Treasurer defends $9 million payout to attorneys
State Treasurer Curtis Loftis on Thursday defended a $9 million payout to two attorneys who represented his office in a settlement with the Bank of New York Mellon Corp. over pension fund losses. Loftis said he personally pounded the negotiating table to maximize the attorneys fees.
Loftis told the Retirement System Investment Commission that the amount paid by the bank in attorneys fees did not reduce what went into the public employees pension fund because he fought for them separately, after the main deal was reached.
I was selling, brother, I was selling. I was trying to get as much money as I could, Loftis told the board that invests the states pension portfolio. Not one penny of legal fees came out of retirement money.
The settlement provided $7 million to the firm of Mitch Willoughby, who started the lawsuit under former Treasurer Converse Chellis, and $2 million to former Richland County Commissioner Mike Montgomery, Loftis longtime friend and fraternity brother. The payments included the attorneys expenses.
Loftis said his relationship to Montgomery is a non-issue. His spokesman Mark Boone said Thursday that Willoughby asked to bring Montgomery on board and that Loftis, a Republican who took office in January 2011, supported the arrangement because he knew Montgomerys work ethic.
This was economic development as far as Im concerned. I was selling at the highest rate possible, Loftis said after the meeting about their pay. These are two South Carolina law firms. Hes from South Carolina. Im going to get them as much as possible.
Loftis fellow commissioners on the board, whom hes publicly feuded with since taking office, as well as members of the State Retirees Association have questioned the settlements benefits and called the attorney fees excessive.
The treasurers office sued the bank in January 2011, accusing it of losing $200 million in retirees money through bad investments that violated its contract for conservative, short-term securities lending. The actual loss at the time of settlement was roughly $120 million, due to partial recovery from those investments in sub-prime mortgages and bankrupt Lehman Brothers, according to the investment commission, which had no say in the settlement.
Under the settlement, the bank credited $25 million to the states investment accounts: $20 million to public workers $27 billion pension portfolio and $5 million to the treasurers fund for local governments.
Loftis contends the deals value could top $100 million when counting potential savings over a 10-year contract awarded to the bank as part of the settlement a contract yet to be signed.
According to the commissions analysis, the settlement would result in higher, not lower, custody fees which are fees for holding the assets. Other savings depend on the unlikely event that the commission would invest at least $3 billion with HedgeMark, a Bank of New York affiliate.
The Associated Press
Ronald Wilder Travis Pritchett