COLUMBIA, S.C. (AP) — For the first time in more than 200 years since becoming a U.S. state, legislators in South Carolina are set to attempt removing an officially elected statewide officer from their position.
On Wednesday, the predominantly Republican Senate opted to conduct a hearing aimed at determining whether Republican State Treasurer Curtis Loftis should proceed with certain actions or policies. removed from office over a $1.8 billion accounting error And subsequently not informing the General Assembly about the issue. Loftis claims that the effort to remove him is driven by political motives.
Loftis can be ousted if both the Senate and the House each muster at least two-thirds opposition against him. On April 21, during a scheduled session, senators will lay out their arguments, after which Loftis or his legal representative will have up to three hours for rebuttal. Subsequently, the House will conduct its separate proceeding.
Money that didn't exist
A 58-page The report issued last week regarding the accounting mistake indicated that South Carolina’s financial records have been unreliable for ten years and still haven’t been rectified. The state has expended millions of dollars on forensic accountants who ultimately concluded that the unaccounted funds weren't actually missing expenditures, but rather stemmed from multiple inaccuracies in bookkeeping and transferring balances between systems without proper reconciliation.
The state should "not leave the continuous financial monitoring—the banking and investment responsibilities of our state—incompetent hands," the senators stated in their report which encompassed more than 600 pages of exhibits.
Loftis countered by highlighting his victories in four elections since 2010 and labeled the Senate investigation as a bid for power, aimed at gaining backing for legislation that would make the treasurer an appointed role rather than an elected one.
"South Carolina faces a financial threat not due to poor management or lost funds. Instead, the genuine peril stems from an unyielding assault driven by politics aimed at my office. This could potentially tarnish South Carolina’s fiscal standing, hike up expenses for taxpayers, and deprive voters of their right to choose a Treasurer dedicated to serving the public rather than catering to special interest groups," as stated by Loftis. in a statement .
The origins of the mistake
Issues began emerging when the state transitioned to new computer systems during the 2010s. Once this process concluded, employees struggled to understand why the financial records were off by more than $1 billion. To address this discrepancy, an account was established to offset the accounting mistake. Over time, additional funds were recorded on paper to maintain balance within the state’s ledgers.
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.
The report indicated that Loftis not only overlooked or did not identify errors committed by his department but also dismissed or delayed efforts to conduct an independent inquiry into the issue.
"The treasurer attempted to conceal them. He managed to keep it hidden for roughly seven to eight years," stated Republican Senator Stephen Goldfinch.
A Senate subcommittee has conducted hearings where they questioned Loftis under oath, but these sessions have turned confrontational. During the proceedings, Loftis threw documents at them, alleged that the senators were conducting a witch hunt, and even threatened to walk out.
Showdown with senators
A specific action that infuriated the senators happened when a legislator questioned Loftis about his failure to submit mandatory financial reports for the state. In response, the treasurer stated that he planned to post an online report which might contain bank account details and other confidential data.
The following day, senators were outraged. They argued that the report could readily be released without including details that might enable cyber criminals to drain the state’s funds.
They asked the governor and the chief of the state police to locate Loftis and request that he refrain from publishing the report. The treasurer mentioned that he was merely adhering to the Senate’s directives.
"His unpredictable nature and hostile attitude diminish those assigned to collaborate with him in ensuring the fiscal stability of South Carolina," the senators stated in last week’s report.
The document further stated that Loftis is accountable for the expenditure of millions of dollars due to inadequate supervision and subsequent refusal to cooperate with the investigation into the account.
What happens next?
On Wednesday, the Senate endorsed what is referred to as an "address for removal" hearing through a voice vote without any objections. Legislators have yet to complete this constitutional process.
The outlook for passing this resolution in the House remains uncertain, as not one Republican has publicly stepped forward to strongly advocate for removing the treasurer.
Republican Governor Henry McMaster has likewise indicated that ousting Loftis would be an extreme measure, though the governor doesn’t hold much sway over this procedure.
