News, notes, and observations from the James River Valley in northern South Dakota with special attention to reviewing the performance of the media--old and new. E-Mail to MinneKota@gmail.com

Wednesday, December 18, 2013

The South Dakota solution: legalize graft and, therefore, eliminate corruption in government



          Madville Times has noted that the Attorney General's pronouncement of  Richard Benda's death as a suicide has been met with loud skepticism, disbelief, and denial.   Cory Heidelberger challenged the disbelievers to call their legislators and demand a special session to examine all the documents relative to Northern Beef Packers and the  handling of the EB-5 program which financed the company.  He has reported carefully on Rep. Kathy Tyler (D-Big Stone City) calling for a special session of the legislature to examine the whole NBP mess. 
 
Asking the GOP-dominated  legislature  in South Dakota to investigate corrupt practices is like opening the hen house door and yelling, "Here Foxy Loxy, come and get it!" One-party rule has long abandoned any semblance of democratic integrity or the notion of serving the people.  Corruption and dismissive tyranny are what a majority of South Dakota seems to think serves them.  The legislature is an expression of the values and  character of those who put it in office.  At some point the people must realize that they are accountable for the those they have chosen to represent them.  Perhaps we have reached that point, but denial and deliberate ignorance is a way of life for many South Dakotans. 
 
The bankruptcy of Northern Beef Packers, the death of Richard Benda, and the handling of the EB-5 program are all incidents in a larger pattern of privilege, secrecy, and corruption in the state.  The Attorney General has tried to dismiss any further investigation with his report on Benda's death by terming it a suicide and linking it to  apparent double-dipping in expense reimbursements and to the diversion of state grant money specified for Northern Beef Packers construction to cover some EB-5 loan acquisition expenses.  He seems to hope that Benda's death will also terminate any interest in Benda's activities and relationships.  Many aspects of Benda's death were not accounted for in the Attorney General's report.  Many questions were left unanswered.  A few reporters have awakened to the fact that the casual and timid reporting on state government has let a culture of decadent greed and repression develop and flourish and become the dominant influence in the state.  That culture has written the laws governing access to public records.  Every law dealing with access to public records and the right to know is laced with loopholes that permit even the dullest of bureaucrats and politicians to find ways to deny the public any knowledge of what officials are doing. 
 
The case involving the death of Richard Benda is similar in the unanswered questions to the death of Morgan Lewis at Northern State University the Monday morning before the general election of 2004.  He was found dead by a door to his office building.  There was no suicide note, no indication that he was in a depressed mental state, and no known circumstances that might put him in such a state.  Initially, the coroner termed the death a homicide.
 
It occurred in a time of turmoil within the Aberdeen Police Department.  A chief had been dismissed.  Two detectives were fired.  And the policeman who was assigned to the NSU campus and was working at the time of the death ran into a conflict about the way he handled the situation and suddenly resigned.
 
After months of speculation and gossip, the chief of police declared the death a suicide.  The coroner's report was revised to indicate that conclusion.  Outside experts were allegedly consulted, but their reports were never made public.  Although the chief alluded to the evidence in a few published interviews, there was never a coherent explanation made that accounted for all the evidence and circumstances involved in the death.  During the turmoil with department personnel, the public was denied any explanation on the basis that
it was a private personnel matter and, therefore, excluded from public examination.  The record of the investigation of Morgan Lewis' death was treated in the same manner under the claim that issues of privacy were involved.  The result was that no examination of the records of the investigation were made public, leaving skepticism and suspicion about the integrity of the investigation and the validity of the conclusion. 
 
Nine years after the death of Morgan Lewis, there is still doubt and skepticism about Lewis' death.  Many specific facts involved in the case have never been made public, and the people have been told that the officials they pay  to carry out their business have decided that confidentiality of personnel matters and rights to privacy overrule the public's right to know what their public servants are doing. 
 
 In South Dakota, the politician who runs for office to do what is best for all the people of the state is rare.  Most politicians in South Dakota are in office to impose a bigoted ideology on the state.  From their bigoted, ignorant, and self-absorbed perspectives,  they promulgate policies which keep wages hovering around the poverty level, enforce racist discriminations, and send young people with an inclination toward decency high-tailing it for other places and other cultures.  The spirit that dominates and rules over South Dakota is viciously discriminatory and openly repressive against people and ideas that tend toward liberal tolerance.  For a time, while the state has consistently elected people who are characterized by the dominant party line, it elected more progressive representatives to federal offices.  Although, the dominant attitude in the state is against big government,  the people elected Democrats to get more than their share of the federal dole for them.  And some people voted Democratic because they really wanted a few people in government that provided support and progress for them.  However, a demographic shift from attrition, the flight of the young and talented to other places, and their displacement by people who moved into South Dakota longing for Jim Crow and an Old Testament theology fixed on hatred and vengeance, have changed the electoral balance.  Equality, justice, and concern for the poor are deliberately omitted from the planks of those who claim to be conservatives.   
 
