Returning to Capitol Hill on Tuesday to testify before the Senate, Jon Corzine backed off his earlier remarks that he could have inadvertently authorized an transfer of customer funds to the firm account of MF Global, the failed commodities brokerage that he had led.
“I never directed anyone at MF Global to misuse customer funds. I never intended to, and as far as I’m concerned, I never gave instructions that anyone could misconstrue,” Corzine told the Senate Agriculture Committee, which subpoenaed the former New Jersey governor and senator to appear before his former colleagues Tuesday.
But Corzine stressed that others at the firm were responsible for actually handling and overseeing any such fund transfers. “I do not know whether all of these transactions were properly recorded and effectuated,” he said. “Nor do I know whether back-official professionals at the firm made errors or miscalculations under extraordinary stress,” he said. Corzine added that the answer would only be found by combing through hundreds of pages of daily transactions, which he had no access to since the firm’s bankruptcy.
Sen. Kent Conrad (D-ND) pointed out that Corzine, in fact, had reportedly met with other MF Global officials shortly after he first said he found out about the missing money. Corzine confirmed that he gone sifted through some transactions during that meeting but implied that he didn’t glean anything revelatory himself about where the funds went.
Corzine suggested that the answers that his former Senate colleagues—and MF Global’s victimized customers—were seeking about the missing funds lay with other officials at MF Global. “As I recall I sat with a group of internal folks who might be able to give me the kind of information I think you’d like to get from me today—to see whether you’d be able to identify some source of where the missing funds might be,” he told Conrad.
During the hearing, senators also pressed two other top MF Global executives to account for the missing money. “This isn’t the Dark Ages. MF Global didn’t keep their books with feather quills and dusty ledgers. The rules about keeping customer money segregated are pretty straightforward,” Sen. Debbie Stabenow (D-Mich.), chair of the agriculture committee, said at the opening of the hearing. But Corzine’s co-workers similarly denied any knowledge of or culpability for the mishandled funds.
“Where is the money? How do you answer that, as CFO? Where is the money?” Stabenow asked Henri Steenkamp, MF Global’s chief financial officer.
“Unfortunately, I do not know where the money is,” Steenkamp replied.
“Well, who does?” she retorted.
Steenkampf simply relied that it was not part of his job “to sign off on client funds” or directly oversee such transactions. Instead, the company had “senior officers executing those controls,” he explained. Lawmakers later pressed Corzine and Steenkamp to name names. “Could each of you give some MF Global employee who can come and tell this committee what happened to the customer segregated accounts? There has to be someone who is able to tell this story. Just give us a name—Joe Blow?” said Sen. Chuck Grassley (R-Iowa).
Corzine seemed reluctant but singled out Christine Serwinski, the firm’s CFO of North American operations. “I know she’s on vacation this week. That team of people might be one of those places,” he told Grassley.
Bradley Abelow, MF Global’s president and chief operating officer, similarly denied that he had any advance knowledge of or involvement in moving the customers’ money. “I do not recall participating in any conversation about use of customers’ segregated funds,” he said. “I do not know what happened, and I am awaiting response of the investigation.”
The FBI, the Securities and Exchange, and the Commodities Futures Trading Commission are currently investigating the missing funds. While Corzine has provided few answers himself, he did indicate some ways to shed light on the missing funds. He admitted that he didn’t know “the ultimate disposition” of more than $6 billion in MF Global’s assets he had sold off in the days before the firm declared bankruptcy. “That may be somewhere you might want to check,” Corzine said.