Liz Farmer is a GOVERNING finance writer.
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Finance
South Carolina Treasurer Fires Back After Censure
South Carolina Treasurer Curtis Loftis has long been a frequent -- and vocal -- critic of how his state's investment commission has managed public pension funds. Now he's continuing to speak out against the commission -- even after official admonishment from the group. The commission voted 5-1 Thursday to censure him; Loftis, who sits on the commission, was the lone dissenting vote.
The embattled treasurer called the censure by the South Carolina Retirement System Investment Commission an effort to silence his public criticism of the commission’s investment practices. Loftis has repeatedly criticized the commission and accused it of withholding information about its investment practices, investment fees and contracts. The $27 billion pension fund boasts one of the largest concentrations in private equity, hedge funds and other alternatives among large U.S. pensions.
“Without necessary and timely information I cannot guarantee the existence, valuation or safekeeping of the assets,” Loftis said in a statement issued Thursday. “As the Custodian and a member of the Commission I am due any and all information and their refusals raise red flags about the security of the funds. Instead of spending public retiree resources on planning a public ambush, Chairman [Reynolds] Williams ought to be concerned about chronic underperformance, poor external audit reports and his criminal investigation.”
In its censure, the commission condemned Loftis for what it called “false personal attacks [that] have created a hostile work environment for Commission staff by implying they lack integrity and fail to live up to professional codes of ethics.” In a four-page condemnation, the censure cited 20 separate statements Loftis made to various media outlets over the past year, as well as four email message exchanges and one Facebook post.
Loftis has for several years been critical of the commission’s management of the state retirement fund. Last summer he filed a criminal complaint against Williams with the state attorney general's office. The complaint accuses Williams of steering a $22 million investment contract to his law firm.
After the censure Thursday, Loftis noted that the commission had paid $296 million in investment fees while only making $125 million even with a total annual return of 12.6 percent.
“The facts are clear regarding high fees and low returns, we absolutely must put an end to sending millions of dollars in fees and expenses out of South Carolina,” Loftis said. “This is the working people’s money and we must treat it as if it is our own.”
The investment commission disputes Loftis’ 2012 figure, saying its “investment decisions added approximately $3 billion to the fund during the past year.” According to the commission, the three-year return has averaged 8.2 percent, for $5.9 billion.*
Gov. Nikki Haley said following the censure that she continues to support Loftis.
*This story was updated to include information from the investment commission challenging Loftis' 2012 estimate of how much money was added to the fund.
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