Investment board rejects S.C. AG's proposal
COLUMBIA, S.C. (Legal Newsline) - South Carolina's Retirement Investment Commission on Thursday rejected a proposal by Attorney General Alan Wilson to hire two law firms to oversee transactions in the system.
According to The Associated Press, Chairman Allen Gillespie said Wilson never consulted the commission on his plan.
In fact, the first the panel heard of it was when it ran in local newspapers, he said.
Wilson made the proposal last month, concerned about fraud in the retirement system, which has about $26 billion in assets.
To help monitor the system, he wanted to hire attorneys from New York firm Labaton Sucharow -- whose partners contributed thousands to Wilson in 2010 -- and Charleston firm Motley Rice.
The lawyers, according to reports, would be paid fees only if hired by the state to recover money.
But State Treasurer Curtis Loftis took issue with the proposal to hire outside lawyers, saying they weren't needed.
"As treasurer, I am the custodian of the state's funds," Loftis told The State this week. "It is important that these large-dollar contracts be without political involvement or interference. Campaign contributions have no place in the decision process of protecting our $26 billion trust fund."
Both firms have been accused of so-called "pay-to-play" arrangements in other states.
Loftis said the state already monitors for fraud, waste and abuse through "a variety of methods."
Wilson said he was merely trying to be proactive" and that Labaton Sucharow's contributions had nothing to do with his proposal.
In January, South Carolina filed a lawsuit against the Bank of New York Mellon Corp. and the Bank of New York Mellon for allegedly making bad investments with the state's money.
Gillespie said Thursday that the commission has its own fraud checking system and would decide if it needed outside help, the AP reported.
From Legal Newsline: Reach Jessica Karmasek by email at firstname.lastname@example.org.