Two law firms, accused of pay-to-play deals in other states, will not monitor South Carolina’s retirement system for fraudulent transactions.
The S.C. Retirement System Investment Commission, which oversees the pension money, Thursday denied a request by state Attorney General Alan Wilson to let Motley Rice of Charleston and Labaton Sucharow of New York monitor the system. The commission said it already has mechanisms to detect fraud in its investment dealings.
Wilson, who received $12,000 in campaign contributions from Labaton Sucharow partners, proposed having the firms monitor the retirement system’s investments for free. If the firms detected fraud, the state subsequently could hire them to sue to recover lost money.
Wilson has said the contributions did not affect his decision to recommend the firms to the commission. He said he based his recommendations on the firms’ experience in helping other pension plans uncover fraudulent transactions.
But some commission members were wary of the offer, including state Treasurer Curtis Loftis, who sits on the commission. Loftis said Thursday that both firms have been accused of deals in other states in which the firms made political contributions and then were awarded state contracts.
Other retirement system commissioners also were critical.
“I have a certain amount of skepticism about any lawyer who would help us out for free,” said one commissioner, Edward Giobbe.
Another commissioner, Travis Pritchett, said he worried the political contributions would taint any deal with the firms. “The decisions we make not only need to be right but they need to also look right.”
Other commissioners expressed concern Wilson’s proposal sparked unfounded worries about fraud within the system, rather than the possibility of fraud in its investment dealings.
Wilson’s office said Thursday the attorney general would adhere to any decision made by the commission, adding his proposal only was an effort to be proactive to stop fraud.
Wilson and Loftis have sparred recently over who had the right to hire law firms to monitor the retirement system. Loftis said he did; Wilson said the commission did. A majority of commissioners Thursday said they alone have the authority to hire attorneys.
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