News Column

AG ends investigation of National Museum of Industrial History

July 18, 2014

By Matt Assad, The Morning Call (Allentown, Pa.)



July 18--The state attorney general's office has concluded its investigation into the finances of the National Museum of Industrial History in Bethlehem and construction on the long-overdue project could begin this fall, according to museum interim CEO L. Charles Marcon.

Marcon said Friday it could take up to two weeks for Attorney General Kathleen Kane's office to issue its recommendations, and while its findings will likely not seek to close the museum or turn its operation over to another organization, the museum board will not escape unscathed.

Several museum board members met Wednesday in Bethlehem with state investigators and came away with the confidence that museum construction could begin as early as September, once the two sides negotiate the changes that must be made in museum operations.

"We don't have a clean bill of health, but it was a good meeting and we're encouraged that we'll be able to move forward," Marcon said. "The goal is to be able to make a joint statement in the next two weeks that satisfies the (attorney general) and the museum. We all want to put this behind us."

Marcon would not discuss what investigators said is keeping the museum from a "clean bill of health." However, when Northampton County District Attorney John Morganelli forwarded his grand jury report to Kane's office in January, his primary target was longtime museum CEO Stephen Donches.

Morganelli's grand jury investigation questions why after 17 years the museum hadn't opened, despite raising $17 million. The report found no criminal wrongdoing but criticized the museum board for squandering the money and its "almost blind confidence" in Donches, a former Bethlehem Steel executive.

The report alleged that Donches had been paid nearly $2.5 million in salary and benefits over the last dozen years. In the wake of the report, Donches resigned his title and his $180,000-a-year salary was cut in half. Marcon was named unpaid interim CEO.

Marcon would not comment on whether Donches' reduced salary continues to be a sticking point with investigators, and Morganelli said he has not discussed the matter with Kane.

"We all want this to become something that puts those donations to good use. We all want the museum to be built," Morganelli said. "The grand jury did not make any suggestion to the (attorney general) when it forwarded the case, but if there was anything to take away from the report, it was the role of Mr. Donches."

Donches has commented on the matter only once. In a written statement in March, he explained that his salary was comparable to other similar positions, that he made tremendous progress in building the museum through two recessions, and never mislead donors about how their money would be used.

Though he agreed to a salary reduction, he's not commented since.

Marcon said if the museum board and investigators can agree on a joint plan in the next two weeks, construction to complete the first floor of the museum could begin and it could be open in late 2015 or early 2016.

Though the museum suspended its fundraising while the investigation proceeds, it did receive a $3 million anonymous donation in June that would enable the project to move forward with converting the 1913 Bethlehem Steel electric repair shop into a museum commemorating the industrial revolution that the steelmaker helped bring about.

The museum was proposed in the 1990s to be the anchor of an entertainment district on the former Steel plant in south Bethlehem. But with funds short, it has since been scaled back to a fraction of the original plan. The property is now anchored by the Sands casino, which has helped generate hundreds of millions of dollars in redevelopment.

That includes the ArtsQuest Center at SteelStacks, the PBS39 Media and Education Center, the Bethlehem Landing visitors center, stores, restaurants, a hotel and concert venues wrapped around public plazas and parking lots.

The museum has since downsized its plans and broken it into phases, tackling the first floor in its first phase. It will include artifacts from the Smithsonian Institution, including its collection from the Centennial Exhibition of 1876 in Philadelphia, as well as former Steel artifacts.

matthew.assad@mcall.com

610-820-6691

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