Daugaard defends himself, Republican Party againts corruption allegations

South Dakota Gov. Dennis Daugaard is defending his administration and political party against allegations of corruption.

South Dakota has been awash in unflattering headlines lately, including a murder-suicide linked to the loss of federal grant money administered by a state contractor; a move by the federal government to terminate South Dakota’s participation in an immigrant-investor program; an audit report showing $43,000 in unaccounted money in the Secretary of State’s Office; and the theft of an original, handmade state flag by a former state employee.

The state also ranked 47th in the nation with an "F" grade in the Center for Public Integrity’s recently released State Integrity Investigation, which measures each state’s protections against corruption.

In an interview the day before the news broke about the flag theft, the Journal asked Daugaard about the murder-suicide and immigrant-investor controversies.

“I don’t think either of those are instances that are indictments of government but more indictments of the individuals who are involved,” Daugaard said.

The Journal also asked Daugaard about Democrats’ claims that the controversies are symptoms of one-party rule, including Republicans’ nearly four-decade lock on the governor’s office and the party’s perennial majority in the Legislature.

“I think that’s laughable to say that these events arose out of a consequence of one party having a larger representation in the political arena than the other,” Daugaard said. “I don’t know how one could lead from one to the other.”

In a Friday interview with the Associated Press, the governor also pushed back against some Democrats' calls to establish a state ethics panel. The state formerly had an ethics commission, but it was abolished in 1979.

"I've seen those ethics boards in other states become more an arena for political combat, and (they) don't really serve to prevent or dissuade unethical behavior," Daugaard said. "I think we have good policies in place, and we have good employees."

GEAR UP

Daugaard told the AP that the state Department of Education and its top official appropriately handled the termination of a state contract with a Platte-based company that handled GEAR UP, a college-readiness program paid for by a federal grant.

The company, Mid Central Educational Cooperative, was thrust into the spotlight because of the murder-suicide involving a husband and wife employed by Mid Central and the murders of their four children.

Daugaard told the AP that in August or early September he learned of problems with Mid Central's management of GEAR UP. He added that the state Department of Education for years offered Mid Central technical support and probably provided more oversight of the GEAR UP grant than others administered through the department.

The department on Sept. 16 informed Mid Central that it was losing its GEAR UP contract. Hours later Mid Central business manager Scott Westerhuis fatally shot his wife, Nicole, and their four children before setting the family home ablaze and shooting himself. Nicole Westerhuis was the co-op's assistant business manager.

A state-federal investigation into the financial circumstances involving GEAR UP is ongoing, and state Attorney General Marty Jackley has said financial problems appear to have been a contributing factor in the deaths. Few details about the inquiry have been made public.

Department of Education Secretary Melody Schopp has said the department worked with Mid Central for several years to try to resolve financial concerns before it decided not to renew the contract. The department didn't find criminal concerns, but Schopp cited lack of fiscal controls, conflicts of interest and failure to follow proper accounting procedures in declining to renew the contract.

The GEAR UP grant has been focused on Native American students in South Dakota.

State Republican Rep. Lance Russell recently called for Schopp to resign over the state's oversight of the grant program. But Daugaard credited Schopp for cancelling the contract and said she has his full support.

EB-5

The immigrant-investor controversy had quieted recently after raging for two years.

But was revived in late September when the U.S. Citizenship and Immigration Services sought to terminate the state’s participation in the federal program known as EB-5. The federal agency said in a letter that the state failed to submit required information and failed to promote economic growth, and the letter also outlined instances of incompetence and mismanagement.

The EB-5 scandal came to light after the October 2013 suicide of Richard Benda, former state secretary of tourism and state development, who was days away from a potential indictment on charges that he stole $550,000 in state grant money by redirecting it to his private employer as he left state government. That employer was SDRC Inc., the company that managed South Dakota’s EB-5 regional center on behalf of the Governor’s Office of Economic Development.

Daugaard said Friday that his administration is pushing to maintain South Dakota's participation in the investment-for-visa program to spare investors who might be harmed if it is terminated.

Participants in the program are promised green cards in exchange for investments of at least $500,000 in U.S. job-creating projects. Daugaard said the administration is concerned participating investors "might be unfairly caught in the middle" if it is terminated.

State documents submitted in response to the federal termination letter show there were about 270 investors waiting for green cards earlier this year via South Dakota's regional center.

Secretary of state revelations

The flag theft, meanwhile, came to light in October when 26-year-old former Secretary of State employee Garrett DeVries was accused of stealing an original, handmade South Dakota flag from state government. He is scheduled to appear in court later this month.

Also in October, news broke of a state audit report that showed former Secretary of State Jason Gant misused federal grant money, overspent his budget and could not account for $43,000 in state funds.

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