State Treasurer Curtis Loftis is continuing his efforts to increase transparency and oversight over state employee pension investments, calling for the State Budget and Control Board to hear his concerns about the management and oversight of an estimated $25 billion in pension funds during it's Wednesday meeting.
As the only publicly-elected member of the six-member S.C. Retirement System Investment Commission, which is responsible for overseeing these investments, Loftis has been calling for needed reforms, a fight which has even drawn the attention of national media, including a recent story in the New York Times, which reported on Loftis' concerns about how these funds are being managed:
(P)ension officials have had their heads turned by Wall Street players who stand to benefit from the state’s money. “This is a world where people have private jets, massive apartments overlooking Central Park, people who live exotic lives,” said Mr. Loftis, reclining in a chair in his baby-blue office at the State House, as his black Labradoodle, Camey, snoozes nearby.
It all sounds like one of those classic tales of a lot of public money meeting a little private greed, of locals wooed by big-city slickers. And Mr. Loftis provides some juicy tidbits, including meetings with Wall Street types within the black-lace covered walls of the Provocateur nightclub in the meatpacking district of Manhattan — and even a dinner with a centerfold model.
Warning that the "Investment Commission has fallen short in its accounting, auditing, reporting, contract management, due diligence and fee management responsibilities,” Loftis intends to present findings to the Board which support numerous and wide-ranging concerns that he has about fiscal transparency, proper oversight and overcharging for fund management by the Commission. He will ask the Board to allow Treasurer's office staff to review contracts and other documents related to the state pension fund's investments.
Loftis' concerns include:
Loftis' concerns include:
- Paying five times the average amount of investment fees and expenses, but it regularly ranking in the bottom 50% of its peers in rate of return.
- Prohibiting the Attorney General from viewing the files of the Investment Commission, as well as lawyers and senior advisors to the Treasurer, Governor, Budget & Control Board and General Assembly.
- Regularly paying tens of millions of dollars in expenses without proper explanations of those expenses, and then failing to disclose those expenses to the public, or any accountable body or elected official.
- Asking the State Treasurer to send millions of dollars to investment firms while prohibiting the State Treasurer from seeking the informed advice of his lawyers, chief investment officer or chief banker.
- Sending tens of millions of dollars to private corporations, partnerships and other entities without proper custody or trust agreements.
- Not reporting most expenses to the State Comptroller - and therefore to the public - by allowing investment firms to pay Commission expenses and to deduct those expenses from the State’s investment, ensuring that these expenses are hidden from the public and the State’s bookkeeping system.
- The Investment Commission has never had a complete independent audit. Past, abbreviated “look-through” audits lack the scrutiny required for accountability of public dollars.
No word yet on if the Budget and Control Board will give Loftis a chance to air his concerns or what action might be taken to open the Commission to greater oversight, but either way, we'll keep you posted.