It’ll affect his reputation: There will be fewer people who want to hear from Rupert Murdoch on questions that run right to the heart of student learning."

Jack Lule, director of Lehigh University's Globalization and Social Change Initiative, said Murdoch had little clout in education from the start. "He had no credibility in education because of his performance in journalism, and because he's into his businesses to make money. People looking at education feel that he's doing the same thing," he said.

"Not only are there privacy concerns provoked by all the revelations recently, but there’s also the fact that he’s trying to make a buck off our kids and he’s been very open about it," Haimson said.

John Dean, who worked as Richard Nixon's White House counsel and became involved in Nixon's ethical breaches and subsequent cover-up, compared the current Murdoch scandal to Watergate.

"He's got a dandy scandal on his hands. It's going to play out a bit longer," Dean told HuffPost. "I don’t know how it'll specifically affect any of his companies other than the fact that it's not going to be the same tomorrow as it was yesterday."

Disclosure: Resmovits has previously worked as an intern at the Wall Street Journal, owned by Murdoch's News Corporation.

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