COLUMBIA, S.C. — South Carolina Treasurer Curtis Loftis said Wednesday that calls for him to resign over an accounting error that left the state trying to figure out what happened to a $1.8 billion fund amounted to a witch hunt.
A House budget subcommittee asked Loftis about the complex problem his office and two others knew about for roughly six years before it was reported to the General Assembly. The leaders of two other agencies who were aware of the problem subsequently resigned and the accounting error was only reported by one of their replacements.
Most of the $1.8 billion was mistakes involved in assigning the money to accounts and didn’t involve actual cash. But it took millions of dollars and a private forensic audit to untangle the mess.
Loftis said the potential damage to South Carolina’s credit rating and a federal investigation into the state’s accounting practices aren’t the fault of his agency. Rather, he said, the fallout is to blame on Republican state senators and others aggressively pursuing the Republican treasurer and making a public spectacle of the mistake.
“Nobody can understand 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, aren’t so sure. Republican Sen. Larry Grooms is calling for Loftis to resign and the Senate Finance Committee on Tuesday passed a resolution to pay a private accounting firm to “babysit” the Treasurer’s Office — as Grooms said — until lawmakers are confident the state’s accounts are back in order.
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 accounting 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 accounting mistake and his replacement reported the mystery account.
State Auditor George Kennedy resigned last week after the private audit by AlixPartners found he did not review audits that failed to report the $1.8 billion discrepancy.
The questioning of Loftis in the House was less confrontational than the Senate’s. But members of the House budget subcommittee were especially upset why Loftis didn’t report the problems as soon as they cropped up, instead of waiting for years.
“I don’t know how to explain to my neighbors, to my constituents that we could have solved this problem for thousands of dollars but now the taxpayers of this state are forced to spend millions of dollars,” Republican Rep. Micah Caskey said.
Loftis repeated the mistakes were made from outside his agency and his staff was trying to fix them.
“They are trying to do the right things. Decision were made. They weren’t the best,” Loftis said.
Loftis also suggested the damage to South Carolina’s borrowing power has already been done. He said the state now can only get loans and financing on a year-to-year basis at unfavorable terms and laid the blame on the Senate and others who have been aggressively scapegoating him for the accounting problems.
Later Wednesday Grooms showed reporters 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’ presentation, Grooms sat in the back of the meeting room in the House. Grooms left before Loftis once the meeting concluded, but said afterward that the treasurer caught up to him in a hallway.
“He asked me if I was happy that I’m the reason our schools and hospitals aren’t being built in South Carolina,” Grooms said.
A reporter asked how he responded and Grooms said, “I know catfish that are more slippery than you are.”
Loftis’ office didn’t respond to give the treasurer’s version of the encounter.