Audit: South Dakota Official Helped Increase Beef Plant Grant

February 13, 2014 09:00 AM

By: DIRK LAMMERS, Associated Press

South Dakota's former economic development director used his public position to help his future private employer get a bigger grant for a struggling beef processing plant, according to a state audit released Thursday.

The Department of Legislative Audit report found that Richard Benda was working out a new job with SDRC Inc. in December 2010 while still leading the Department of Tourism and State Development. SDRC recruited foreign investors for the Northern Beef Packers plant in Aberdeen.

Benda was on his way out the door when he amended two Future Fund grant agreements to give Northern Beef an additional $600,000 in state money, the audit found.

Gov. Dennis Daugaard's spokesman, Tony Venhuizen, said the additional funds were never allocated to Northern Beef and were returned to the Future Fund.

"They never used the increase that he authorized," Venhuizen said.

Benda was found dead Oct. 22 with a fatal shotgun wound. His death was ruled a suicide.

In October, Daugaard announced an investigation into possible financial misconduct before his administration. The news came a day after Benda's funeral.

Benda had been informed in mid-November that he would not be retained when Daugaard took office. Benda accepted a loan monitor job with SDRC Inc., a privately held Aberdeen company that recruited foreign investors for the failed Northern Beef Packers plant and other ventures in the state.

The Governor's Office of Economic Development for years contracted with SDRC to administer the federal EB-5 program, in which foreign investors can secure permanent residency for as little as $500,000. South Dakota has since canceled the contract.

A separate 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 immigration loan monitoring fees. He also found that Benda had double-billed the state for three flights.

No charges have been filed, but a federal investigation into the use of the EB-5 program in South Dakota is ongoing.

Northern Beef opened on a limited basis in 2012 after years of delays, but the company filed for bankruptcy protection in July because it lacked money to buy cattle for slaughter.

San Francisco-based investment banking firm White Oak Global Advisors submitted the winning $44.3 million credit-and-cash bid for the idled plant during a bankruptcy court auction in December. The sale closing is pending court approval.

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