The Scandal Evolves

Sep 17, 2014

By Cory Allen Heidelberger

Ten months ago, I offered a brief summary of the breaking scandal involving the Governor's Office of Economic Development, Northern Beef Packers, and the EB-5 visa investment program. At the time, I listed the four most important issues in the scandal for South Dakotans to watch:

1. the suspicious death of former GOED chief and EB-5 figure Richard Benda;
2. the misguided focus of state economic development policy on big boondoggle projects like the bankrupt Northern Beef Packers;
3. the impact this scandal would have on Mike Rounds's chances of winning Tim Johnson's Senate seat; and,
4. the lack of accountability in GOED's execution of the EB-5 visa investment program.

After that November 13, 2013, article, a coroner ruled Benda's death suicide. No hard evidence has emerged to prove otherwise. Attorney General Marty Jackley has revealed that he was prepared to arrest Benda for diverting hundreds of thousands of dollars from a state grant to his pocket. Governor Dennis Daugaard has said he is “sure” Benda killed himself “because of the stress of this situation.”

The policy angle of the scandal seems lost on our leaders and our voters. The state has avoided any public promotion of further EB-5 activities, but Mike Rounds continues to assert that Northern Beef Packers was a good investment that will pay off.

The electoral angle of the scandal did not materialize during the primary. New revelations dried up as the spring primary approached. Mike Rounds took a few shots from his primary opponents about GOED, NBP, and EB-5, but he still cruised to a 55 percent victory in June. The candidate who asked Rounds the toughest questions about NBP and EB-5, Rep. Stace Nelson, finished third, behind State Sen. Larry Rhoden, who “refrained from making any judgment calls” about the scandal.

Republican voters dismissed the scandal in June, but Republican legislators reawakened the press and voters to the GOED/NBP/EB-5 affair at the end of July, when they refused to even discuss calling Joop Bollen, the director of the state's EB-5 program, to testify before a Legislative committee. Bollen seems to have quite a bit to account for:

1. Bollen privatized his own state job in 2008, signing a contract between his state agency and his own new private company.
2. That contract probably violated South Dakota's conflict of interest law.
3. Bollen's privatization of his EB-5 activities may have denied the state general fund well over a hundred million dollars.
4. That privatization probably violated Board of Regents policy (Bollen worked for Northern State University).
5. When a California company sued the state agency Bollen directed in 2008, Bollen concealed the lawsuit from his superiors and wrote his own legal response to the court.
6. Pretending to represent the state in that court case violated more state law and good sense.
7. Bollen's private company functioned like a bank, but did not obtain a lending license or pay bank franchise tax.

Gov. Rounds says he was briefed several times in 2007 on the EB-5 privatization plan. The violations Bollen appears to have committed while carrying out that plan could be grounds for firing a state employee. But Gov. Rounds rewarded state employee Bollen with a lucrative no-bid contract to continue running EB-5.

Therein lies the core question of accountability that has risen from this scandal. If Bollen did wrong, why didn't Rounds hold him accountable? And whatever Rounds's reasons — inattention? error? complicity? — to what extent should voters hold Rounds accountable as he seeks their reward of a Senate seat?

Editor's Note: Cory Heidelberger is our political columnist from the left. For a conservative perspective on politics, please look for columns by Dr. Ken Blanchard on this site.

Cory Allen Heidelberger writes the Madville Times political blog. He grew up on the shores of Lake Herman. He studied math and history at SDSU and information systems at DSU, and has taught math, English, speech, and French at high schools East and West River.