COLUMBIA, S.C. — South Carolina Treasurer Curtis Loftis said on Wednesday that demands for him to step down due to an accounting mistake involving a $1.8 billion fund are like a witch hunt.
A House budget panel asked Loftis about a complicated issue that his office and two others had known about for about six years before it was shared with the General Assembly. The leaders of two other agencies who knew about the problem later retired, and only one of their new replacements reported the accounting mistake.
Most of the $1.8 billion was due to errors in giving the money to accounts and didn’t involve real cash. But it took millions of dollars and a private forensic study to untangle the mess.
Loftis stated that the possible harm to South Carolina’s credit rating and a federal inquiry into the state’s accounting methods are not caused by his office. He said the problem is caused by Republican state senators and others who are actively going after the Republican treasurer and publicly highlighting the mistake.
“Nobody understands it.” It’s a political witch hunt,” said Loftis, who several times blamed the mistakes on now retired members of his staff or on the Comptroller General and Auditor offices who help him with state finances.
Lawmakers, especially in the Senate, are uncertain. Republican Sen. Larry Grooms wants Loftis to resign. The Senate Finance Committee has agreed to hire a private accounting company to watch over the Treasurer’s Office until lawmakers feel sure that the state’s finances are in good shape again.
The issues began when the state updated its computer systems in the 2010s. When the process was done, workers couldn’t understand why the books were off by more than $1 billion. A fund was set up to fix an accounting mistake, and over the years, more money was put on paper to keep the state’s financial records balanced.
The error was discovered after Comptroller General Richard Eckstrom retired in March 2023 due to another accounting mistake, and his successor reported the unknown account.
State Auditor George Kennedy quit last week after a private audit by AlixPartners revealed that he did not review audits that missed a $1.8 billion error.
Loftis was questioned by the House in a less aggressive way than by the Senate. House budget subcommittee members were particularly upset that Loftis didn’t report the problems right when they happened, choosing to wait for years instead.
Republican Rep. Micah Caskey said, “I don’t know how to tell my neighbors and the people I represent that we could have fixed this issue for a few thousand dollars, but now taxpayers have to pay millions.”
Loftis kept making mistakes caused by others outside his agency, and his team was working to correct them.
They are trying to make good choices. Decisions were made. “They weren’t very good,” Loftis said.
Loftis also said that the harm to South Carolina’s ability to borrow money has already happened. He said the state can only get loans and funds for one year at bad terms. He blames the Senate and others for unfairly blaming him for the accounting issues.
Later Wednesday Grooms showed media a memo from Senate Finance staff that said the state can borrow and assume debt and no projects have been held up.
During part of Loftis’ talk, Grooms sat at the back of the meeting room in the House. Grooms left before Loftis after the meeting ended, but later said that the treasurer ran into him in a hallway.
“He asked me if I was glad that I’m the reason our schools and hospitals aren’t being built in South Carolina,” Grooms said.
A reporter asked how he reacted, and Grooms replied, “I know catfish that are slipperier than you.”
Loftis’ office didn’t reply to give the treasurer’s version of the encounter.
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