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Q and A with Gov. Daugaard: GOED not marketing, soliciting EB-5 projects

PIERRE -- Recently Gov. Dennis Daugaard answered questions regarding his knowledge and perspective of state government's involvement in the EB-5 program.

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The federal program offers preferential visa treatment to qualifying foreign citizens who provide loans or make investments in U.S. projects that create jobs.

The administrative and management work for EB-5 in South Dakota was contracted out by Richard Benda, then the secretary of tourism and state development, with SDRC Inc. in 2009. Benda went to work for SDRC in 2011. Joop Bollen, of Aberdeen, was SDRC president.

Shortly after starting a new job in Madison last fall, Benda was found dead Oct. 22 at a rural Lake Andes farm of what was determined to be a self-inflicted gunshot wound.

His Oct. 20 death came as federal and state investigations were under way regarding his activities and those of SDRC, including in relation to the now-closed Northern Beef Packers project in Aberdeen.

Pat Costello, commissioner of economic development in the Daugaard administration, terminated the SDRC contract in September.

Here are the questions and the governor's written responses:

Q: What was the scope of your knowledge and discussions as lieutenant governor regarding the EB-5 program with Gov. Mike Rounds and the various secretaries of tourism and state development? Have you spoken with them about EB-5 since you took office as governor in 2011?

A: I was generally aware of the EB-5 program as lieutenant governor, to the same degree that any interested observer might have been. I don't remember ever talking with Governor Rounds or any of the Rounds-era Tourism and State Development (TSD) secretaries about EB-5 while I was lieutenant governor. I have not discussed the program with Governor Rounds or any of those TSD secretaries since I took office in 2011.

Q: Why did you as governor-elect in late 2010 choose to not retain Richard Benda as secretary of tourism and state development or as commissioner of economic development?

A: I wanted to refocus the state's economic development efforts. I also reorganized the cabinet in a way that broke TSD into three smaller departments at that time.

Q: While lieutenant governor or as governor, were you aware that the Hanul law firm based in California and South Korea was active in South Dakota's EB-5 operations, via the South Dakota International Business Institute and later via SDRC Inc. in Aberdeen?

A: I became aware of the Hanul law firm in a briefing after I became governor. By that point, Hanul law firm was no longer working with the state. I believe the firm may have still been working with SDRC, but of course our contract with SDRC has now been terminated.

Q: As lieutenant governor or as governor, prior to the 2013 investigations, were you aware of the state contract with SDRC?

A: As lieutenant governor, I was not aware of the specific structure that TSD had set up to administer EB-5. I became aware of SDRC's role after I took office as governor.

Q: Why has use of EB-5 been suspended by your administration? Do you foresee returning to use of EB-5 financing this year or, if you're re-elected, in your second term?

A: Governor's Office of Economic Development (GOED) is not actively marketing or soliciting EB-5 projects or investments. The office provides information on the program to interested projects. That is a result of the leadership change at GOED and my desire to refocus our economic development efforts. EB-5 is a federal program. Now that the SDRC contract is terminated, GOED will be taking an administrative role in regard to EB-5. If a project wants to pursue EB-5 investment, GOED will submit the project to USCIS for approval. GOED will continue to receive reports from existing EB-5 projects, and to make the required reports to USCIS.

Q: Do you agree with the use of EB-5 for the purposes in the past, including those projects which were allowed by USCIS and those which were disallowed by the U.S. Citizenship and Immigration Service?

A: USCIS determines which projects are allowed and which are disallowed, and I obviously believe projects should operate within USCIS guidelines. Certainly several projects have successfully used EB-5 to bring jobs and investment to South Dakota.