Home > South Dakota > Aberdeen beef plant and EB-5 program under federal investigation

Aberdeen beef plant and EB-5 program under federal investigation

October 31, 2013
Angus Cow, Curious by Kim Newberg

Angus Cow, Curious by Kim Newberg

Earlier I posted about alleged misconduct by the Governor’s Office of Economic Development (GOED) before Duagaard took office in 2011. Today the AP has released information on another federal investigation in South Dakota that may be related. This from the AP story posted by the Argus Leader:

Federal authorities are investigating the finances of an idled beef plant and a federal immigration program that supplied much of its funding, two former chief players in the company told The Associated Press on Thursday.

Dennis Hellwig, who stepped down as Northern Beef Packers’ general partner more than four years ago, and Bob Breukelman, the plant’s former construction engineer, told the AP they have been questioned by federal investigators about the idled Aberdeen plant’s financial dealings and the federal EB-5 program, in which foreign investors can secure permanent residency for as little as $500,000.

“There were some discrepancies in the way the EB-5 program was being handled,” Breukelman said.

It is unclear yet if this is part of the same investigation that the feds are directing at GOED. Yet it would make sense that any investigation of GOED would include the Aberdeen Beef Plant and the EB-5 program. This is what I had to say back in July when making the case Daugaard needs to be replaced:

There is nothing free-market about any of the Northern Beef debacles. The EB-5 program is corporate welfare and has nothing to do with free-enterprise. At its core the EB-5 allows foreign investors to buy a green card; at the same time politicians get to funnel a LOT of money to their favored businesses. It’s a win-win. Well, it’s a win if you happen to be one of those investors or politicians. However if you happen to be someone working for an EB-5 welfare recipient it isn’t so good. These programs are well-known for being ineffective and falling way short of the “created jobs” promise that they were created for.

I still believe my words to be true. Programs like EB-5 allow certain politicians and bureaucrats to handle millions of dollars without regards to the existing market and with little or no oversight. GOED was the driving force behind both the Aberdeen beef plant and the EB-5 vista program. Since this was one of the largest projects (failures) of the GOED office during the Rounds administration I would imagine the two investigations are related in one of the two following ways:

  • GOED is being investigated for alleged misconducts; which the Aberdeen beef plant and EB-5 program are a part of.
  • The EB-5 funds used for the Aberdeen beef plant are being investigated; which points back towards GOED.

Either way the result is the same: GOED, the Aberdeen beef plant, and the EB-5 programs are too intertwined to investigate one without looking at the others.

Of course the elephant in the room is if this investigation will impact the Rounds Senate campaign or Daugaard Governor re-election campaign. Rounds was Governor during the time-frame in question and Daugaard was the Lieutenant Governor. If any wrongdoing is found it is not good news for either campaign. Here are some possible scenarios and how both politicians could be impacted:

  • One or both of them are directly implicated in the scandal. If either one is found to be part of the scandal it would be hard for the other to deny knowledge of the events. In this case I believe both politicians would be handing the Republican primary election to the best conservative opponent. I also feel this scenario would give a Democrat contender a lot of support (no matter who gets the Republican ticket).
  • Neither of them are directly implicated in the scandal. This scenario would be worse for Rounds than Daugaard. In this scenario Rounds would be compared to Obama’s leadership style of “I had no idea that was going on”. Daugaard could maybe come out of this scenario clean by claiming to have created a more accountable GOED.
  • The investigation ends with no wrongdoings found. This scenario would of course be the best-case scenario for both Daugaard and Rounds. They could ironically use the investigation as proof their political enemies are using the system against them. I don’t see this scenario as likely, but it is possible.

Personally I think this investigation could (and should) point to why South Dakota needs to go a more fiscally conservative route for both the Governors race and the US Senate race. Corporate welfare abuse cause situations such as the Aberdeen beef plant. As a state I believe it is time for us to look in a direction that is willing to put fiscal conservatism over cronyism and corporate welfare.

  1. 1qaz1qaz
    October 31, 2013 at 10:46 pm

    We need to track down the true amount that was spent including interest, infrastructure, etc…

  2. 1qaz1qaz
    • Ken Santema
      November 1, 2013 at 9:23 pm

      Yeah, TIF’s are handed out like candy at Halloween in some places. Aberdeen has gotten bad about it (besides the beef plant). Its crazy!

  3. Drew
    November 1, 2013 at 12:31 am

    I agree there was very little leadership from Gov. Rounds on fiscal and accountability issues, and he may be paying the price now.

    • Ken Santema
      November 1, 2013 at 9:25 pm

      Yeah, I don’t think Rounds will be in trouble for anything done “wrong”. I think it will more likely show poor choice of accountability and transparency in his administration.

  4. gooter
    November 2, 2013 at 9:46 am

    E-5 investigation more than likely revolves around one of the following points: Targeted Employment Area fraud, ie: foreign investors can invest $500,000 vs. $1000000 for their green card if targeted area is below 20000 residents or has an unemployment rate greater than 150% of national average. Aberdeen wouldn’t qualify for either, these numbers are to be provided by governors office. Since its been reported that the beef plant has $500,000 investors, its plausible that fraudulent numbers were used to secure the lower investment threshold. Second, SEC requirements for the regional office include due diligence toward the sources of income for each foreign investor, which must be lawful and transparent. The regional office oversight is under the GOED. Third, the Benda involvement. He was in charge of economic development, with E-5 oversight, then on to seeking financing for the beef plant. It’s more than suspicious, especially given his untimely demise.

    • Ken Santema
      November 4, 2013 at 9:07 pm

      I think your second point is going to be a big issue for the upcoming election. Transparency is hardly a priority in Pierre, and has not been for quite some time. The GOED office in particular appears to be extra protected from transparency in certain situations. I wonder if this investigation will push the legislature to truly shift some of the power away from the executive branch. It may give that extra push to create a more balanced government in Pierre.

      • Stephanie Strong
        November 4, 2013 at 9:32 pm

        This is the website to the details of the EB-5; the facilities that are involved so far, 122 of them, and the appropriation bills that funded this project and extended funding of this project. God help us

  1. November 7, 2013 at 4:33 pm
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