COLUMBIA -- South Carolina's treasurer and attorney general are clashing over a plan to use law firms, including one in Mount Pleasant, to review state pension fund investments for fraud, underscoring a soured relationship for top Republicans.
Attorney General Alan Wilson said Wednesday that fellow Republican Curtis Loftis had supported that proposal before an about-face during the past month. The state's pension plans had nearly $19 billion in investments, according to the last formal financial report.
Loftis released a statement asserting his authority over issues with retirement funds and questioned whether lawyers were needed, because he has "extensive monitoring and other resources" in place to watch over pension funds.
"Like many treasurers across the country, I am the custodian of the state's funds," Loftis said. "We closely monitor these funds to make sure they are well protected."
Loftis told legislators this year that he needed authority to spend more money to monitor taxpayer money. And legislators gave him temporary authority to choose lawyers for his office's outside legal work, a move Gov. Nikki Haley vetoed with Wilson's backing.
On Wednesday, The State newspaper in Columbia reported that Wilson's 2012 campaign received $12,000 in contributions from partners in Labaton Sucharow of New York, one of the firms that would review investments. The firm's contributions in other states have raised questions, and Loftis wanted none of that.
"It is important that these large-dollar contracts be without political involvement or interference," Loftis said.
Wilson said he is not being influenced by donors. "I picked them because of their ability," Wilson said. "There is no money. There is no contract. ... There's no pay-to-play."
Loftis faced questions this year about a lawyer with close ties to him being hired for a lawsuit involving pension funds. Loftis' fraternity brother and personal lawyer Mike Montgomery was added to a lawsuit with contingency fees that could bring him up to $3 million if the state wins what Loftis described as a case that could bring a $200 million settlement.
Loftis defended the arrangement months ago. "We don't hire enemies to do stuff for us."
And, as Loftis noted Wednesday, Wilson agreed to the arrangement.
Wilson pointed out that the New York law firm and mount Pleasant's Motley Rice will review the investments at no charge. Any decision to pay lawyers to pursue litigation will be made by the South Carolina Retirement System Investment Commission, which meets Thursday with plans to discuss the monitoring plan.
Loftis appoints one of that panel's members, but has no control over the commission's decisions.
Wilson said he and Loftis first discussed the plan for lawyers in May. He said there were subsequent conversations with Loftis and his staff members. He said he recalled Loftis saying that he would go with anybody Wilson approved to monitor the funds.
Wilson said he embarked on getting lawyers to do the work after that, and Loftis met with the New York firm and liked what it was offering.
Wilson said the turnabout came after the story on Loftis' friend and after he helped kill a proposal by Loftis to have a freer hand in hiring lawyers. Current law gives the attorney general sole authority to OK lawyers who work for state agencies.
Loftis asked for a month to think about the lawyers. After more than two months, Wilson told Loftis in an Aug. 26 letter that he was moving forward.
Loftis responded last week. "I am not in need of any legal and or monitoring systems at this time, and if and when the need arises, the selection of appropriate council will be as I deem appropriate," Loftis wrote.
"The treasurer took one position and now he's 180 degrees opposed to it," Wilson said.
Their relationship isn't what it used to be. "Back when he liked me, he was all over this," Wilson said. Now, "every time I turn around, he's kicking me in the teeth in the media."