The Northside of the South Carolina Statehouse with the silhouette of the statue of Gen. Wade Hampton in the foreground. (File/Mary Ann Chastain/Special to the SC Daily Gazette)
COLUMBIA — Two of South Carolina’s financial officers have now resigned in the wake of multibillion-dollar accounting blunders that prompted a federal securities investigation.
State Auditor George Kennedy submitted his resignation Thursday in a letter to the state’s five-member fiscal oversight panel.
“It has been both an honor and a privilege to serve the State of South Carolina during the past nine years,” Kennedy wrote. “However, I believe it is in the best interest of the Office of the State Auditor that I resign from my position as State Auditor effective today.”
He made no reference to the accounting errors in his letter and gave no further explanation. The errors did not involve any actual missing or found taxpayer dollars. Rather, they represented years of miscounting in reports sent to Wall Street.
Kennedy, who earns a salary of $187,200, offered his assistance in finding a replacement.
“I also welcome the opportunity to provide my thoughts on how the Office of the State Auditor can be strengthened for the future,” he wrote in closing.
Kennedy’s resignation follows that of former Comptroller General Richard Eckstrom in 2023.
Eckstrom, who had been the state’s top accountant for 20 years, resigned as legislators prepared to force him out following the discovery that his office was reporting $3.5 billion more than actually existed.
More errors came to light last year as the Statehouse investigation continued.
Ultimately, the $1.8 billion that appeared on the state’s books without explanation also turned out to be accounting errors.
All but about $200 million of the massive sum on paper never actually existed. And the $200 million that was real isn’t excess that can be spent, according to the report released last week by the forensics accounting firm AlixPartners (which the state paid $3 million to find out what happened).
Still, none of the accounting errors put the state’s coffers in the red because state budget writers rely on a separate agency for revenue projections. But the erroneous reports may have misled Wall Street credit agencies that rate the financial health of state and local governments — which is why there’s a federal investigation.
The origin of the issue, financial officials have testified, was a chaotic, decade-long transition from the state’s old accounting system to a new one, which took place between 2007 and 2017.
As state auditor, Kennedy’s bosses included the two elected offices involved in the mess — comptroller general and state treasurer.
Of the three, only Treasurer Curtis Loftis is left.
According to the findings of AlixPartners, neither Kennedy, Eckstrom, nor Loftis attempted to get to the bottom of what caused the discrepancies. Nor did they alert legislators or regulators to the mounting, yearslong errors. Instead, the problem surfaced after a staffer in Eckstrom’s office noticed in late 2022 that the numbers were way off.
Loftis, who has said he won’t seek a fifth term in 2026, has brushed off calls for his own resignation.
“The people of South Carolina deserve a State Treasurer who puts their interests first — someone who is not afraid to face challenges head-on and advocate for reforms that benefit everyone,” Loftis wrote in a letter shared with the SC Daily Gazette this week. “I stand by my record and will continue to serve with integrity and accountability.”
This is a developing story. Please check back for updates.