Former Democratic Gov. Jon Corzine is set to tell a Congressional committee this morning that he cannot account for millions missing from client accounts at the now bankrupt MF Global, the investment firm Corzine helmed before resigning last month.
“I simply do not know where the money is, or why the accounts have not been reconciled to date,” Corzine says in a statement he will deliver later this morning. The statement was posted on the website of the House Argicultural Committee.
Reports this morning had Corzine invoking his fifth amendment right, but the former governor, who before heading into public life was the top dog at investment giant Goldman Sachs, will tell the committee “as a former United States Senator who recognizes the importance of congressional oversight, and recognizing my position as former chief executive officer in these terrible circumstances, I believe it is appropriate that I attempt to respond to your inquiries.”
Much of the testimony is spent defending his tenure at MF Global, including debunking the often reported storyline that the Corzine-led company upped its risk substantially when the former governor took over.
“One of the recurrent themes in the media has been that MF Global took on too much risk during my tenure, in particular the amount of leverage that MF Global bore at the time of its bankruptcy,” The testimony from Corzine reads. “In fact, MF Global reduced leverage. In the quarter ended March 31, 2010, MF Global’s leverage was 37.3. During my tenure, it was consistently around 30.”
Corzine also defends his reported conversations with regulators in which he defended the investment practice known as repurchase transactions – the same investment that sent the company into the downward spiral that ultimately resulted in its bankruptcy.
The closing of the statement focuses on the missing money. The statement says Corzine was shocked to learn that all customer accounts could not be reconicled.
“I remain deeply concerned about the impact that the unreconciled and frozen funds have had on MF Global’s customers and others,” the statement says.
The statement concludes with an apology from Corzine, whose reputation as a financial genius lies in tatters.
“As the chief executive officer of MF Global, I tried to exercise my best judgment on behalf of MF Global’s customers, employees and shareholders. Once again, let me go back to where I started: 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.”
The house of cards at MF Global came rumbling down earlier this fall when the company was unable to weather its risky positions in European debt. In October the firm filed for bankruptcy and reports surfaced that the company was under investigation as some $1.2 billion in client funds are unaccounted for. A day later, a company employee admitted co-mingling client funds with firm money.
Regulators have combed the company’s books in an attempt to find the missing money but the bulk remains unaccounted for.
Corzine’s full testimony is attached below.