The dominant political attitude shapes the state of freedom of information in South Dakota.  The state ranks 47th among the 50 states on the Better Government Association Integrity Index.  People in the state are denied the right to monitor the performance of their public officials and to require accountability for how their offices are conducted.  The bankruptcy of Northern Beef Packers,  the EB-5 program, the alleged suicide of Richard Benda have produced a definitive demonstration of the sneaking and repressive mode of doing business of state government.  But the laws governing access to information and the duties of officials give the sneaking and oppression legal cover. 
 
From the time that the Northern Beef Packers plant was proposed through its bankruptcy,  it  has been frustrating to know and evaluate the proceedings.  South Dakota corporation law allows a blanket of secrecy to cover all corporate business, keeping secret just who comprises the business.    But South Dakota law maintains that blanket of secrecy when government gets involved, too. Any business can get a full, detailed credit report on any individual.  But no one can get any information about the legitimacy and financial integrity of any business operation. 
 
Northern Beef Packers was a business scheme about which there was much justified skepticism.  It grew out of a recognition that a beef packing plant in this region was a desirable and feasible idea.  It earned serious consideration from producers who made an earnest study of the possibility of a producer-owned cooperative.   A hard fact is that very few cooperative ventures by agricultural producers succeed, as demonstrated by the attempts of wheat producers to make pasta in North Dakota.  Agricultural co-ops seem doomed to failure because farmers are not very co-operative when it comes to running businesses.  So, the farmer-owned beef packing plant was abandoned,  but the potential for a regional beef packer to succeed was recognized.
 
Attempts to launch a beef-packing plant with state help failed, first in Huron, and then in Flandreau.  Some promoters with devious schemes and other promoters who posed as entrepreneurs but had not the vaguest idea of how to start and run a packing plant put a murky taint on the whole idea.  When plans were abandoned for Flandreau, the economic development organization there and the Farmers Union were out  money they had invested in development plans.  The same people behind the scheme in Huron and Flandreau suggested the plant for Aberdeen, but were not involved in its development.  
 
From the  outset, supporters of  the NBP idea recognized that the plant would have to compete with the big four in beef packing who control 80 percent of the market.  However, they also recognized that a regional plant would have shipping and distribution advantages for both cattle-raisers and consumers.  As the idea for the plant progressed,  some of its supporters also recognized that there is a growing market for cattle not fed growth hormones and anti-biotics, for grass-fed premium beef, and for beef that could be tracked from birth to customer.   South Dakota Certified Beef was part of a plan to market specialty, premium beef that the big four packers are not equipped to produce.  This business model had two essential components:
 
  1. It required the development of a customer base.  This could most quickly and efficiently be done by becoming part of a distribution program that features and promotes premium beef, such as the ones branded Angus and Amish.
  2. The model also was dependent upon success for delivering exactly the quality of beef promised at the precise time it is promised. 
Industrial cattle feeding  hormones, anti-biotics, manure
This business model must have production facilities geared to serving this specialty market, something that the big four producers are too large and inflexible to economically do.  The NBP  plan would provide ranchers and farmers with a competitive market that disappeared with the closing of the stockyards.  When cattle were shipped to the stockyards,  buyers from competing companies would bid on the animals.  Most beef today is raised by contract in feedlots that finish the cattle with growth hormones that speed up the rate at which the cattle put on weight and anti-biotics to combat the diseases that thrive in the crowded, manure-laden, industrialized environment.  Most beef is sold directly to one of the big four packers--Tyson, Cargill, JBS, National Beef--who are more interested in keeping their industrial processes running cheaply and smoothly than in providing customers what they want. 

Early in its development, Northern Beef Packers had signed on with a marketing-distribution organization based upon the Angus brand. However, the marketing organization dropped NBP when delays and financial problems created uncertainties about the plant.  Beef producers supported the plant and hoped that the problems could be solved, but also understood that the controlling priority was a market for the beef it processed. 

