- Associated Press - Tuesday, February 4, 2014

PIERRE, S.D. (AP) - The South Dakota House called for legislative hearings on Tuesday to investigate the state’s economic development agency, including its involvement in issues related to the financing of a failed beef packing plant.

Representatives voted 51-18 for a resolution urging the investigation. The measure, sponsored by House and Senate leaders of both political parties, next goes to the Senate.

The Legislature’s Government Operations and Audit Committee will hold hearings after several outside reviews are completed on the Governor's Office of Economic Development. Gov. Dennis Daugaard ordered the reviews after finding out about alleged misconduct in GOED before he took office. Subsequent investigations 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.

Two reviews of GOED were completed last week, finding some problems in financial control procedures and the handling of documents. A detailed audit of the office is expected soon, and federal officials also are investigating.

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 GOED, 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 last fall by South Dakota 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.

House Minority Leader Bernie Hunhoff, D-Yankton, said the Legislature needs to hold hearings to determine how to handle economic development in the future. Economic development is one of state government’s most important functions, he said.

But Rep. Stace Nelson, R-Fulton, voted against the bill, saying government should stay out of economic development and leave it up to private entrepreneurs.



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