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SC retirees kept out of briefing on settlement

Seanna Adcox, Associated Press

COLUMBIA, S.C. (AP) -- South Carolina retirees say they have a right to know how a settlement between the state treasurer's office and the Bank of New York affects the trust fund that pays their pensions.

State attorneys briefed the commission overseeing the state's pension portfolio Thursday, but only on the condition that three representatives of the State Retirees Association and a reporter for The Associated Press leave the room.

"Under what law are we not able to attend this meeting?" asked Sam Griswold, the association's former president. "You do realize you're talking about our money? It's held in trust for us."

The treasurer's office sued the bank in January 2011, accusing it of losing $200 million in retirees' money through bad investments that violated its contract. Under the settlement that took effect this month, the global investments company agreed to put $25 million in South Carolina's accounts, with $20 million designated for the retirees' $27 billion fund.

Attorney Mitch Willoughby said the settlement still limits discussions. A clause required the bank's approval of public statements, though it allowed exemptions for discussions with the Retirement System Investment Commission, legislators and other state officials. It also allowed exemptions under the state's Freedom of Information Act.

"We're authorized today to speak with the commission," Willoughby said. "Understanding the limitations in the agreement, there are still ongoing contract negotiations. We want to be very careful that we comply with that contract."

Willoughby suggested that the retirees ask the treasurer's office to give them a similar briefing later.

The settlement awards the Bank of New York Mellon Corp. a new, 10-year contract as the holding bank and securities investor of state assets — keeping roughly $40 billion with the bank that's held the state contract since at least 2000.

Under the deal, Treasurer Curtis Loftis promised to encourage that the bank and an affiliate that manages hedge fund investments, HedgeMark, win as much of the state's investment business as possible for at least the next decade. As treasurer, Loftis is a voting member of the investment commission.

Provided HedgeMark manages at least $3 billion in state assets, the treasurer's office will get back an expected $2.6 million annually as a portion of the bank's fees.

In return, South Carolina also gets a greater profit share on securities lending and breaks on fees.

The bank had to release all of the money — including an additional $9 million to two South Carolina attorneys — by last Friday, according to the settlement obtained last week by the AP.

But the 10-year contract is still in the works. The retirees say they're troubled by that commitment.

"We're not happy with the way this has been handled," said Wayne Bell, current president of the retirees' association. "Our future and out trust is being treated so secretly in a veil of secrecy."

In response, Willoughby argued the lawsuit was publicly litigated for two years. But Bell shot back that alarming secrecy surrounds the settlement — a public document under state law.

Loftis' fellow commissioners tried to get him to discuss the details in open session at their meeting a week ago, but Loftis refused, saying only that it was a good deal for the state. He accused the commissioners he's been feuding with since taking office in 2011 of trying to embarrass him before the settlement allowed him to talk. He said then he could give the details in a week.

An AP reporter asked permission from the treasurer's office to sit in on Thursday's briefing and was told only that the office was giving no briefing.

The three people addressing the commission were the two attorneys hired to represent the treasurer's office in the case and one from the attorney general's office. Both Loftis and Attorney General Alan Wilson signed off on the settlement last month.

When Bell said the association has yet to get a copy of the settlement under his public records request to the treasurer's office last week, the attorney general's representative told him to submit it through his office.