State Treasurer Curtis Loftis says a member of the commission that oversees the state’s $25 billion retirement fund used his position to steer business to two companies he works for, warranting an investigation for “a possibly criminal act.”
Reynolds Williams denied Loftis’ allegations Monday, saying Loftis is targeting him to settle an old political score.
Williams, who became chairman of the S.C. Retirement Investment Commission on July 1, is the chief executive of the Florence-based Willcox, Buyck and Williams law firm. The firm also owns First Eastern Carolina Title Agency.
The state paid the law firm and title agency $88,000 for work on a roughly $22 million timber investment that the commission, including Loftis, approved last year.
Loftis has reported his allegations to state Attorney General Alan Wilson, alleging Williams is in violation of S.C. law, which bars a retirement commissioner from obtaining “any economic interest for himself ... or a business with which he is associated.”
“Now, I’m not a judge, but I know what I found is the appearance of a serious breach of fiduciary responsibility and possibly a criminal act,” Loftis said.
Williams did not vote on the investment deal last year, citing a conflict of interest. Williams disclosed his relationship to the deal to the commission and its staff six months before the commission voted on the investment. Williams added he did not make money on the deal because his law firm has a series of internal financial firewalls that prevent conflicts of interests.
“Neither I nor anybody with whom I am associated has any ownership interest in that (timber) company,” Williams told The State in a written statement. “I fully disclosed all attorney-client relationships to the commission early in the due-diligence process; I never asked a single commissioner to support the investment; I never suggested that any staff member make any particular decision; I abstained from acting or voting when Mr. Loftis proposed the investment.”
A spokesman said the attorney general’s office is "forwarding the material we have on file to both SLED and the State Ethics Commission. (The Treasurer's letter alleges activity that would fall under each authority, criminal and ethical.) When both entities have completed their reviews, we will then determine what, if any, prosecutorial action is warranted."
Loftis and Williams have a history of friction.
In January, when Loftis was the subject of a SLED investigation regarding “a possible pay-to-play scheme,” Williams publicly called for lawmakers to remove Loftis from the commission. Lawmakers declined to remove Loftis, and the state attorney general’s office cleared Loftis of any wrongdoing.
Williams said Loftis is coming after him as payback, calling Loftis’ letter to the attorney general’s office “political posturing.”
“There are 520,000 people (in the state retirement system) affected by this. ... I swore that I would protect their money,” Loftis responded. “His comments are juvenile.”
Williams was appointed to the Investment Commission by state Sen. Hugh Leatherman, R-Florence, chairman of the Senate Finance Committee. Leatherman said Monday he did not know of Loftis’ allegations.
“As far as I know, Mr. Williams is an outstanding person,” he said. “He certainly has the respect of the people in the Florence area.”
Loftis said he voted for the investment deal because, at the time, he did not know the extent of Williams’ involvement. He said he discovered more about Williams’ involvement while perusing the contracts of the state’s pension investments — contracts that, because of confidentiality agreements, are only available to him, commission members, commission staff and the five-member Budget and Control Board. Loftis says that confidentiality prevents him from consulting with his staff and other outside attorneys when reviewing investment decisions — and that, he says, could lead to trouble.
“It’s a simple mathematical equation: A fetish for secrecy plus $25 billion equals trouble,” Loftis said. “That’s what we’ve got.”
The Budget and Control Board, the trustees for the retirement fund, will meet Thursday to discuss allowing some outside attorneys to review the investment commission’s documents.
Commission member and former chairman Allen Gillespie has said each investment contract contains a confidentiality agreement that would have to be renegotiated.