PIERRE, S.D. (AP) — South Dakota, a small state recognized for a massive stone sculpture of four U.S. presidents, has quietly built a reputation as a haven for the rich to store trust funds — all with the blessing of the state Legislature.
A report released by the International Consortium of Investigative Journalists dubbed the “Pandora Papers” shows that in addition to the familiar offshore destinations, there are 81 secret accounts set up in the Mount Rushmore State, which for decades has passed an annual bill supporting the trust industry.
A legislative task force on the industry holds unadvertised meetings to update trust laws around the world and help the state keep the program enticing to investors, South Dakota Public Broadcasting reported Monday. Republican state Sen. Tim Johns explained during a Senate Commerce and Energy meeting that task force members are appointed by the governor and recognized “as experts in their field.”
“This body has been assembled with the goal of establishing and maintaining South Dakota’s stature as the premier trust jurisdiction in the United States,” Johns told the committee in January.
The Pandora Papers investigation involved 600 journalists from 150 media outlets in 117 countries. It shows that trusts in South Dakota have more than quadrupled over the past decade to $360 billion in assets, including an increase of $100 billion in the last three years.
There are 105 independent trust companies in South Dakota, as well as state-chartered banks employing about 500 people.
Republican state Sen. Lee Schoenbeck said those jobs are important and that he wants to keep the industry in South Dakota, no matter what the report shows.
“Or, as opposed to hiding it in Granada or Cancun or somewhere?” Schoenbeck said. “Those people that are throwing those rocks all the time, half of them want the business moved to their states. The other half just like to throw rocks.”
Susan Wismer, a former Democratic lawmaker, has been a vocal opponent of the trust industry and the routine bill that comes up every session. She said attorneys from the trust fund task force tend to over-simplify the initiative.
“Legislators do not have a clue what it is that they are really voting on other than that these attorneys that deal with big money are telling them that it’s good for South Dakota’s economy to do this,” Wismer said.