New questions for Rounds over visa program

Former South Dakota Gov. Mike Rounds (R) was aware that a member of his cabinet had a potential conflict of interest between his role overseeing a controversial state investment program and his next job, working for an investor profiting from the program.

{mosads}Rounds told the Argus Leader, however, that he had no regrets about how he handled the program, and only wished that he had paid more attention so he could explain it better to the public now that it’s proven to be a damaging issue in his bid for Senate.

Richard Benda, secretary of Tourism and State Development under Rounds, oversaw the state’s EB-5 visa program, which offered foreigners visas in exchange for investments in local projects. Benda proposed a $600,000 loan to the Northern Beef Packers plant, which Rounds authorized, just two weeks before both left office.

The plant went bankrupt after receiving at least $100 million in EB-5 loans, one of the many failed projects financed by the EB-5 program that have brought scrutiny to its management.

Benda went on to work as a loan monitor for SDRC Inc., a company that managed EB-5 investment programs, including South Dakota’s.

Benda committed suicide in October of last year while facing indictment for allegedly attempting to redirect that loan to pay his own salary. 

Rounds revealed during a Tuesday interview with the Argus Leader that he was aware his former cabinet member would be leaving for a job tied to the investment he approved.

“My staff told me that when he was leaving state government, he was going to work for an investor in the beef plant,” Rounds said.

He said he couldn’t remember when he found out. And he also didn’t know which investment firm Benda was going to work for, and didn’t press, because he was satisfied his former cabinet secretary had found a suitable job.

“I said ‘Good, I’m glad to hear that he’s going to be actively involved in the beef plant,'” he said.

A state audit had initially found that Benda didn’t disclose the potential conflict of interest before leaving office, but should have. He should have been required to “remove himself from involvement in subsequent matters relating to [Northern Beef].”

The EB-5 program has become a flashpoint in a Senate race once seen as an easy pickup for Republicans, with Sen. Tim Johnson (D-S.D.) retiring in an increasingly red state.

Democrats’ recruiting failures left them with a political unknown, former FEMA regional director Rick Weiland, whom the party initially saw as a poor fit for the state. 

But Rounds has been dogged by questions surrounding the EB-5 program, which is now the subject of multiple investigations and mired in scandal, and he’s lost support in the polls, ceding ground to former GOP Sen. Larry Pressler, now running as an independent.

Sensing an opportunity, national Democrats and Democratic groups backing Weiland are pouring millions into the state hammering Rounds on the EB-5 program, which they say he mismanaged.

Rounds, however, stood by the program during his Tuesday interview, calling it “a proven, successful program for financing [in a] major recession.” He said he didn’t regret not questioning Benda’s involvement “more deeply” while governor.

“If someone said, ‘By the way, four years from now or five years from now … they’re going to ask you a question on this’… yeah, let me go ahead,” Rounds said. “But I’m not a prophet. I don’t know what questions are going to be asked in [2014] about an activity that was occurring back in [2009].”

He did say, however, that Benda “did some things in the last couple of weeks [of my term] that I did not know about, and that I’d like to ask him questions about” if he were alive.