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Riley’s Loan to College of Building Arts violates State Code of Laws

Lee Walton

With little more than a muffled murmur on the evening of September 9th, Charleston City Council rubber-stamped Mayor Riley’s “financial lifeline to the American College of the Building Arts …agreeing to loan the fledgling school $734,500 to help pay operating expenses.” In doing so, both Council and the Mayor knowingly, flagrantly, and simultaneously violated Section 6-5-10 of the Code of Laws of South Carolina and national standard accounting policies which restrict municipal investments and loans to a very limited number of well secured, federally or state collateralized investment alternatives. This latest demonstration of Riley’s blatant control over his “bought-by-the-pound” council of lackeys ushered in yet another era in Riley’s escalating quest for absolute power to control the management and financial resources of Charleston.

Notwithstanding the shop-worn second act of the Council Chamber dog-and-pony show that concluded in the passage of the bill to bail-out the floundering College of the Building Arts with an unsecured loan, Riley, his Chief Pettifogger Charming Charlton, CFO Dollar Blind Bedard, and Riley’s newest favorite Council lackey, Wachovia V.P. Notsolily White, a.k.a. favorite nephew of Riley’s life-long political ally and former Chief Pettifogger, Bill Regan, still had to frantically scramble to fabricate a color of legitimacy to secure approval for the ACBA loan. Through covert arm-twisting, Riley solicited the willing assistance of The Historic Charleston Foundation’s Miss Kitty to orchestrate a temporary, paper-only buy-back of McLeod Plantation from ACBA for its original selling price of $850,000. Ostensibly, Riley and City Council entrusted ACBA to hold these funds in escrow to secure the City’s loan. Try as he might, Riley’s convoluted logic and smoke-and-mirrors scheming still failed to legitimize the ACBA loan.

State Code Section 6-5-10 specifically restricts municipal investments only to federal and state general obligations, savings and loan association investments insured by the FDIC, certificates of deposit where such CD’s are collaterally secured by federal or state general obligation securities, or funds placed in deposit accounts with federally insured financial institutions. In the case of the ACBA loan, none of the above investment alternatives were applicable. Riley just reached into the City’s unrestricted net assets of the General Fund and snatched an illegal loan for ACBA. To add further insult to injury, Riley then entrusted ACBA with the HCF buy-back funds as security for the City’s $734,500 loan; that’s like asking a trembling alcoholic to guard a liquor store. As the chief facilitator in this little charade, the HCF, principally through the actions of its Director, Miss Kitty, has also allowed itself to be tainted and painted with the same brush of ignorance and collusion that Riley used to paint his council.

The Palter and Chatter has also been a consistent ACBA spear-catcher and now not-so-arms-length accomplice to Riley’s illegal ACBA loan. The P&C owners have been both very vocal and highly visible in their unwavering support of Riley’s latest theatrics to legitimize his $734,500 unsecured loan of City General Funds to the financially struggling and heavily indebted ACBA.

Municipalities are established to provide services. Inherent in the concept of operational accountability is a broad interpretation of the meaning of stewardship of public resources. Stewardship by elected officials comprises not only the safekeeping of all publicly owned resources and assets, both capital and financial, but also the compliance with all lawful and legally justifiable requirements for their use. Riley’s ACBA loan is clearly a violation of these legal requirements.