SC Senate votes to remove state treasurer over $1.8B accounting error

COLUMBIA — The South Carolina Senate voted late Monday to remove state Treasurer Curtis Loftis from office for his role in a $1.8 billion accounting error that went unreported for nearly a decade.

By a vote of 33 to 8, with five senators absent, the Republican-controlled Senate used an obscure constitutional measure to do something never done before in South Carolina history — remove an elected official from office — in this case one who is a member of the majority’s own party. All eight votes against removal were cast by Republicans.

But senators don’t have the authority to remove Loftis on their own.

The House would also need to approve his removal by a two-thirds majority, which would then require Gov. Henry McMaster to take the official action.

And Republican leaders in the House have not said whether they will take up the case.

South Carolina’s accounting problems, which involved almost no actual money, stem from the changeover from the state’s legacy accounting system to a new one.

During that process, a series of electronic ledger entries made it appear the state had $1.8 billion sitting untouched in a fund with no record of where it was supposed to go. A forensic accounting firm hired by the state ultimately found the entries were made in error and all but $200 million of the money was never real.

But what seemed to frustrate senators the most is that the state’s financial officials never alerted the General Assembly to the issue.

Two Republican members of the panel that has spent the last year investigating the matter argued the treasurer was incompetent, untrustworthy and “willfully neglected his duties” when he failed to report the mistakes to legislators.

“When he was faced with a $1.8 billion anomaly that remained in state records for years and years and years, he failed to detect it, he failed to report it, and when questioned, he failed to tell the truth about it,” said Sen. Stephen Goldfinch, R-Murrells Inlet.

“This was not momentary oversight or a technical misunderstanding by any means,” he said. “It was a sustained failure of judgment, of duty and of candor.”

Questions from senators, Republicans and Democrats both, were largely focused on what the treasurer knew when and why he had not taken responsibility for his role.

“It makes it so difficult for me to tell my neighbor … It is so hard to defend,” Sen. Luke Rankin, R-Myrtle Beach, said to Loftis. “Help me. Help us. Accept the responsibility.”

In response, Loftis said, “Tell me what you want me to accept responsibility for, because it’s complicated.”

Throughout the process, Loftis has maintained he did nothing wrong and instead laid the blame for the error outside his office. No money went missing, he has argued, and the whole investigation amounted to nothing more than political theater.

Lawyers representing the treasurer opened their arguments with a photo of Loftis and Republican President Donald Trump. They pointed to his winning track record — four terms in office — and he is now making his case to voters again, 14 months ahead of the Republican primary.

“Our democracy was built by letting issues like this be decided at the ballot box.” said attorney Deborah Barbier.

The legal team went on to remind many of the 34 Republicans in the 46-member Senate that they represent GOP-dominated districts.

The voters who elected them also likely cast their ballot for Loftis, said attorney Johnny Gasser, and choosing to remove Loftis amounted to telling residents their vote didn’t matter.

“Do you really want to go down this path today?” Gasser asked.

But Sen. Larry Grooms, who has led the investigation, contended Loftis had not behaved like the treasurer voters believed they had elected in 2022 or any of the previous election years. Loftis, he said, decided “protecting his public image was much more important than faithfully executing the duties of Office of State Treasurer.”

“Now that he’s been outed, now that his secret is exposed, now that sunlight is shining upon him and his failures, he is a different person,” added the Bonneau Beach Republican. “This Curtis Loftis is a liability to the finances of our state.”

And while the accounting error itself involved almost no real money, that hasn’t stopped the state from racking up bills trying to get to the bottom of the problem.

“The self-proclaimed ‘best friend of the taxpayer’ is costing the taxpayers tens of millions in legal, auditing and oversight fees,” Grooms said. “And these costs to the taxpayer are just beginning. With friends like this, who needs tax-and-spend liberals.”

Lofits did acknowledge his actions may have fallen short of expectations at times and promised to do a better job in the future.

“My passion for fighting what I perceive to be injustice may have been inappropriate, but my intent was always to do the honorable thing,” he told the Senate. “I hope all of us in this room agree that we should rise above the moment and return our focus to what matters — serving the people of South Carolina with honor, respect and purpose.”

For many, it was too little, too late.

“If your banker has a $1.8 billion error in your account, what do you do?” Goldfinch said. “At the end of the day, you go get a different banker.”