Jon Corzine to tell House panel he doesn’t know where customers’ money went
Jon S. Corzine, the former U.S. senator and New Jersey governor who presided over the collapse of the commodities brokerage MF Global, says he cannot explain what happened to “many hundreds of millions of dollars” that the firm was holding for customers.
In testimony prepared for delivery to Congress Thursday, Corzine says he was “stunned” to learn shortly before the firm sought bankruptcy protection at the end of October that MF Global could not account for the money.
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“I simply do not know where the money is, or why the accounts have not been reconciled to date,” the former MF Global chief executive says, according to the testimony.
Regulators pushed MF Global into bankruptcy court on Halloween after an effort to sell the troubled firm unraveled. The firm is now in liquidation.
The firm was required to keep clients’ money separated from its own. But more than $1.2 billion may be missing, the trustee overseeing the firm’s liquidation said last month.
The FBI, the Commodity Futures Trading Commission and other authorities are investigating and have had difficulty figuring out what happened to the missing funds.
Meanwhile, the firm’s collapse has become a major disruption for customers and others who depended on MF Global.
The House Agriculture Committee, whose jurisdiction includes agricultural commodities and one of the federal agencies that regulates MF Global, subpoenaed Corzine to appear at a hearing Thursday on the firm’s bankruptcy. The committee turned down Corzine’s request to testify voluntarily in January, he says.
In his prepared statement, Corzine says that many people in his situation would invoke their Fifth Amendment right to remain silent. However, as a former senator, Corzine says, he recognizes the importance of congressional oversight and believes “it is appropriate that I attempt to respond to your inquiries.”
Though anything he says could be used against him, Corzine hedges his testimony by saying he had too little time to prepare for the hearing and only limited access to records “essential to my being able to testify accurately.”
“I sincerely apologize, both personally and on behalf of the company, to our customers, our employees and our investors, who are bearing the brunt of the impact of the firm’s bankruptcy,” Corzine says.
The journey to the witness table was a dramatic turnabout for the New Jersey Democrat, who made a fortune at the helm of the investment bank Goldman Sachs and then parlayed his wealth into a career in politics.
Corzine’s testimony is his first public statement on the demise of MF Global since he resigned as chief executive of the firm more than a month ago. On Nov. 4, days after the bankruptcy filing, he issued a brief statement saying he felt “great sadness for what has transpired at MF Global and the impact it has had on the firm’s clients, employees and many others.”
Coming three years after the world’s financial system nearly imploded, the collapse of MF Global exposed persistent vulnerabilities, some of which involve derivatives, the complex instruments that contributed to the crisis of 2008.
