State board withdraws $5M loan to Northern Beef Packers
PIERRE — The state Board of Economic Development canceled a $5 million loan commitment to Northern Beef Packers on Tuesday.
The arrangement originally was approved Jan. 28, 2010. The board subsequently extended the commitment multiple times.
The board granted its most recent extension at the Feb. 12, 2013, meeting. The commitment was supposed to run through March 1, 2014.
Why the Aberdeen project never received the loan isn’t clear. Nor is why the board ended the commitment some six weeks early after numerous extensions.
The beef plant opened in fall 2012 and closed last year because the business was financially broke.
Northern Beef is one of the South Dakota projects under scrutiny in investigations into a financing scheme known as EB5 that involved business and government officials.
Loans for projects were pooled from immigrants seeking federal visas for them and their families to live in the United States.
Richard Benda was state secretary of tourism and state development in the Rounds administration when the state board made the $5 million state loan commitment to Northern Beef.
As secretary, Benda signed a state contract with SDRC Inc., based in Aberdeen, to serve as the EB5 administrator and manager for state government.
Benda subsequently was hired by SDRC after the Rounds administration ended. He went to work as the loan monitor for the Northern Beef project.
In March 2013, Gov. Dennis Daugaard’s office received a subpoena from a federal grand jury seeking eights sets of information. One dealt with Benda’s travel while he was secretary. The other seven haven’t been revealed.
That led to Daugaard’s legal counsel requesting that state Attorney General Marty Jackley investigate Benda’s travel records.
The Daugaard administration terminated its EB5 management contract with SDRC in September.
Benda’s body was found Oct. 22, dead of a shotgun wound to the abdomen on Oct. 20, according to the subsequent investigation overseen by Jackley.
Unknown at this time is what prompted the state board to formally withdraw the loan commitment some six weeks before it would have automatically expired on March 1, 2014.
The board’s credit committee considered the matter at a meeting on Jan. 2 of this year. The recommendation was withdrawal, according to official minutes from that meeting.
The full board considered the recommendation in closed session Tuesday. When the meeting resumed in open session, the members voted unanimously to withdraw the financing package.
They didn’t give any public explanation for the decision, other than a brief statement from chairman Jeff Erickson of Sioux Falls.
“Per our discussion,” he said.
Daugaard administration officials didn’t respond Tuesday afternoon to a reporter’s questions about the timing and reasons for the withdrawal.
Northern Beef’s lawyer didn’t respond Tuesday afternoon about how the packing plant would be affected by the withdrawal. The $5 million loan was one part of a substantial package of state government assistance for the project.