A significant factor that is largely glossed over is that NBP could not attract domestic investors.  It found little market for its TIF bonds, and other investors were warned away by the constant uncertainties in NBP's financing and development plans.  Consequently,  NBP became dependent on the EB-5 investments for its formation and operation, and seemed to gear itself more to exporting its beef to the countries where those investments originated--Korea and China--than in the domestic market it once had envisioned.  By the time NBP actually began to process cattle, its programs for tracking its cattle, supplying specialty markets, and producing certified beef were no longer mentioned on its website or in its promotional materials. 

And here is where the corporate and governmental secrecy and the timidity of the press in covering the development of the NBP became complicit in the disaster which led to the apparent suicide, the loss of  tens of millions by foreign investors, the major screw-over of workers, and exposure of a government mired in a financial-finagle carried out with astounding incompetence.  The public knew that NBP was on very shaky, if not sinkhole ground, in its finances through the multi-million dollars worth of mechanic's liens filed against it, as reported in the press.  What was not reported was that the state economic development office had evidence that the company was floundering.  Both the local and state development agencies knew there were problems but chose to continue to promote the venture as an economic opportunity, not a financial and managerial disaster.  Bob Mercer brought this to light when he reviewed the minutes of the State Board of Economic Development and the State Economic Development Finance Authority prior to the blocking of an EB-5 loan.  The State Board of Economic Development committed itself to loan NBP $5 million and the Economic Development Finance Authority $20 million,  both contingent upon NBP meeting certain specifications before the loans were actually made.  I don't think they were ever made, but it would have been nice if local government agencies,  potential investors,  cattle producers, potential employees, and the community in general would have known about the loan commitments and the reservations the boards had about the venture. Here is an outline of the boards' proceedings obtained by Bob Mercer:   
  • State Board of Economic Development
  • Jan. 2010,  commits to $ 5 million loan with stipulated conditions to be met.
  • Jan. 27, 2011, conditions not met; loan commitment extended 3 months.
  • April 12, 2011, conditions not met; commitment extended 1 month.
  • June 27, 2011, conditions not met,   commitment extended 6 months.
  • June 12, 2012, an unexplained request from NBP is denied.
  • Sept. 12, 2012,  commitment to loan is extended to March 1, 20013


  • Economic Development Finance Authority
  • Feb. 2010,  commits to $20 million loan with conditions to NBP.
  • July 2011, notes at meeting that conditions have no been met.
  • Oct. 6, 2011. extends commitment 6 months.
  • July 19, 2012, approves extension with conditions.
  • Oct. 10. 2012, extends commitment to March 1, 2013.
  • Feb. 21, 2013, extends commitment to March 1, 2014.

       July 19, 2013, NBP files for bankruptcy.

Anyone who has dealt with government records, or corporate records of transactions  will be struck by the fact that the minutes cited above do not record any essential facts or provide any specific information about the actions taken.   The examination of the minutes by Bob Mercer reveals that no substantive records have been kept.  While most other states with freedom of information laws would be required to produce full records explaining what the loans were for, what conditions were placed upon them, and why the conditions were not met and the deadlines were extended,  that information is not available under the rules by which South Dakota operates. 

The matter of Northern Beef Packers, the EB-5 loans, and the death of Richard Benda reveal that the state is set up to conduct business in an under-handed, secretive way so that the citizens cannot learn what the state is doing and how it is doing it.  This is a custom that goes back to the Bill Janklow days when bank transactions and accounts were kept secret from the elected state treasurer.   

Mercer was further denied access to the records surrounding Richard Benda's death when the attorney general decided that such records would not be released if a member of Benda's family objected to the release.  Richard Benda was a former state official whose actions as that state official have been called into question by his death.  Every detail of his life that affects his record of performance as a state official is public business.  But under the ;protection of state law, the attorney general seems to be hiding corruption and connivery with a specious and viciously cynical act of legal skullduggery.

The late comedian Roger Price was a network commentator during political conventions many years ago.  In announcing a fake run for president, he said his platform was to legalize graft and, therefore, eliminate corruption in government.  With South Dakota's laws on access to government records and public information,  the state seems to have applied what was satire.   Once again, the people of the state are being played for dupes. 














1 comment:

Tara Volesky said...

Excellent article. I hope people educate themselves about how corrupt SD is. We need to elect new leaders that will bring integrity and honesty back to SD.

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