Former MF Global boss apologises at congressional hearing but dodges questions about what went wrong

Fallen financier and former New Jersey governor Jon Corzine said he was “stunned” by the collapse of his firm MF Global but told a congressional panel that he had no idea where the missing $1.2bn (£780m) had gone.

Corzine faced hostile questioning after being subpoenaed to testify before the House of Representatives’ agriculture committee on the bankruptcy of the financial firm and the missing money – some of which is owed to farmers who used the company to hedge crop investments.

The former Goldman Sachs chief and one-time confidant of President Barack Obama was the first former senator to be subpoenaed to appear before Congress since 1908. His comments will have been closely watched by US authorities and lawyers preparing possible legal actions against him and his firm. Some lawyers expected him to take the fifth amendment – the constitutional right not to speak in order to avoid self-incrimination.

An exhausted-looking Corzine said he was “devastated” by MF Global’s collapse but dodged specific questions about what went wrong or where the money had gone. He said he had wanted to speak in January when he expected to have a fuller grasp of the situation. “I never intended to break any rules or any laws,” he said.

In a prepared testimony, Corzine said: “Recognising the enormous impact on many peoples’ lives resulting from the events surrounding the MF Global bankruptcy, I appear at today’s hearing with great sadness. My sadness, of course, pales in comparison to the losses and hardships that customers, employees and investors have suffered as a result of MF Global’s bankruptcy. Their plight weighs on my mind every day, every hour. And, as the chief executive officer of MF Global at the time of its bankruptcy, I apologise to all those affected.”

Corzine said he had “limited access to many relevant documents” since departing from the firm on November. “I simply do not know where the money is.”

Corzine quit MF Global days before it was forced to declare bankruptcy, driven to collapse after investors lost confidence following its series of bets on European debt. All 1,066 employees have been fired and a court-appointed trustee is searching for missing funds.

The firm has been accused of being “over leveraged” – relying too heavily on borrowed money but Corzine said he had reduced the debt at MF Global from $37.3 for every $1 the firm held to “around 30″. He admitted the ratio was still far higher than he would have wanted.

He will also defend the firm’s trading strategy, which he “strongly advocated.”

“I believed that [MF Global's] investments in short-term European debt securities were prudent,” Corzine said. “There were discussions at board meetings, at which the transactions were described, analysed and debated.”

Before his appearance, the committee had harsh criticism for Gary Gensler, chairman of MF Global regulator CFTC, and Corzine’s former Goldman Sachs colleague. Gensler was absent from the hearing and has recused himself from the case. “I find that entirely unacceptable,” said congressman Tim Johnson.

The US justice department and financial regulators are also conducting a search for the missing money. Regulators believe the funds went missing shortly before the broker’s collapse. The CFTC has formally opened an investigation into the broker and issued subpoenas to MF Global and its auditors, PricewaterhouseCoopers.

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