South Dakota Senate leader defends state's trust industry, under scrutiny from Pandora Papers
The U.S.-based offshoring of wealth management services, rooted largely in South Dakota, has drawn an intense spotlight from national media over the last 24 hours for ties to rich, international clientele accused of human rights abuses. South Dakota has been a leader in the industry since the 1980s.
SIOUX FALLS, S.D. — South Dakota's top state senator is defending the lucrative trust industry, hours after a series of news reports linked to the so-called Pandora Papers revealed that international moguls, including some with nefarious ties to drug cartels and labor abuses, have stored their money in South Dakota-based trust companies, enabled by the state's generous pass-through laws.
The most critical look came in an article published on Monday, Oct. 4, by The Washington Post with the assistance of the International Consortium of Investigative Journalists, who reviewed 11.9 million confidential documents, which, "come mostly from the Sioux Falls office of Trident Trust, a global provider of offshore services."
The journalists' review of the documents revealed that the South Dakota-based trust company has provided services to Colombian textile magnate Jose "Pepe" Douer Ambar, an international drug trafficker, and Federico Kong Vielman, a member of a prominent Guatemalan family whose palm oil company exploited workers and was investigated by the U.S. Environmental Protection Agency for pollution.
The article also reveals that the Sioux Falls company holds in trust $14 million for the four daughters of Carlos Morales Troncoso, a deceased sugar magnate accused of labor abuses.
Trident Trust lists a downtown Sioux Falls address with the South Dakota Secretary of State's website and has been open since 2014. Peter Randazzo, the general manager listed on papers filed with the state earlier this year , did not respond to an email request for comment.
But Senate Pro Tempore Lee Schoenbeck , R-Watertown, told Forum News Service on Monday that the industry, which has donated to local, state, and federal campaigns, has also economically boosted the largely rural state.
"I haven't had any complaints about the careers and opportunities the trust industry has created in our state," Schoenbeck said. "I imagine the folks that aren't getting those careers in their jurisdictions aren't too happy."
Schoenbeck said he didn't anticipate any changes to state law as a result of the reports.
Forum News Service also reached out to the state's three members of Congress, all Republicans. A spokeswoman for Sen. John Thune said Thune was aware of the reporting but had yet to issue a statement. Similarly, a spokeswoman for Rep. Dusty Johnson said Johnson had seen the report and was still working through the "tremendous amount of material" before making any public statement.
As noted by reporters in the past, South Dakota became a hub for trusts in the 1980s after then-Gov. Bill Janklow led a campaign to create a friendlier wealth management environment, including wiping away rules on perpetuities, allowing trusts to stay exempt from taxes.
According to South Dakota's Division of Banking, more than 100 trusts held over $350 billion in assets , as of 2020. The South Dakota Trust Association's Executive President Angie Kuiper did not immediately respond to a voicemail requesting comment for this story.
On the group's website, marketing language touts the " South Dakota Advantage ," including the absence of a state income tax or rules against perpetuities, as well as friendly "privacy laws."