Penn State to Probe Sex-Abuse Scandal
Source: sfgate.com
Penn State University, mired in a child sex-abuse scandal on campus, named a trustee to lead an investigation into the events and faces a possible downgrade of its debt rating by Moody‘s Investors Service.
The school yesterday appointed Merck & Co. Chief Executive Officer Ken Frazier to head the committee investigating the scandal and placed on leave Mike McQueary, an assistant coach who witnessed an alleged sexual assault on a boy in the locker rooms in 2002. Separately, Moody‘s put Penn State‘s Aa1 rating of about $1 billion in bonds on review while it considers the reputational and financial risk arising from the situation.
The Penn State board met in State College, Pennsylvania, after firing football coach Joe Paterno and President Graham B. Spanier on Nov. 9. Former defensive coordinator Jerry Sandusky, 67, was charged with the sexual assault of eight boys from 1994 to 2009. Athletic Director Tim Curley, 57, and Senior Vice President Gary Schultz, 62, were charged with perjury and failure to report the allegations. Paterno, the coach with the most wins in major college football history, wasn‘t charged.
McQueary told a grand jury that he witnessed Sandusky sexually attack a boy in the school‘s locker room showers in 2002. The university had said McQueary, who was a graduate assistant at the time, won‘t attend the team‘s final home game tomorrow after multiple threats were made against him.
"It became clear that under any circumstances he would not be able to function in a coaching role," Interim President Rodney Erickson said yesterday at a news conference.
The interim president said the university will add extra security at the game and appoint an ethics officer to report to him.
‘Do the Right Thing‘
"Never again should anyone at Penn State, regardless of their position, be scared to do the right thing," Erickson said.
The board yesterday also named Pennsylvania Education Secretary Ron Tomalis as vice chairman of the committee investigating the scandal. Both Frazier, a graduate of Penn State and Harvard Law School in Cambridge, Massachusetts, and Tomalis are trustees.
Frazier became Merck‘s CEO in January after joining the company in 1992 as general counsel. He made his name at Merck leading the company‘s legal defense against thousands of claims that its Vioxx painkiller drug caused heart attacks and strokes.
Death Row Case
Before joining Merck, when he was a partner at Philadelphia law firm Drinker Biddle & Reath LLP in 1991, Frazier and two colleagues took on the case of James Willie "Bo" Cochran, an Alabama man on death row for allegedly committing a 1976 murder. Frazier and his team, working on a pro-bono basis for a man they believed innocent, won a new trial for Cochran, who was acquitted 1997.
"For the university, its alumni and students, this has been a terribly sad time for us," Frazier said during a Nov. 10 meeting with analysts at the company‘s headquarters in Whitehouse Station, New Jersey. "The board took steps that I think were in best interests of the university in the long term."
Paterno has retained defense lawyer J. Sedwick Sollers to represent him, Paterno‘s son Scott said in a statement yesterday. Paterno would like to answer questions though he will not because of advice from Sollers, the statement said.
"Like everyone who has watched this story unfold, my father is experiencing a range of powerful emotions," Scott Paterno said. "He is absolutely distraught over what happened to the children and their families."
Source: sfgate.com
Penn State faces Moody’s rating downgrade
From: marketwatch.com
Sponsors also pull ads for college’s televised games, reports say
The scandal already has claimed the jobs of Penn State President Graham Spanier and legendary head coach Joe Paterno. In addition, athletic director Tim Curley and a university senior vice president, Gary Schultz, are facing charges of perjury and of failing to report the abuse.
It’s likely that the fallout still has a long way to go, though, as prospective donors and students digest the full extent of the wrongdoings in State College, Pa.; the university also faces possible lawsuits from Sandusky’s alleged victims. Moody’s said Penn State has about $1 billion of rated debt.
“Over the next several months, Moody’s will evaluate the potential scope of reputational and financial risk arising from these events,” the ratings agency said in a statement. “While the full impact of these increased risks will only unfold over a period of years, we will also assess the degree of near- and medium-term risks to determine whether to downgrade the current Aa1 rating.
“We will monitor possible emerging risks emanating from potential lawsuits/settlements, weaker student demand, declines in philanthropic support, changes in state relationship and significant management or governance changes,” according to Moody’s
Also Friday, The Wall Street Journal reported on its online edition that “about a half-dozen” advertisers have pulled ads from ESPN DIS +0.95% broadcasts. The report cited an unnamed media buyer as saying clients were being advised to move away from those games.
Late Thursday, Cars.com withdrew its sponsorship of ESPN’s broadcast of this weekend’s game between Penn State and University of Nebraska because of the allegations regarding Penn State, the Journal said.
An ESPN spokeswoman told MarketWatch that the network does not comment on individual advertiser activity.
Moody’s Investor Services said Friday that it has placed the revenue bond rating for Penn State University on review for possible downgrade.
The university is reeling from a scandal involving alleged sexual abuse of several children by a former leader of the football coaching staff, Jerry Sandusky, who was indicted and arrested last weekend. School authorities also are said to have known about the abuses but apparently did not intervene.
Source: marketwatch.com
