A commission of state senators investigating why $1.8 billion was sitting in a bank account said the state treasurer had lost control of the state treasury.
In a heated hearing on Tuesday, Treasury Secretary Curtis Loftis spent six hours defending the existence of a $1.8 billion account.
Whether it will lead to a similar fate as the previous Controller General last year remains to be seen.
“I wasn’t sitting on anything,” Loftis said after being accused of not sharing information about the account.
But at the end of the contentious hearing, State Senator Larry Grooms (R-Berkeley), who chairs the panel, said the General Assembly could not rely on Loftis to resolve the problems surrounding his office that came to light during the Senate investigation.
“These actions result in misrepresentations of the state’s financial condition and thereby mislead the General Assembly, the people of South Carolina and others who rely on the state’s financial reports,” Grooms said. “Mr. Loftis has neglected his responsibilities. The State Treasurer has abused the public trust.”
Loftis reiterated that the previous comptroller general and auditors knew about the $1.8 billion account, but senators focused on why Loftis did not inform lawmakers sooner.
New Comptroller General Brian Gaines brought the problem to the attention of lawmakers.
Speaking to reporters after the hearing, Grooms said the state’s investment portfolio had lost nearly $1 billion in value and that the Treasury secretary was selling investments at a loss.
At one point in the hearing, state Sen. Stephen Goldfinch (R-Dorchester) asked Loftis if he had pressured the state auditor to change a draft report that showed the state fund had a negative cash balance.
“I’m not going to stand here and be accused of breaking the law,” said Loftis, defending himself. “I’m being accused of breaking a law that I don’t even believe exists and that there’s no evidence for. And there’s an accounting firm you can call and ask.”
Grooms said the committee had contacted the auditor, who had indicated that the situation was not good.
“I believe there was influence,” Grooms said. “I believe there was undue influence on the auditor to make a correction showing that the general fund balance was zero when the draft report said it was (negative) $456 million.”
During Tuesday’s hearing, Grooms asked why nearly $31 billion in state funds incorrectly accounted for in the state ledger have not been reconciled since the state changed its accounting system in 2017.
“He lost control in 2016 and has made no effort to correct that. Instead, he is trying to shift the blame onto others,” Grooms said in an interview.
Loftis denied that the amount was $31 billion, claiming that the actual amount was $1.8 billion. At one point, he approached reporters and showed them a document with the total amount at $1.8 billion.
Loftis, a Republican, was re-elected to a fourth term in 2022 with nearly 80% of the vote. The Democratic Party did not field an opponent. His only challenger on the ballot came from the Alliance Party.
The treasurer said Tuesday that this term would be his last.
Last year, former Comptroller General Richard Eckstrom resigned after it was revealed that the Comptroller General’s office had inflated the state’s coffers by $3.5 billion. The General Assembly said it was preparing to remove him.
Whether Loftis will suffer a similar fate remains to be seen. Grooms said the investigation is continuing and more witnesses may be called.
“There are still some outstanding questions that the subcommittee and our staff have been investigating,” Grooms said.
