- Associated Press - Monday, February 10, 2014

PIERRE, S.D. (AP) - South Dakota lawmakers on Monday ordered a legislative investigation of the state’s economic development agency and its involvement in financing a failed beef packing plant.

The Senate voted 33-1 to pass the resolution, which was sponsored by House and Senate leaders of both political parties. The House last week approved the measure, which tells the Legislature’s Government Operations and Audit Committee to conduct the investigation.

The committee will hold hearings after several outside reviews are completed of the Governor’s Office of Economic Development. Gov. Dennis Daugaard said he ordered those outside reviews after finding out about alleged misconduct in GOED before he took office.

Two reviews were completed two weeks ago, finding some problems in the agency’s financial control procedures and its handling of documents. A detailed audit of the office is expected soon, and federal officials also are investigating.

Sen. Larry Tidemann, R-Brookings, the chamber’s head of the Government Operations and Audit Committee, said the panel will meet as soon as the Department of Legislative Audit issues its report.

Earlier Monday, a House committee rejected a measure sponsored by members of the Democratic minority that would have set up a special committee to conduct a three-year review of economic development programs. Republicans said there’s no need for a study other than the one to be done by the Government Operations and Audit Committee.

A state investigation last fall found that former economic development director Richard Benda had double-billed the state for travel and that part of a state grant for the beef plant had been improperly diverted.

Benda left his government post and accepted a loan monitor job with SDRC Inc., a privately held Aberdeen company that for years contracted with GOED. The company recruited foreign investors for the failed Northern Beef Packers plant and other ventures in the state.

While contracting with the state, SDRC administered the federal EB-5 program, in which foreign investors can secure permanent residency for investing at least $500,000. South Dakota has since canceled the contract.

An investigation by Attorney General Marty Jackley found that $550,000 of a $1 million state grant given to Northern Beef for construction and equipment costs was improperly diverted to SDRC to pay EB-5 loan monitoring fees. He also found that Benda had double-billed the state for three airline flights.

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