MF Global execs ignorance, silence stymie Congress

Wed Mar 28, 2012 8:47pm EDT
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By Sarah N. Lynch and Aruna Viswanatha

WASHINGTON (Reuters) - An MF Global executive who has become a central figure in the desperate shifting of funds before the brokerage's collapse, refused to answer questions from Congress on Wednesday, frustrating lawmakers probing why an estimated $1.6 billion of customer money is missing.

The failure of Assistant Treasurer Edith O'Brien and her MF Global MFGLQ.PK colleagues to clear up how the money seemingly vanished drew considerable mocking from lawmakers, who alternated between anger and disbelief.

Appearing before the investigations panel of the House Financial Services Committee, none of the four executives, who also included a senior lawyer and two top finance officials, explained why the money is missing or who was at fault.

MF Global descended quickly into Chapter 11 protection last October 31 after several frantic days of shuffling money between accounts and failing to find a buyer. Chief Executive Jon Corzine resigned four days later.

"Bonnie and Clyde, they were chumps," said Steve Pearce, a New Mexico Republican and panel member, referring to the 1930s bank-robbing duo. "You guys have people send things electronically ... and nobody's responsible, and you can't even declare that it was robbed or stolen."

O'Brien, a demure brunette dressed in a somber black suit, was excused after invoking her constitutional right against self-incrimination.

She had been the star witness after the panel last week released details of an email from her that said a $175 million transfer made last October 28, and which may have included customer funds, was "Per JC's <Jon Corzine's> direct instructions."

Unlike O'Brien, Corzine gave exhaustive testimony late last year at multiple hearings, and consistently said he "never intended" to break any rules and did not give instructions to misuse customer funds. Raiding customer funds is a violation of federal regulations.   Continued...

Former MF Global CEO Jon Corzine testifies before a House Financial Services Committee Oversight and Investigations Subcommittee hearing on the collapse of MF Global, at the U.S. Capitol in Washington, December 15, 2011. REUTERS/Jonathan Ernst