COLUMBIA, S.C. (AP) -- The state treasurer's office wants to pay the bank that holds South Carolina's assets $2 million directly from public workers' pension fund without getting approval from the Legislature.
Office attorney Bill Condon has sought approval from the Retirement System Investment Commission and two other agencies responsible for the fund. But former Sen. Greg Ryberg, the commission's new chief operating officer, replied with a resounding no.
"This attempt to spend millions of dollars of retirees' trust fund money with absolutely no transparency or accountability is one of the more shocking schemes that I have seen," said Ryberg, who spent 20 years in the Senate before retiring last year.
A spokesman for Treasurer Curtis Loftis did not return phone or email messages Wednesday seeking comment. Since taking office in 2011, the elected Republican has publicly feuded with Ryberg, as well as his fellow commissioners on the board that invests retirees' $27 billion pension portfolio.
But Condon is seeking their approval in an attempt to wrap up a 10-year contract with the Bank of New York Mellon Corp.
A settlement negotiated last spring through Loftis' office awarded it a new contract as the holding bank and securities investor of state assets — keeping roughly $40 billion with a bank the state accused of losing retirees' money through bad investments. But six months later, no contract exists.
Under the not-yet-signed contract, the state would have to pay the bank an estimated $2 million annually in upfront custodial fees never before paid. The treasurer's office wants the money to come from the pension fund because there isn't money in the 2013-2014 budget for it.
Condon says legislative approval isn't needed because the money is coming out of a trust fund, not public funds, he wrote in a letter obtained by The Associated Press. He likened it to investment management fees paid from the fund.
Custodial costs could go through the budget process in future years, but the money needed now "may still be properly paid from the trust," he wrote. As for transparency, he added, the letter itself provides that, and costs could be disclosed in audited financial statements.
By law, the treasurer is the custodian of state assets, including the pension money.
In a Nov. 14 written response, Ryberg argued that the treasurer's office, not the trust fund, should bear those costs, especially since Loftis signed a settlement without knowing where the money would come from.
Officers with the State Retirees Association believe the trust fund should bear all the costs of administering employees' pensions, including custodial fees. But they are adamantly opposed to letting the treasurer's office dip directly into the fund without other approval.
The association's treasurer, Wayne Pruitt, said the group prefers it go through the budget process. If that's impractical, the Legislature needs to approve handling it differently, he said, adding the payment should be jointly approved with the investment commission and the Public Employee Benefit Authority, the agency that doles out benefits.
"It makes me nervous when anybody thinks they can singlehandedly, arbitrarily take money out of the trust fund," Pruitt said.