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GOED investigations lead state government to enact further fraud protections

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News Mitchell,South Dakota 57301
The Daily Republic
GOED investigations lead state government to enact further fraud protections
Mitchell South Dakota 120 South Lawler 57301

PIERRE — People applying for some positions in the Governor's Office of Economic Development would need to pay for criminal background checks under a new requirement approved by Legislature.

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That change, which awaits a decision from the governor, is one of many under way or being considered within state government, in response to the financial reviews and investigations during the past year involving GOED and the late Richard Benda.

State Auditor Steve Barnett will hold a public hearing March 25 on new rules he's proposing for expense vouchers from state government employees.

Barnett wants to set a 60-day time frame for submitting vouchers and require an explanation in writing when that limit is exceeded. He also wants to require the governor's signature on cabinet members' vouchers.

The state Bureau of Human Resources meanwhile is taking steps to make employees and supervisors more aware of state laws and regulations regarding fraud, its consequences and routes for reporting improper activities.

Benda was secretary of tourism and state development from 2006 through early 2011 in cabinet of then-Gov. Mike Rounds. GOED was part of Benda's scope of responsibilities.

An investigation by the state attorney general and subsequent auditing and reviews found a variety of weaknesses and failings.

They ranged from Benda being double-paid for airline tickets to China and Las Vegas to reimbursements for tens of thousands of dollars in undocumented or poorly receipted travel expenses.

Benda also was found to have increased the amounts of two Future Fund grants during the last month that he and Rounds were in office.

Federal authorities sought information about Benda and other undisclosed topics in March 2013, triggering a series of probes within state government at the request of Gov. Dennis Daugaard.

Benda's body was found Oct. 22 on a farm near Lake Andes. He died from what authorities determined was a self-inflicted shotgun blats to his abdomen suffered Oct. 20.

He is believed to have been aware of the attorney general's investigation and possibly knew of the first financial review by an outside accounting firm commissioned in early October.

The state Bureau of Finance and Management is working with a variety of other state departments and offices on additional safeguards on travel reimbursements, such as requiring dates of travel to be tracked, submitting expenses no later than monthly, and allowing only one out-of-state trip per voucher.

The Legislature's joint committee on government operations and audit held its first hearing on the GOED and Benda matters March 7.

The committee will meet at least once more, according to its chairman, Sen. Larry Tidemann, R-Brookings.

He said the 10-legislator panel wants to look at the Future Fund grant program including its results.

"It's accountability," Tidemann said.

The Future Fund grants began in 1987 under then-Gov. George S. Mickelson and are funded through a fee charged to all businesses that pay into South Dakota's unemployment insurance program.

The fund is exclusively under the governor's control without any legislative oversight or public notice required.

Rounds distributed approximately $75 million of Future Fund grants during his eight years as governor. The grants flow through GOED.

Rounds made 745 grants from the program, including 145 totaling $21.4 million in 2010, his last year in office, according to an analysis by the Pierre Capital Journal.

The newspaper reported that nearly 30 were made during his final month as governor.