SIOUX FALLS, S.D. (KELO) — The private and hidden nature of South Dakota’s trust industry is again under question for any possible ties to Russian assets. 

Gov. Kristi Noem (R-S.D.), Republican and Democrat lawmakers alike downplayed any South Dakota connections with Russia during news conferences Thursday in Pierre. Leaked records and documents in the Pandora Papers tied 81 trusts to South Dakota, but exposed examples of alleged wrongdoing from individuals holding money in South Dakota did not include ties to Russia.   

However, the private nature of South Dakota’s trust industry has led people to ask about any possible connections to Russia and if the state would benefit from more transparency on the complex and secret nature of the industry.  

Noem said she was not aware of any Russian assets in South Dakota’s trust industry and praised the industry’s strong vetting process for setting up trusts. 

“It’s all private information,” Noem said. “Our trust industry does have integrity and it has been proven to be an outstanding lawful system in the country.” 

Senator Reynold Nesiba (D-Sioux Falls) said he reached out to Oliver Bullough, a journalist from London, who has been critical of South Dakota’s trust industry in the past. 

“His suspicion is there’d be very little Russian money hidden in South Dakota trusts,” Nesiba said. “Generally, Russia is suspicious that America has a rule of law and could investigate and there would be potential (for the money) to be frozen.” 

Nesiba said he also spoke with the State Investment Officer Matt Clark about the state’s exposure to Russian sanctions. 

“What he shared with me is that we have very little exposure,” Nesiba said he heard from Clark. “The little exposure we have to Russia would be through some Vanguard investments that are part of mutual funds.” 

Nesiba said Clark roughly guessed South Dakota had .01 or .015, or less than one tenth of 1 percent of the state’s portfolio as possibly exposed to Russian markets or connections.   

“It would be really expensive for us to divest that because we’d have to sell a Vanguard mutual fund that has a broad package of other international investments,” Nesiba said. “I was happy to hear that.” 

Senate Majority Leader Gary Cammack (R-Union Center) said the State Investment Council has told him there’s no direct investments tied to Russia. 

“There is a potential that some of the funds could be part of the mix in the investment,” Cammack said. 

House Majority Leader Kent Peterson (R-Salem) says he supports the trust industry as it is. 

“They have a very due-diligence process when they set these up,” Peterson said.

Nesiba said some of the latest leaked documents showed people from China have money hidden in South Dakota trusts. He said he would be concerned about those ties if China acted in a similar way to how Russia is invading Ukraine.  

“One of the things that makes South Dakota trusts so attractive is there’s so much privacy,” said Nesiba, who called for better federal oversight of the industry. “I think trusts would be better regulated at the federal level.” 

Asked about Chinese assets, Noem said she’d have to look at the situation and see if it was a single individual’s information being released. She also worried about what precedent that would set for other related industries. 

“That’s up to our trust industry,” Noem said.