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Topic: Pearson Foundation Repeatedly Breaks the Law
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Jerry P. Becker

Posts: 13,815
Registered: 12/3/04
Pearson Foundation Repeatedly Breaks the Law
Posted: Jul 7, 2014 3:34 PM
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From The New York Times, December 12, 2013. See
http://www.nytimes.com/2013/12/13/nyregion/educational-publishers-charity-accused-of-seeking-profits-will-pay-millions.html?_r=0
; See, also, Diane Ravitch, May 29, 2014 --
http://dianeravitch.net/2014/05/29/mercedes-schneider-on-the-warm-relationship-between-gates-and-pearson/
; Prof. Ravitch also calls attention to the video by high school
teacher, Joshua Katz -- See
https://www.youtube.com/watch?v=BnC6IABJXOI
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Educational Publisher's Charity, Accused of Seeking Profits, Will Pay Millions

By Javier C. Hernandez

The Pearson Foundation, the charitable arm of one of the nation's
largest educational publishers, will pay $7.7 million to settle
accusations that it repeatedly broke New York State law by assisting
in for-profit ventures.

An inquiry by Eric T. Schneiderman, the New York State attorney
general, found that the foundation had helped develop products for
its corporate parent, including course materials and software. The
investigation also showed that the foundation had helped woo clients
to Pearson's business side by paying their way to education
conferences that were attended by its employees.

Under the terms of the agreement to be announced on Friday, the
money, aside from $200,000 in legal expenses, will be directed to
100Kin10, a national effort led by a foundation, the Carnegie
Corporation, to train more teachers in high-demand areas, including
science, technology, engineering and math.

"The fact is that Pearson is a for-profit corporation, and they are
prohibited by law from using charitable funds to promote and develop
for-profit products," Mr. Schneiderman said in a statement. "I'm
pleased that this settlement will direct millions of dollars back to
where they belong."

Officials at Pearson and the foundation defended their work.

"We have always acted with the best intentions and complied with the
law," they said, in a joint statement. "However, we recognize there
were times when the governance of the foundation and its relationship
with Pearson could have been clearer and more transparent."

The case shed a light on the competitive world of educational testing
and technology, which Pearson has come to dominate. As federal and
state leaders work to overhaul struggling schools by raising academic
standards, educational companies are rushing to secure lucrative
contracts in testing, textbooks and software.

The inquiry by the attorney general focused on Pearson's attempts to
develop a suite of products around the Common Core, a new and more
rigorous set of academic standards that has been adopted by 45 states
and the District of Columbia.

Around 2010, Pearson began financing an effort through its foundation
to develop courses based on the Common Core. The attorney general's
report said Pearson had hoped to use its charity to win endorsements
and donations from a "prominent foundation." That group appears to be
the Bill and Melinda Gates Foundation.

"Pearson Inc. executives believed that branding their courses by
association with the prominent foundation would enhance Pearson's
reputation with policy makers and the education community," a release
accompanying the attorney general's report said.

Indeed, in April 2011, the Pearson Foundation and the Gates
Foundation announced they would work together to create 24 new online
reading and math courses aligned with the Common Core. [See
http://www.nytimes.com/2011/04/28/education/28gates.html ]

Pearson executives believed the courses could later be sold
commercially, the report said, and predicted potential profits of
tens of millions of dollars. After Mr. Schneiderman's office began
its investigation, the Pearson Foundation sold the courses to Pearson
for $15.1 million.

The attorney general's office also examined a series of education
conferences sponsored by the Pearson Foundation, which paid for
school officials to meet their foreign counterparts in places like
Helsinki and Singapore.

The trips were made public after a series of columns in The New York
Times, which detailed the expensive hotels and meetings with
corporate executives that were staples of the experience.

Several school officials who went on the trips represented education
departments that had contracts with Pearson. The investigation did
not determine whether those officials had awarded any new contracts
based on any improper influence. But the report found that executives
from other companies were not invited to attend, giving Pearson's
corporate side a clear advantage.

The attorney general portrayed a culture at Pearson in which the
lines between business and charity were often blurred. Pearson
remains the largest donor to the Pearson Foundation, and the staff of
the foundation included several Pearson employees. The board was made
up entirely of Pearson executives until 2012.

As part of the agreement, the foundation said it would alter its
governing structure by appointing three board members to review any
financial transactions that might benefit the business side. The
foundation also pledged to bar Pearson executives, in most instances,
from attending its education conferences, and said it would not
feature Pearson products at such meetings.
------------------------------------------------------
A version of this article appears in print on December 13, 2013, on
page A32 of the New York edition with the headline: Educational
Publisher's Charity, Accused of Seeking Profits, Will Pay Millions.
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