A $1.8 billion mistake could cost the S.C. treasurer his job

COLUMBIA, S.C. - For the first time in over two centuries as a U.S. state, South Carolina lawmakers are going to try to remove a statewide elected official from office.

The Republican-dominated Senate on Wednesday decided to hold a hearing to decide if Republican state Treasurer Curtis Loftis should be removed from office over a $1.8 billion ing error and then failing to report the problem to the General Assembly. Loftis says the attempt to oust him is politically motivated.

Loftis can be removed if two-thirds of the Senate and House vote against him. At a hearing on April 21, senators will present their case and Loftis or his attorney will have three hours to respond. The House would then follow suit with their own hearing.

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“To remove Treasurer Loftis from his office for willful neglect of his duty,” said Sen. Larry Grooms, R-Berkeley.

The hearing will likely take several hours – with two senators making their case for why Loftis should be removed.

Loftis will be able to respond and defend himself, with an attorney present and every senator allowed to ask both sides questions.

It’s the most serious action to result at the State House so far from the investigation into a mystery $1.8 billion surplus that an outside audit determined was nonexistent and the result of a years-long ing error.

Two of the state’s three key financial officers who were involved and aware of the error have since resigned.

But Loftis has remained adamant he will not do so, calling legislative inquiries into the situation and his role in it a witch hunt.

Some lawmakers see it differently – led by Grooms’ Senate Finance subcommittee – which has spearheaded the legislative investigation and called for Loftis’ removal.

Two-thirds of in the Senate and the House of Representatives would need to vote in favor for Loftis to lose his job.

“It really depends on the people who have heard him talk,” said Senate Majority Leader Shane Massey. “The more senators hear him talk, the more they want to get rid of him. … If the body decides not to go that route, we’re going to have to figure out how to manage that office over the next two years because he’s not capable of doing it himself.”

Gov. Henry McMaster does not believe Loftis should lose his job – saying he doesn’t think that would help the state.

But it is important to note that the governor has no role in this type of removal-from-office proceeding, which is entirely up to the General Assembly.

A 58-page report released last week on the ing error said South Carolina’s books have been inaccurate for 10 years and continue to not be corrected. The state paid millions of dollars to forensic ants who eventually determined the missing money was not cash the state never spent, but instead was a series of errors in balancing books and shifting s from one system to another that were never reconciled.

The state should “not consign the ongoing fiscal oversight — the banking and investment functions of our state — to continued incompetence. In sum: if the treasurer cannot keep track of the treasury, then he should not remain treasurer,” senators wrote in their report that included more than 600 pages of exhibits.

Loftis responded by pointing out he has won four elections since 2010 and called the Senate investigation a power grab so they can get for a bill to have the treasurer become an appointed position.

“South Carolina’s financial threat isn’t from mismanagement or missing money. The real danger comes from a relentless, politically motivated attack on my office — one that risks undermining our state’s financial reputation, increasing taxpayer costs, and stripping voters of their right to elect a Treasurer who works for the people, not special interests,” Loftis wrote in a statement.

The origins of the mistake

The problems started as the state changed computer systems in the 2010s. When the process was finished, workers couldn’t figure out why the books were more than $1 billion out of whack. A fund was created to cover the ing error and over the years more was added on paper to keep the state’s books balanced.

The error came to light after Comptroller General Richard Eckstrom resigned in March 2023 over a different ing mistake and his replacement reported the mystery .

The report said Loftis not only ignored or failed to find mistakes made by his office but also rejected or slowed down attempts to independently investigate the problem.

“The treasurer tried to cover them up. He covered it up for the better part of seven to eight years,” Republican Sen. Stephen Goldfinch said.

A Senate subcommittee has held hearings to question Loftis under oath. They have been contentious. Loftis has slammed papers, accused senators of a witch hunt and threatened to get up and leave.

Showdown with senators

One move that particularly angered senators occurred after a lawmaker asked Loftis why he didn’t file reports on the state finances, as required by law. The treasurer said he would publish a report online that could include bank numbers and other sensitive information.

Senators were in an uproar the next day. They said the report could easily be published without information that would allow cybercriminals to empty the state’s s.

They had the governor and the head of the state police find Loftis and demand he not publish the report. The treasurer said he was just following the Senate’s instructions.

“His volatile temperament and angry demeanor degrade those who are charged to work with him to secure the financial standing of South Carolina,” senators wrote in last week’s report.

The report also said Loftis is responsible for millions of dollars to be spent through his lack of oversight and later lack of cooperation investigating the .

What happens next?

The Senate approved Wednesday what is called the “removal on address” hearing by a voice vote with no opposition. Lawmakers have never taken the constitutional step to its conclusion.

The resolution’s future is a little more murky in the House, where no Republicans have come out to forcefully call for the treasurer’s removal.

Republican Gov. Henry McMaster has also suggested removing Loftis from office is too drastic, but the governor does not have a major role in the process.

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