Facing negotiations with the Pennsylvania Office of Attorney General after a yearlong investigation, the $7.5 billion Hershey charity for disadvantaged children has hired as its general counsel Philadelphia lawyer John H. Estey, a former chairman of the Delaware River Port Authority and chief of staff for Ed Rendell when he was Pennsylvania's governor.
Estey's appointment comes as the charitable section of the Office of Attorney General has concluded the fact-finding part of its investigation and is said to be seeking changes at one of the nation's wealthiest charities. Any changes would have to be approved by the board of the Hershey Trust Co., the state-chartered institution that manages Hershey's billions of dollars in assets.
As general counsel for the trust company, Estey would lead the negotiations. The trust company also could reject suggestions.
Estey gives Democratic credentials to the Hershey Trust Co.'s board, which has as its chairman the powerful Republican LeRoy S. Zimmerman. Rendell said last week that Estey was an "extraordinarily competent individual."
Estey replaced Mary Louise Porter, who was fired by the trust company board, according to a source with knowledge of the decision who is not authorized to discuss it.
Porter is a former corporate lawyer with the Hershey chocolate company. She would not comment on her departure.
Hershey Trust Co. spokeswoman Connie McNamara said Porter resigned Sept. 21 and was not fired. The company said Estey was appointed Sept. 22. Estey is a partner with the Philadelphia law firm Ballard Spahr L.L.P. McNamara said in an e-mail that Estey holds the positions of acting general counsel, acting corporate secretary, and acting chief compliance office at the Hershey Trust Co.
The Hershey Trust Co. did not respond to questions regarding her departure, noting that Estey was appointed Sept. 22. Estey is a partner with the Philadelphia law firm Ballard Spahr L.L.P.
Hershey Trust Co. spokeswoman Connie McNamara said in an e-mail that Estey holds the positions of acting general counsel, acting corporate secretary, and acting chief compliance office at the Hershey Trust Co.
"Estey's appointment is temporary, and the board intends to move forward quickly to fill the positions on a permanent basis. Estey is not a candidate for the positions on a permanent basis," McNamara wrote.
Porter retained her positions as general counsel and corporate secretary at the Milton Hershey School, McNamara said. Milton and Catherine Hershey bequeathed their fortune to the Milton Hershey School, founded for orphan boys in 1909. The school now enrolls boys and girls from impoverished families.
A recent issue for the Hershey Trust Co. board was whether the charity should buy and redevelop with school funds the historic Hershey chocolate factory in downtown Hershey. The factory is ending candy production next year. The factory project was the subject of an Inquirer story in June.
The Inquirer disclosed that the project could divert $100 million from the school and its beneficiaries, disadvantaged children. The Hershey chocolate company recently sold the old factory to a private investor. McNamara said in a statement that a review of the factory project, "under the terms presented," did not meet fiduciary obligations to the school.
The AG investigation remains ongoing.
In the midst of his successful gubernatorial campaign last year, then-Attorney General Tom Corbett launched the investigation into the Hershey charity as The Inquirer was publishing a series of stories on questionable expenditures with school funds.
An Inquirer story in October 2010 disclosed the purchase of a money-losing private golf course north of Hershey for $12 million, or two to three times the charity's own appraised value of the golf course.
Though it was purchased as private "buffer land" for student safety, the trust for the Hershey School then built a $5 million restaurant/bar on the golf course, which is now open to the public.
Corbett and Zimmerman, both Republicans, are considered friends and political allies. After winning the governor's race in November, Corbett held a dinner in January for donors to his inaugural gala at the Hotel Hershey. The luxury hotel is owned by a for-profit company, Hershey Entertainment & Resort Co., that itself is owned by the Hershey charity. Zimmerman is chairman of the Hershey Entertainment board.
Once governor, Corbett appointed Linda Kelly, a former federal prosecutor, to complete his unexpired second term as attorney general.
The investigation into the Hershey charity expanded after Robert Reese, the former top executive at the Hershey Trust Co. and a board member, filed a petition in Dauphin County Orphans Court claiming abuse of charitable assets. Reese later dropped the petition, claiming health reasons.
The Milton Hershey School and the Hershey Trust Co. said in court filings that Reese was vindictive because he was not reelected to the trust company's board in February.
On his website at Ballard Spahr, Estey lists business and finance, government relations, regulatory affairs and contracting, higher education, and infrastructure as practice areas. Estey did not return phone calls seeking an interview.
Rendell said in a voice mail, "I don't know anything about his hiring at Hershey, but John Estey is an extraordinarily competent individual. . . . There is no one quite like David L. Cohen [Rendell's chief of staff when he was Philadelphia mayor in the 1990s], but John comes close in his ability to multitask. . . . He would be a terrific person for any organization."
Find more coverage of the Hershey Trust at www.philly.com/hersheyEndText