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Hershey kisses state investigation goodbye

By Laurie Bennett

May 28, 2013 at 6:21am

When Kathleen Kane won the Pennsylvania state attorney general election last year, many hoped that the Hershey Trust would get some long-overdue scrutiny.

The trust, majority stockholder in the Hershey chocolate company, owner of Hershey Entertainment and Resorts, and overseer of the Hershey School for disadvantaged children, had a well-established pattern of political entanglements and questionable expenditures.

Hershey logo

Its overlapping boards, shown in the Muckety map above, created all sorts of potential conflicts.

The charity’s spending habits were examined in 2010 by the Philadelphia Inquirer, which found a litany of troubling practices, including:

* Prominent Republicans, including former Gov. Tom Ridge and Former Attorney General Leo Zimmerman, received a combined $1 million a year to serve on three boards connected with the school.

* The school paid $12 million - two to three times the appraised value - for a money-losing golf course in 2006. The deal bailed out club investors, who included Richard H. Lenny, then-CEO of the Hershey Company.

* After buying a roadside attraction called Pumpkin World USA for $8.6 million, the Hershey Trust leased the business to its former owners. There were a couple of wrinkles in this deal: The price was more than nine times higher than the property’s fair-market value, and another party had planned to develop part of the land as a competitor to Hersheypark.

Robert Reese, a former board member and grandson of the creator of Reese’s peanut-butter cups, filed a court petition accusing the trust of misusing assets.

The attorney general race became a microcosm of the issues swirling around the trust. Kane promised closer scrutiny of charities, drawing strong support from Reese. Her opponent, David Freed, is the son-in-law of Leroy S. Zimmerman, who chaired the trust.

Kane wound up a prolonged investigation of the trust earlier this month, announcing a “reform agreement” with the organization. The pact limits overlapping board memberships and lowers compensation for the members.

In an editorial on Sunday, the Inquirer called the agreement a “sweet nothing.”

“Despite a 2½-year investigation and promises to the contrary, Kane has produced a ‘whitewash,’” the paper wrote.

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