The Pennsylvania attorney general's office confirmed Wednesday it is investigating actions taken by the trust that runs the Milton Hershey School.
Nils Frederiksen, spokesman for Attorney General Tom Corbett, said the office started its probe into the Hershey Trust after receiving information about an acquisition made by the trust.
Frederiksen declined to say whether the investigation centered on the trust’s 2006 purchase of the Wren Dale Golf Club.
A front-page story in Sunday’s Philadelphia Inquirer raised questions regarding the price the trust paid for the Derry Twp. property and its contention that it would provide a buffer zone for the school from possible development.
The trust paid $12 million for Wren Dale in 2006. In 2008, it transferred its management to Hershey Entertainment & Resorts Co., which now operates it as Hershey Links.
Questions also emerged as to whether the sale was made to bail out Wren Dale’s investors. Then-Hershey Co. CEO Richard Lenny was among the investors but did not disclose that information to the trust board prior to purchase, reports said.
Frederiksen said the probe was not prompted by the recent media reports.
"An investigation was initiated last month based on information we had received [at that time]," he said.
The Milton Hershey School, the nation’s largest residential school for disadvantaged children, is funded by interest and dividends from the Hershey Trust Co. Its eight-member board governs roughly $8 billion in assets that include Hershey Entertainment & Resorts Co., operator of Hersheypark, and a controlling interest in The Hershey Co., one of the world’s largest candymakers.
Connie McNamara, vice president of communications for the Derry Twp.-based school, said it has not received any official notification of an investigation. She said it’s common for the school to receive requests for information from the attorney general.
Trust Chairman LeRoy Zimmerman declined comment, but provided a written statement: "In addition to filing a comprehensive annual report with the office, we are always forthcoming with any and all intervening requests for information they may have. We believe the facts will continue to support the conclusion that we have acted appropriately."
Under a 2001 agreement, Frederiksen said the trust is required to inform the attorney general’s office when it sells certain assets. The trust doesn’t have to inform the state of its purchases, including real estate.
Frederiksen said the investigation is being conducted by the office’s charitable trust division.
The Hershey Trust has come under fire in recent months over several issues, including board member compensation and the closing of a facility for transitioning new students that had cost the school millions.
McNamara reiterated the trust’s stance that the golf course had been purchased as a buffer for an area that was being developed as student housing. She also said the $9 million price of the land had been fairly negotiated with the property owners.
When asked about Lenny’s involvement, McNamara has said the CEO did not vote on the purchase. The agreement was approved by a three-person executive committee consisting of Zimmerman, former Hershey Trust chairman Anthony J. Colistra and Harrisburg-area lawyer Velma Redmond. Colistra is now president of the Milton Hershey School.
McNamara said Wednesday it’s common for the board to use an executive committee.
In 2001, then-Attorney General Mike Fisher conducted an investigation of the trust, including plans to sell the Hershey Co. It lasted 18 months and resulted in changes at the school and a reconstitution of the board that governs the trust.
Corbett, the Republican nominee for governor, has been criticized for what detractors call a lack of interest in the proceedings of the Hershey Trust.
"Tom Corbett, in what he is hoping is his last month in office as attorney general, finally sees fit to investigate six years of asset misuse, children being hurt and cronyism by his close political allies just when the media exposed this," said Ric Fouad, a vocal alumnus who heads the group Protect Hershey’s Children. "His self-serving conduct couldn’t possibly be more transparent."
Frederiksen said the office has been responsive to concerns regarding the trust but doesn’t have the power to directly intervene in charitable operations.
"Our office does not micromanage charities," he said. "We’re there to address problems or complaints when they come up."
Instead, it will present any findings to the Orphans' Court. The court has "the final determination of what is appropriate or not," Frederiksen said.