A company directly connected to a member of Gov. Kristi Noem’s cabinet received nearly $600,000 in coronavirus relief grants from the state, while additional companies registered to the cabinet member’s business associates received at least $3 million.
Steve Westra is the commissioner of the Governor’s Office of Economic Development. When Noem appointed him to the job in 2019, he was chief operating officer of Hegg Companies in Sioux Falls. He filed a financial interest statement at that time listing income from Hegg Companies, but cabinet members are not required to update those statements annually.
Noem’s spokesman, Ian Fury, said Friday by email that Westra is on a leave of absence from Hegg Companies. But when Hegg Companies filed its 2020 annual report with the South Dakota secretary of state, the corporation listed Westra as vice president and secretary.
This winter, Hegg Companies received $574,425 in grants from a state coronavirus relief program for small businesses. At least six other corporations registered to Hegg Companies President and CEO Paul Hegg or his father, Board Chairman Peter Hegg, received a combined $3 million in grants, according to an SDPB review of the grant recipient list. The Hegg family’s holdings include real estate, hotels, construction, an assisted-living center and a property-management firm. Paul Hegg did not immediately return a message from SDPB.
Hegg-affiliated grant recipients
|Hegg Companies Inc.||$574,425|
|Hegg Hospitality Management LLC||$308,950|
|Venture Ranch Inc.||$109,866|
|Empire Restaurants Inc.||$102,377|
|Main and Main LLLC||$1,000,000|
|River Greenway Hospitality||$898,229|
|Rapid Hospitality LLC||$602,847|
The money came from the state’s $1.25 billion share of federal coronavirus relief funds. From that amount, the state has awarded $288 million in grants to more than 3,000 businesses. Recipients were required to show at least a 15 percent reduction in business.
Westra did not return messages. Governor Noem’s spokesman, Ian Fury, emailed a statement.
“Commissioner Westra has taken a leave of absence from his private-sector companies and is working for the state of South Dakota,” Fury wrote. “Decisions about grant program acceptances were made by an independent third-party.”
That independent third party is Guidehouse, a global consulting company hired by the state to manage several coronavirus-relief grant programs. The state has paid the company more than $7 million.
Conflict-of-interest laws forbid state officials from overseeing contracts that benefit them. In this case, it was the state Bureau of Finance and Management – not Westra’s Office of Economic Development – that signed the contract with Guidehouse. But when the state hosted a webinar to explain the business grant program to potential applicants, an employee from Westra’s office conducted it.
The state’s Government Accountability Board has authority to receive and investigate conflict-of-interest complaints. The board consists of four judges.
Democratic State Sen. Reynold Nesiba, of Sioux Falls, said he doesn’t know if Westra did anything wrong.
“But everyone in public service should be very careful to keep themselves above even the appearance of impropriety,” Nesiba said. “And so this sounds problematic, although I haven’t looked at it closely.”
-Contact reporter Seth Tupper by email.