Last updated on 2016.09.05
Mike Rounds insists he wasn't involved in the "transactional details" of his EB-5 program. But he seems to have been keenly aware of one central transaction in the privatization of his EB-5 program: the issuance of a private no-bid contract to state employee Joop Bollen to continue running it.
Bob Mercer asked the former governor, now GOP Senate candidate, about his role in the privatization of EB-5 back in May. Rounds finally provided answers to Mercer this week:
[Mercer]: In 2009, Richard Benda as secretary of tourism and state development and Joop Bollen as SDRC president reached a contract that privatized South Dakota's EB-5 administration and other activities. The contract was drawn by Tim Engel of the May Adam Gerdes Thompson law firm, under a long-standing contract agreement, for the Department of Tourism and State Development, and Jeff Sveen on behalf of SDRC. Did you approve of the concept? What was your role in the contract? Did you inspect the 2009 contract before it was signed by Benda? Did you approve him to sign it?
[Rounds]: Not unlike the hundreds or thousands of state agency contracts, this transaction was handled at the department level and they utilized department counsel. I was aware of the desire to privatize the program in order to better compete with the 500 regional centers located around the country. I was advised that there were only two state government-managed regional centers and that privatization would help South Dakota compete at the national level. From a competitive standpoint, I agreed with the concept of privatization. I was not involved in the transactional details nor did I review the contract.
[Mercer]: Under what state legal authority was the contract formed in such a way that state government derived money from a portion of the fees charged by SDRC to EB-5 investors/lenders?
[Rounds]: I was not involved with the transactional details of the contract. It was handled by the state agency in consultation with their counsel [Bob Mercer, "Rounds Answers Reporter's Questions on EB-5 Scandal," Black Hills Pioneer, 2014.10.02].
If I take Rounds at his words, I get a picture of his economic development chief Richard Benda saying, "We need to privatize EB-5. Can we?" and Governor Rounds saying, "O.K., see you later."
Rounds's own description to Ben Dunsmoor indicates that his approval went further, from concept to execution, to approval of the executioner:
At one time Bollen, was a state employee working for the Board of Regents doing the same kind of work. But Rounds told KELOLAND News both the Board of Regents and Benda's office asked Rounds in 2009 if the state could privatize EB-5 to be more competitive with other offices recruiting foreign investors across the country.
"What I also asked was, 'So who's going to do this? Because there aren't a lot of people who understand the EB-5 program at the federal level.' And the response I received back was Mr. Bollen, who was working for the Board of Regents, has agreed to separate himself out and do this,” Rounds said [Ben Dunsmoor, "Rounds: I Was Told Bollen Was the Man to Run EB-5," KELOLand.com, 2014.10.02].
Rounds is saying that he knew Bollen was going to run EB-5 when it was fully privatized in 2009. That statement implies that he approved of issuing that contract to Bollen specifically.
Perhaps stunningly, Rounds appears to have answered it... and not in a way that wins any moral votes:
Rounds says the Board of Regents and the economic development office recommended Joop Bollen run the private firm simply because he knew how to navigate the complicated EB-5 program.
The recommendation came despite the fact that state officials knew Bollen had inappropriately filed legal documents in a lawsuit he got involved in with a California recruiting firm.
"We weren't worried about whether Mr. Bollen was privatizing or not. We were worried about whether or not the projects that needed this outside investment would have access to an office that knew what they were doing. It was not the time to go out and start somebody brand new and find out later on they didn't know what they were doing," Rounds said [Ben Dunsmoor, "Rounds on EB-5: 'There Is No Conspiracy'," KELOLand.com, 2014.10.02].
Rounds has previously said that the Board of Regents, not he personally as Governor, was responsible for Bollen's employ. But here, Rounds tells Dunsmoor that the Regents and his own office of economic development recommended giving Bollen the contract.
That language creates a very different picture: before Benda gets out the door, Governor Rounds asks, "Who's going to do this?"
Benda leans against the door frame, worried the jig is up. "Bollen."
"Bollen?!" Rounds shouts. "That meathead? Didn't he get us into that lawsuit and break all those rules? No way! Let's find someone else."
But as Rounds says here, he doesn't say that. He lets slip this golden opportunity for good management. He wasn't worried about whether the person in charge had broken any rules; he just wanted someone who knew how EB-5 worked. The state didn't have time to gamble on a new person. He thus overlooked Bollen's infractions and approved the plan with Bollen on top.
Mike Rounds answers the character question with Bosworthian clarity: if there's money at stake, Mike Rounds doesn't care if his people break the rules. Mike Rounds doesn't have time to go find honest dealers.
Voters, Mike Rounds just summarized all you really need to know to see why EB-5 means you have to cast your vote for someone other than Mike Rounds to get a Senator you can trust.