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Grand jury investigating fate of Bethlehem Steel museum donations

17 yrs and $19 million later, but no museum

Grand Jury: head of Bethlehem Steel museum should be removed

EASTON, Pa. - A grand jury has been investigating why money was raised for a Bethlehem Steel museum, but there is no museum.

Bethlehem Steel wanted a museum, so it donated a building, and a board was appointed to make it happen, but after 17 years and as much as $19 million in fundraising, there is no museum.

Now, a Northampton County grand jury is recommending Stephen G. Donches, president and CEO of the National Museum of Industrial History, resign or be fired and the Pennsylvania Attorney General's office step in.

The grand jury could find nothing criminal but said efforts to build a museum on the old Bethlehem Steel site were not handled properly and donations for the project went mainly to operational costs and salaries for former Bethlehem Steel employees.

"Do I think that when they started this thing they were well intentioned? Yes, I do," said Northampton County District Attorney John Morganelli when he announced the grand jury report Thursday. "What the grand jury did was they put a big spotlight on this operation."

After a yearlong forensic investigation, the grand jury is recommending Donches resign or be fired and that the board consider taking civil action against Donches for failing to turn an estimated $19 million of donations into a museum.

"Here we are $19 million and 17 years later, and quite frankly the building was given to them day one and to put a new roof on and do the exterior and to move the artifacts. That's not much work done in 17 years," Morganelli said.

The grand jury said only $3 million was spent on repairing a building donated for the museum on the former Bethlehem Steel site. The grand jury found the rest of the public and private funds were spent on operational costs and salaries.

"When Mr. Houser, the auditor, looked at where all the money went over 17 years, the number one expenditure was for Stephen G. Donches, who raked in $2.4 million between 2002 and 2012 of both salary and benefits, his pension and health care," said Morganelli.

The grand jury also recommended the board be evaluated for conflicts of interest as some members reportedly did business with the project. The grand jury also asks that the report be sent to the Pennsylvania Attorney General's office to see if the nonprofit museum should be involuntarily dissolved.

In addition, the grand jury is asking legislators to consider laws that would protect the public from donating to nonprofit organizations that "exist primarily for the benefit of the officers and their business friends and who fail within a reasonable period of time to complete the nonprofit mission."

Again, the grand jury said there is nothing criminal about what happened but is recommending action.

"The public can make their own judgments and is it reasonable for some people to conclude, as the grand jury mentioned, that this became a resting place for soon-to-be unemployed Bethlehem Steel guys who could continue to draw a salary after losing their jobs and a pension and more benefits? Yeah, I think the grand jury came to that conclusion to a large degree," Morganelli added.

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Allentown, PA 18102


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