Last fall, as a candidate for attorney general, Kathleen Kane suggested that her rival David Freed was unfit to finish an investigation of the powerful Hershey Trust, once led by Freed's father-in-law. After Freed said he would appoint a special counsel to look into the erratic chocolate-fueled charity, Kane sassed: "I am an independent prosecutor, and Mr. Freed would have to hire one."
It was a good line, but that turns out to be all it was. Now that Attorney General Kane has bestowed a Hershey's kiss of a settlement on the trust, one wonders whether Mr. Freed's emissary could have done much worse.
Despite a 2½-year investigation and promises to the contrary, Kane has produced a "whitewash," as the Georgetown Public Policy Institute's Pablo Eisenberg put it last week in an Inquirer op-ed. The settlement, which absolves the charity's officials of wrongdoing in exchange for meager reforms, is so generous that the trust issued a glowing press release about it.
Founded by the pioneering candy magnate Milton Hershey and his wife more than a century ago, the $10 billion charity serves as a boarding school for 1,800 poor children in central Pennsylvania. Its latest encounter with state authorities began around the time The Inquirer's Bob Fernandez reported on its puzzling real estate investments.
In 2006, the trust purchased a faltering golf course next to the Hershey School's campus for $12 million, or two to three times the value indicated by its own appraisal. Ostensibly to provide a "buffer" for the campus, the purchase effectively bailed out dozens of local investors - one of whom was the chief executive of Hershey Co. and a member of the charity's board. The trust also put forward the "buffer" rationale to explain why it bought a nearby tourist attraction called Pumpkin World USA for $8.6 million, or more than nine times its assessed fair market value.
The trust spent another $5 million to add a clubhouse, restaurant, and bar to the golf course. Then, this year, it announced that it would close the course and seek approval to build student housing on the property.
For this brand of astute decision-making, trust board members were paid at least $95,000 annually. LeRoy Zimmerman, the former attorney general who was the charity's chairman from 2006 through 2011, was paid as much as half a million dollars a year for his service on Hershey-related boards.
The recently unveiled settlement - the third between the Attorney General's Office and the charity in 11 years - wanly limits board members' yearly stipends to $30,000, and their membership to two Hershey boards. It also requires the trust to give the attorney general "written notice" of any large real estate purchases. In addition, board members must disclose conflicts of interest and make their "best efforts" to ensure that some charity officials know something about education, investment, and (cough) real estate. Perhaps the most merciless punishment imposed here is that henceforward, trust officials must fly coach.
In announcing the settlement, Kane proclaimed that she looked forward to a "new era" in the state's relationship with Hershey. Not very long ago, so did we.