South Carolina legislators and external auditors have spent almost a year examining an enigma: a $1.8 billion SC money sum in state accounts, devoid of any identified owner.
Almost the entire amount, approximately $2 billion, detailed in a highly anticipated report that was made public on Wednesday afternoon, has been discovered to be non-existent.
The snafu has also led to the confirmation that South Carolina is currently being investigated by the federal government.
$1.8 Billion SC Money
“There is no $1.8 billion SC money surplus,” Gov. Henry McMaster told reporters Wednesday, minutes before the report had been published but following his briefing on it. “There’s no missing money. There’s no stolen money. The funds don’t exist.”
An audit found that the mystery $1.8 billion SC money was, in fact, an accounting error made about a decade ago, when the state converted from an old accounting system to a new one.
The report states that approximately $1.6 billion of the money mentioned was non-existent, while the remaining $200 million had initially been real but was spent by lawmakers without being subtracted from the records.
Lawmakers were unaware of the error until late 2022 despite the state treasurer, comptroller general, and auditor being aware of it. Additionally, the error had persisted on state financial reports.
“I’m not saying there was a crime. I’m not saying there was a cover-up. But we knew that errors occurred and that the folks responsible for those errors chose not to try to correct them,” Sen. Larry Grooms, R – Berkeley, told reporters after the report’s publication.
McMaster refrained from attributing blame to any specific individual or department on Wednesday.
“This is one of those situations where, if everybody’s responsible, then nobody’s responsible,” he said.
Grooms, who chairs the Senate Finance subcommittee that investigated the $1.8 billion SC money, has come to a different conclusion.
“The state’s books were a mess, but the problem began — and let me make this clear — the problem began in the State Treasurer’s Office,” he said.
The elected Treasurer of that office is Curtis Loftis, who accused the Comptroller General’s Office and former Comptroller Richard Eckstrom. In 2023, Eckstrom resigned due to legislative scrutiny after a prior investigation by Grooms’ subcommittee into a $3.5 billion accounting mistake.
After the report’s publication on Wednesday, Loftis asserted in a released video that it confirms our longstanding knowledge.
“This report confirms there is no mystery bank account with $1.8 billion SC money in it. There is no missing money, and all cash and investments are accounted for,” Loftis said in the video statement.
In April 2024, while testifying under oath to senators, the treasurer affirmed that he had indeed invested the money, which the audit later revealed to be nonexistent.
Loftis informed them during public statements that the investments he made had yielded approximately $200 million in interest for the state, which was subsequently utilized by lawmakers.
“Clearly you can’t earn interest on money that doesn’t exist, so I’ll be curious to see how he explains that,” Grooms said Wednesday.
The SEC is investigating South Carolina in response to the findings and mistakes revealed by Grooms’ subcommittee, as affirmed by the report’s publication and acknowledged by the governor and lawmakers.
The senator claimed to be uninformed about the start of the investigation, despite having been aware of it for around one year.
“This is a state government accounting error unlike any of the other states,” he said.
The state’s bond rating and financial penalties may be negatively impacted due to the SEC’s findings, according to Grooms.
“We hope that those investigators will understand what happened because it was an accounting error and no criminal conduct. … Errors sometimes happen. Unfortunately, this was a big one,” McMaster said.
The report provides a comprehensive list of over twenty recommendations, which encompass the suggestion of engaging a third party to oversee the state’s financial matters.
For nearly a year now, Grooms has consistently emphasized the need for the treasurer to step down, and he reiterated this call on Wednesday.
“In the private sector, if anyone had made a blunder of $1.8 billion — whether it was an error, negligence, misfeasance, malfeasance, fraud, or a cover-up — they would lose their job,” he said.
On the same day, McMaster expressed his continued trust in the elected treasurer during a conversation with journalists.
The financial advisory and consulting firm AlixPartners, LLP, based in Washington, DC, conducted an audit that amounted to approximately $3 million in taxpayer funds for the state.
Local News Via - MyrtleBeachSC.com
