A Familiar Face: Why Ex-Schools Chancellor Joel Klein Is Murdoch's Fixer

Wednesday, July 20, 2011

Former New York City Schools Chancellor Joel Klein sat behind Rupert Murdoch and his son, James, as the media mogul and his protege were being grilled by parliament Tuesday.

The familiar face to New Yorkers who joined News Corp. last year is spearheading an internal review of the embattled company facing allegations of phone hacking by its now-defunct News of the World tabloid.

Here are five reasons the former chancellor was likely tapped to lead the internal review:

  • He was the former head of the U.S. Justice Department's anti-trust unit under the Clinton Administration, giving him a rare view of corporations and government. He was in charge of the case to break up Microsoft in the 1990s.

  • Murdoch trusts Klein. He appointed Klein to the board of News Corp., along with making him an executive vice president in charge of education technology ventures in November 2010.

  • Klein is still new to News Corp. He and Murdoch aren't close friends, but are acquaintances who got to know each other better through Murdoch's donations to the city's public schools. He's independent enough to be trusted in this role, according to Rodgin Cohen, senior chairman at Sullivan and Cromwell, who was heavily involved in counseling banks during the financial crisis: "In a crisis situation where the client feels and probably is being besieged, you very much need somebody with sound and whole judgment and is unafraid to tell the client what the realities of the situation are."

  • The scandal involves a deep knowledge of government. Though the main investigation focuses on British tabloid reporters, News Corp. and its executives could face a potential prosecution under the U.S. Foreign Corrupt Practices Act, if certain laws were broken overseas. It's already been reported that News Corp. employees allegedly paid $170,000 to the British police to obtain information not available to the public to give the company's tabloid reporters a competitive edge. Because some of the allegations against News Corp. are several years old, the company would have had to fully disclose its potential risks in filings with the Securities and Exchange Commission to inform its stockholders. And the FBI is probing allegations that News Corp journalists hacked into the voice mail of September 11, 2001, victims and their families.

  • However, there are limits to Klein's role. He's conducting an internal review and everyone reporting to him is an employee of News Corp. The company set up a new management and standards committee in London, but it also reports to Klein, and therefore management. When companies are in trouble, often their independent directors will conduct their own investigation (separate from management) with outside law firms that they hire specifically to ensure objectivity. This week, it was revealed that News Corp.'s independent directors retained the New York law firm Debevoise & Plimpton. It's unclear exactly what the firm will be doing. Attorney Lanny Davis, an expert in crisis management who was special counsel to former President Bill Clinton, said of News Corp. that "the only way to get this crisis behind them is transparency."


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Comments [13]

Sophie from Poughkeepsie, NY

Oh, all these people travel in the same circles. Why is anyone surprised?

Jul. 20 2011 07:21 PM
Michael Fiorillo

It's an evil gnome (Klein), working for a ghoul (Murdoch).

After all, what could be more ghoulish than hacking the cell phone of a dead girl, deleting messages so that the voicemail would not fill up?

These are truly repulsive, destructive people.

Jul. 20 2011 03:18 PM

Joel Klein is an itinerant lackey to billionaires--first Mike Bloomberg, now Rupert Murdoch.

Jul. 20 2011 02:33 PM

For years Joel Klein appeared on Brian Lehrer's show and never a glove was laid on him as he put forth his agenda and continued the fraud of privatizing part of what Daniel P.Moynihan once called the greatest public school system on the face of the earth. London has nothing on New York when it comes to media-government coziness.

Jul. 20 2011 02:05 PM

To: nuff said from hewlett ny
Please provide a link to your source.

Murdoch wants to cash-in using federal no-bid education contracts at the expense of students and taxpayers.The FBI and US Department of Education must investigate to determine if Klein provided Murdoch inside information about Wireless Generation before the $360 million dollar purchase by News Corp.

Jul. 20 2011 01:58 PM
nuff said from hewlett ny

Shouldn't you also be looking at when Newspapers and reporters are actually being paid to promote an agenda and print op-eds that are are really political statements that are bought and paid for? The most egregious appears to be "Education Reform". The NY Times reported in Mar 2011 that many reporters were being paid as much as $500,000/y­ear by Bloomberg and/or affiliated entities. If that is true are the newspapers­, in particular the NY Post and NY Daily News, still entitled to site source confidenti­alityu et al for paid political op-eds? At what point will the Times itself finish the coverage of this subject now that the corruption in the Murdoch papers is on the front pages? Is there criminalit­y in paying newspapers for stories or should there be disclaimer­s attached identifyin­g who is really responsibl­e for the storry? At this point could the cozy relationsh­ip between Bloomberg, Murdoch, Zuckerman, Gates, Tisch and Michele Rhee end up being a scandal of epic proportion­s or are their actions legal? Is it even legal to pay reorters that work for a newspaper, it sure seems like an ethics violation? Have the reporters classified themselves as independen­t contractor­s? If so , who is paying the papers , and who and how much is being paid to carry the story?Thes­e are questions I hope you will explore in your follow-up articles--­-just a thought

Jul. 20 2011 10:56 AM
Akademos from NYC

That's 'Akademos'.

Jul. 20 2011 10:55 AM

And what about the $24 million Wireless Generation no-bid contract with NY public schools? Shortly after it was signed, Joel Klein left for his new position with News Corp., who (gulp) own Wireless Generation.

Jul. 20 2011 10:40 AM
akademos from NYC

Fix: ' "not unafraid" to tell the client what the realities of the situation are.'

Jul. 20 2011 09:57 AM

So much of that hearing turned my stomach. There was nothing objective about any of it and every single thing that occurred has to be questioned for its authenticity. Even the pie throwing - if ever a distracting manuever was played, that was it. TV news shows covered the pie throwing ad nauseum and somehow forgot to report on the purpose of the questioning. I know I'm off topic here, sorry, just so frustrated.

Jul. 20 2011 09:39 AM
Lloyd from Manhattan

Not much confidence in Klein's objectivity. He sat right behind Murdoch pere et fils while they denied responsibility for anything. Klein sat right behind Rupert Murdoch when he denied knowing about milliions of pounds of payoffs his company made. How can Klein expect to hear the truth from people whose Fox News shamelessly calls itself "fair and balanced"?

Jul. 20 2011 09:03 AM
julia Willebrand

Yup. News Corp is paying Klein to be "objective". Who could question that?

Jul. 20 2011 09:03 AM
Hugh from CT

I think number 5 is important to stress. Klein is on Murdoch's payroll. What do you mean by "independent?"

How is he "objective?" What have I missed here?

Jul. 20 2011 08:41 AM

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