State quietly ends contract with company related to investigation

Gov. Dennis Daugaard’s administration quietly cancelled its contract with a private company managing a controversial visa program in late September.

SDRC, Inc., a private company based in Aberdeen, had signed a contract with South Dakota to manage and promote the federal EB-5 program in December 2009.

That program allows foreigners to gain green cards in the United States if they invest $500,000 or more in a business project that creates at least 10 full-time jobs. It was a major source of funding for the Northern Beef Packers project that’s now under federal investigation.

But on Sept. 19, South Dakota’s economic development commissioner Pat Costello terminated the SDRC contract “for cause, effective immediately.”

The letter was terse and demanded the immediate return to the state of documents and funds controlled by SDRC.

"Demand is hereby made that SDRC turn over to GOED all books, records and reports required to be kept by it under the Contract within ten business days," Costello wrote in the letter.

The contract termination was not announced at the time. Tony Venhuizen, Gov. Dennis Daugaard’s senior adviser, disclosed that SDRC’s contract had been terminated on Friday in response to questions from the Argus Leader about the program.

But Venhuizen wouldn’t say why the contract had been terminated.

"I don’t think I can probably comment on that at this time," Venhuizen said.

He also said he couldn’t say why he couldn’t comment. But the Governor’s Office of Economic Development, which Costello leads, is currently under state and federal investigation for activities that took place before Daugaard took office.

The SDRC contract was scheduled to last until June 30, 2014.

In place of SDRC, Venhuizen said GOED is managing the EB-5 program. But he said there have been no new EB-5 investments made since the contract was terminated.