COLUMBIA — S.C. Treasurer Curtis Loftis threatened to cut off funding for state pension fund investments after he lost a push Thursday to secure more oversight of fund contracts.
If he follows through, Loftis could subject the state to penalty clauses laid out in the $25 billion retirement fund’s agreements with managers, said Reynolds Williams, the chairman of the S,C, Retirement Fund Investment Commission.
“Not funding an authorized investment would be a breach of his fiduciary duty,” Williams said in a statement.
Loftis, a member of the commission, said his refusal to cut checks would not be illegal.
Less than an hour after making the threat Thursday evening, Loftis appeared to back off. His spokesman said in an email that the treasurer is “nowhere near” the point of refusing to fund investments, and will continue to work with staff from the commission and his office on the matter.
Loftis had said earlier that whether he makes good on the threat will depend on whether he can satisfactorily resolve his concerns about oversight of fund contract matters, including custody arrangements.
Loftis’ threat followed a day-long, mostly closed-door meeting of the commission in which he failed in bids to remove Williams as chairman and secure the right for his senior staff to review investment contracts.
Currently, only Loftis as a commissioner can look at the contracts.
He has repeatedly argued that his staff also should have access to the agreements.
Loftis claims that oversight of the fund’s agreements with managers is dangerously thin, and puts the retirement fund’s more than 500,000 beneficiaries at risk.
He said Thursday that the confidentiality rules in the fund’s contracts that allow only commissioners to look at the agreements are “a stain” on the commission.
Loftis motions to expand access to contracts and remove Williams both fell by 3-3 votes.
Loftis has accused Williams of benefiting from a commission investment, a charge Wiliams has denied.
The S.C. Attorney General’s Office, acting on information provided by Loftis, has asked the State Law Enforcement Division and State Ethics Commission to investigate the allegations.
Loftis was successful on one of his motions — a requirement that commissioners and staff be given an additional 30 days to examine an approved fund contract before it can be executed.
In other action, the commission unanimously named Hershel Harper as its new chief investment officer.
He had been serving in that role on an interim basis since late last year following the resignation of Bob Borden.
Reach Stephen Largen at 864-641-8172 and follow him on Twitter @stephenlargen.