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Former SD governor says he was aware of beef plant loan, but not involved in the details

Former South Dakota Gov. Mike Rounds says he was generally aware that $30 million in financing was being lined up for faltering Northern Beef Packers in 2010, but also said he was not directly involved in the deal.

Former South Dakota Gov. Mike Rounds says he was generally aware that $30 million in financing was being lined up for faltering Northern Beef Packers in 2010, but also said he was not directly involved in the deal.

During an interview conducted in March 2014, when fewer details were publicly available about the deal, Rounds told Forum News Service that financing was tough to come by because of the Great Recession that hit the nation in 2008. Forum News Service contacted the Rounds campaign this week, but it did not have any additional statements.

"It was in the middle of a national recession. Traditional funding sources were literally not available," says Rounds, now a candidate for the U.S. Senate. "So the operation -- remember it was not part of us, but an independent, separate from the state. It had nothing to do with us."

Rounds says he "always assumed" that "the beef plant itself" went out and found the $30 million that came in a loan from Epoch Star Ltd., a corporation formed in the British Virgin Islands solely to make the loan to Northern Beef. Epoch Star was managed by a group out of Hong Kong.

"Apparently they went out and they solicited and they received an indication from an outside source who said, 'If we can get licensed in the state of South Dakota, we're prepared to loan you the money,'" Rounds says. "They had to go through all the hoops, just like any other institution. They had to go through the state banking commission and get licensed. That's the extent of the state's involvement with it."

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On that detail, Rounds was mistaken, as the June 29, 2010, vote of the South Dakota Banking Commission was to waive any licensing and tax requirements for Epoch Star.

In addition, the 87-page loan agreement outlines a requirement that the state commit to two separate $5 million loans to Northern Beef in addition to Epoch Star's $30 million. That loan agreement was not publicly available at the time Rounds was interviewed, and those requirements of the state's commitment were not known.

Rounds says he did not speak with any of the banking commissioners about the loan deal.

"I never had a single discussion with anybody on the banking commission about the project," he says. "We didn't go to the banking commission. We didn't discuss it with the banking commission."

Rounds says he was made aware of the pending deal through routine briefings.

"We knew they were looking for funding ... All they told me was they were going to apply and ask for permission to do it," Rounds says.

Rounds says he was not made aware of the source of the $30 million, something that remains unknown outside of those directly involved in the Epoch Star deal.

When asked if there could be any state of South Dakota funds used to make up the $30 million, Rounds replied, "None that I know of at all."

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