Treasurer: SLED investigation ‘just a roadblock’

State Treasurer Curtis Loftis said Tuesday that SLED agents have not asked to interview him concerning an alleged “pay-to-play” scheme at the state’s $24 billion retirement fund — a sign, he says, that their investigation is not directed at him.

“To me, (the investigation) is just a roadblock,” Loftis said after a speech to the First Tuesday Club, a Republican organization, in Columbia. “I knew the day I started this there would be many roadblocks thrown up for me, and I just have to keep going.”

The State Law Enforcement Division is investigating allegations by two unnamed financial-management firms that they were promised a lucrative contract to manage a portion of the state’s retirement fund if they would pay a fee to Mallory Factor, a friend who helped Loftis transition into the treasurer’s office after winning election in 2010.

Factor, who lives in Charleston, and Loftis have denied any wrongdoing. A SLED spokeswoman would not say whether the agency had interviewed Loftis.

Loftis kicked off a three-city speaking tour of South Carolina Tuesday, attacking the five-member Retirement System Investment Commission, which is charged with overseeing South Carolina’s pension investments.

Loftis, a member of the commission, has criticized that board, saying it has invested too much money — about half of its assets — in alternative investments, investments other than stocks, bonds and cash. Those nontraditional investments have resulted in higher fees that the state must pay to financial-management firms, Loftis says.

Tuesday, Loftis also questioned a statement by Investment Commission chairman Allen Gillespie to a House budget panel that the performance of the state’s pension fund ranks in the top third nationally. Loftis says the fund ranks in the bottom quarter.

Loftis and the commission are both right.

Loftis’ numbers come from a year-end report, which encompasses the fiscal year from July 1, 2010, to June 30, 2011. Gillespie’s numbers come from a quarterly report in September, which includes numbers from Oct. 1, 2010, through Sept. 30, 2011.

“They used a nonstandard year because it made it look better,” Loftis said. “When the federal government says ... ‘File your tax returns,’ you can’t say, ‘I made a bunch of money in November; I’m going to start my year early and finish it early.’ You can’t do that.”

Gillespie said the September report debunks Loftis’ claims the state’s nontraditional investments put “taxpayers and pension-plan members at excessive risk.” While financial markets struggled in August, South Carolina’s fund outperformed others nationally, meaning “the portfolio wasn’t as risky as our peers,” Gillespie said.

“I don’t think peer rankings ... are the right benchmark anyway,” Gillespie said. “You could beat all your peers and still not pay your liabilities.”

Loftis plans to speak to groups in Charleston and Greenville later this week about the retirement fund. Tuesday, he waved around copies of Pension & Investment magazine and the Wall Street Journal, both featuring articles highlighting his criticism of alternative investments.

“We’re going to be beating the drum. You’re going to be seeing more articles, as I understand it. More (state) treasurers are going to be talking about this across the country.”