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Documents Link SDRC Inc. And Keystone XXL

Mon, 04/21/2014 - 11:37am
Associated Press

SIOUX FALLS, S.D. (AP) — A state-sponsored company that directed millions of dollars from foreign investors to the idled Northern Beef Packers plant and other projects in South Dakota before running afoul of authorities also attempted to help finance the now-stalled Keystone XL oil pipeline, documents show.

Aberdeen-based SDRC Inc. submitted an application to federal immigration authorities to list the pipeline's operator, TransCanada, as a qualifying business under the federal EB-5 visa program, the Argus Leader (http://argusne.ws/1nB5AmY ) reported on Sunday. The program allows foreign investors to secure permanent residency in the U.S. for investing at least $500,000 in qualifying projects.

The newspaper obtained copies of the application the company submitted to the U.S. Citizen and Immigration Services and other documents through a Freedom of Information Act request.

The South Dakota Governor's Office of Economic Development for years contracted with SDRC to administer the EB-5 program. The program helped fund several large projects in the state and was used to secure funding for the plant. But the company's contract was cancelled in September, months after state officials learned that a federal grand jury was investigating South Dakota's EB-5 program.

A state audit also found that more than half of a $1 million state grant to the beef plant was improperly diverted to SDRC.

The newspaper reported that SDRC's founder, Joop Bollen, in May 2011 applied to USCIS for permission to add Calgary-based TransCanada Corp., which has proposed the controversial pipeline, as a qualifying business under the federal visa program. The same application asked to expand the company's coverage area to Montana and Nebraska, in a bid to provide financing to the pipeline.

According to the contract that the company had with the state, its management of the EB-5 program was supposed to be "for the benefit of South Dakota."

The director of policy and communications for Gov. Dennis Daugaard, Tony Venhuizen, told the newspaper that state officials didn't learn until last summer of SDRC's application to provide EB-5 financing to the pipeline's operator. By then, the state's program was facing state and federal probes.

Venhuizen, however, said the state didn't know until last week under questioning by the newspaper that SDRC's was planning on expanding its services to Montana and Nebraska.

"That was not a detail that he (Bollen) mentioned," Venhuizen said.

Bollen did not respond to a request for comment from the newspaper.

A spokesman for the pipeline operator, Davis Sheremata, said Bollen contacted TransCanada.

"SDRC contacted us on an unsolicited basis offering to initiate an application for EB-5 funding," Sheremata said in a statement. "We shared with SDRC publicly available information on estimated costs for the project but opted not to pursue funding through the EB-5 program. Keystone XL is a $5.3 billion project that is completely privately funded."

The 1,179-mile pipeline is awaiting approval from the president. The Obama administration last week announced it is putting off its decision on the politically heated project, likely until after the November elections, by extending indefinitely its review of the project. The pipeline would travel through Montana and South Dakota to a hub in Nebraska, where it would connect with existing pipelines to carry more than 800,000 barrels of crude oil a day to refineries in Texas.

Northern Beef opened on a limited basis in 2012 after years of delays, but filed for bankruptcy protection in July. Investment banking firm White Oak Global Advisors submitted the winning $44.4 million credit-and-cash bid for the plant in December and closed on the sale earlier this month.

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