The South Dakota Legislature convenes briefly Tuesday to hear Governor Dennis Daugaard deliver his budget address. It will be the first chance our elected officials have the chance to gather and look the Governor in the eye since Richard Benda's death and the revelations of state and federal investigations into financial mischief in the economic development office Benda ran for former Governor Michael Rounds.

Ahead of this uncomfortable meeting, Governor Daugaard's ec-dev chief Pat Costello announced this week that Governor Daugaard has directed GOED to modify its travel policy and initiate some audits and external reviews. According to Costello's November 27 memo, we will see the following actions pertaining to GOED activities:

  1. External review of the Governor's Future Fund (from which $550K granted by Rounds went AWOL to Benda and Joop Bollen), Proof of Concept, and Dakota Seeds. CPA David J. Lingle of Pierre accounting firm Stulken, Petersen, Lingle, Walti, and Jones is in charge of that review. The state engaged Lingle and company to review the Future Fund in early October; GOED added Proof of Concept and Dakota Seeds to the review in early November. Lingle's report is expected mid-December.
  2. Audit of the Governor's Office of Economic Development for the last four complete fiscal years, FY 2010 to FY 2013. Auditor General Marty Guindon of the Department of Legislative Audit is conducting this investigation. He should be finished January 24, 2014, during the Legislative session. This audit will not include the Revolving Economic Initiative Fund (REDI), the Economic Development Finance Authority (EDFA), the SD Science and Technology Authority, or the SD Ellsworth Development Authority; Costello says those programs are already audited.
  3. Internal Control Examination of GOED to satisfy Government Auditing Standards. Jeremy G. Bendewald and Jason Olson of Eide Bailly are conducting this examination. Their report is expected January 3, in time for the opening of the Legislature on Janaury 14.
  4. Change of travel policy to prevent the double-billing that Attorney General Marty Jackley uncovered. Previous policy, says Costello, allowed the same person to approve and process travel reimbursements.

In announcing these reviews, Commissioner Costello is confirming that the misdeeds currently under investigation in GOED and South Dakota's EB-5 visa program are worth spending time and money on.

The only possible red flag—ah, let's just call it yellow for now—is the engagement of Eide Bailly for the GOED internal control examination. Eide Bailly does the books for a number of South Dakota Hutterite colonies. The colonies do lots of business with Prairieland Pork Producers and Dakota Provisions/Dakota Gobblers. Jeffrey Sveen, Hutterite attorney, is deeply involved in both businesses. And the FBI has been investigating meat-packing plants and the EB-5 program in South Dakota since March 2012 in at least significant part because of concerns about movements of money from EB-5 projects involving Sveen and the Hutterites to the EB-5 pool for Northern Beef Packers.

Now if Eide Bailly's review is restricted to GOED practices, they may not touch the convoluted money streams of the private loan funds Jeff Sveen helped Joop Bollen create to direct the EB-5 visa investments where they wanted. But if any GOED and EB-5 operations are intertwingled, it is conceivable (yes, rank blog speculation!) that in reviewing GOED practices, Eide Bailly could uncover information that indicates its accounting services for the Hutterites missed some improprieties. Commissioner Costello might want to review the American Institute of CPAs' Rule 102-2, on conflicts of interest, just to make sure everything is kosher.

It is encouraging that Governor Daugaard is taking these steps to investigate what went wrong in his and Mike Rounds's Office of Economic Development. But even these steps may not be enough to answer public calls for independent, bipartisan investigations into possible misconduct in the GOED and the state's EB-5 program. Legislators, use your time in Pierre Tuesday to ask the Governor and each other whether you are doing enough to investigate and root out corruption in South Dakota government.