Why is Jon Corzine still at large?
Corzine, the former New Jersey senator and governor, former chief executive of Goldman Sachs, led MF Global, a futures broker and bond dealer that collapsed in 2011. MF Global investors lost as much as $2.1 billion. At the time MF ran into trouble, Corzine was eligible for as much as a $12.1 millon golden parachute. However, Steven Goldberg, a spokesman for Corzine, told me this afternoon that Corzine didn’t take any compensation when he stepped down. He also said Corzine has been unemployed since then, spending time with his family and doing philanthropic work.
Vanity Fair produced an exhaustive look at the collapse last year. Now a report to the bankruptcy trustee by Former FBI director Louis Freeh confirms what anyone paying attention already knew. According to Reuters, Freeh’s 124-page report states, “The risky business strategy engineered and executed by Corzine and other officers and their failure to improve the company’s inadequate systems and procedures so that the company could accommodate that business strategy contributed to the company’s collapse.” As is the habit of the likes of Corzine, he was not using the investments of MF Global to fund productive enterprises and create jobs and innovations, but betting to profit from the misery of others, on European sovereign debt.
The story continues:
Freeh’s report found MF Global management ignored the hedging recommendations of its chief risk officer, Michael Stockman, and lacked the controls to monitor its cash on a real-time basis.
The weak reporting system also prevented the company from knowing that cash from segregated customer accounts was being used to meet margin calls tied to MF Global’s own bets on the sovereign debt of countries such as Portugal and Ireland.
“These glaring deficiencies were long known to Corzine and management, yet they failed to implement sufficient corrective measures promptly,” the report said.
Goldberg, Corzine’s spokesman, gave me this prepared statement (from him, not Corzine). In the interests of fairness, I will quote it in its entirety:
The Trustee’s report, with its allegations of negligent conduct, is a clear case of Monday Morning Quarterbacking. It intentionally ignores the failure of counterparties to fulfill their commercially contracted obligations to MF Global and the profound impact this failure had on MF Global’s customers and other stakeholders.
As we have said before, there simply is no basis for the suggestion that Mr. Corzine breached his fiduciary duties or was negligent. When Mr. Corzine joined MF Global, the firm had lost money in each of the previous three years and in five consecutive quarters. During his entire tenure as CEO, Mr. Corzine worked tirelessly and in good faith to turn the business around. He and the rest of the Board engaged in a rigorous and careful evaluation of the appropriate strategy for the firm. After extensive discussions with the Board, the senior management team and a highly respected management consulting firm, Mr. Corzine set a new, publicly disclosed strategy to replace the existing unsustainable model. The strategic plan, which was approved by the Board, also included review of internal processes and controls by respected consultants and outside auditors. As a result of the new strategy, there was a marked improvement of MF Global’s financial performance.
While Mr. Corzine is disappointed by the Trustee’s report, he is encouraged by the recent settlements with banks and creditors whose conduct contributed to the failure of the firm and delayed the ability of customers to be repaid. Mr. Corzine respects the efforts of both Trustees in this regard and is pleased that the settlements and the proposed plan of reorganization make it probable that customers will receive full recovery of their funds.
It’s no mystery why Jon Corzine is still at large, and not merely because he was a high-profile Democrat at a time when the Democrats control the Department of “Justice.” Like all the grifters whose hustles brought on the Panic of 2008 and help make the recovery so anemic, he’s not blue or red — he’s green. And in Washington, D.C., and our criminal justice system, money talks. The same corrupt system continues.
As I’ve written before, if this were still the Cold War, one could be forgiven for suspecting that Corzine, Blankfein, Killinger et al were KGB plants, like the characters in the FX series, The Americans. Hiding in plain sight, wrecking not just the economy but faith in capitalism.
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Today’s Econ Haiku:
Clay Bennett’s judgment
That’s Irony Ball