Former New Jersey Gov. Jon Corzine has been ordered to testify at a congressional hearing next week on the collapse of MF Global. But legal experts are wondering what he will say, if anything.The question is no longer will he appear, but what will he say.
A congressional committee Friday voted to subpoena Jon Corzine to testify at a hearing next week on MF Global, the failed futures firm the former governor and senator led until shortly after it collapsed Oct. 31.
The action, taken by the House Agriculture Committee, compels Corzine to appear at a hearing next Thursday. But whether Corzine utters a word beyond "Fifth Amendment" is anyone’s guess.
Legal experts say the subpoena throws Corzine into a quandary. Even if he feels he has nothing to hide in leading MF Global into oblivion, the legal experts say, he faces great risk answering any question as criminal and civil authorities will pore over his testimony for statements that can be turned against him.
He also runs the risk of a facing a perjury accusation if someone else later contradicts his sworn testimony.
"I just find it absolutely inconceivable that his lawyers would allow him to answer any questions," said Harvey Pitt, a former chairman of the Securities and Exchange Commission, "including ‘Did you ever work at MF Global?’"
Yet if Corzine invokes his right against self-incrimination and refuses under the glare of news cameras to answer his former congressional colleagues, he risks looking guilty in the court of public opinion.
"It’s an especially difficult position to be in," said Robert Mintz, a partner with McCarter & English and former assistant U.S. attorney for New Jersey. "It’s not a courtroom where he has an attorney to cross-examine witnesses and present his side of the case."
While neither Corzine nor MF Global have been charged with any wrongdoing, dark clouds have circled the firm since it sought bankruptcy protection.
A massive shortfall in customer cash — perhaps $1.2 billion or more, according to the broker’s bankruptcy trustee — has dogged efforts to unwind the firm and sparked separate probes by the FBI and the Commodity Futures Trading Commission into alleged violations of federal laws on segregated client accounts. The House Agriculture Committee is one of four congressional bodies that oversees the CFTC, which was the primary regulator of MF Global’s futures business.
Jon Corzine, the former governor and head of MF Global, has been subpoenaed to testify next week before the House Agriculture Committee.Corzine’s own role in the firm also is under fire, as he has been seen as driving the decision to place a $6.3 billion bet on troubled European sovereign debt that landed the firm in trouble with credit rating agencies and investors.
The former governor has not spoken publicly and rarely has been seen since Nov 4, when he resigned his post at MF Global.
"The circumstances surrounding the MF Global bankruptcy are unprecedented. Many of our constituents have lost funds and many more have lost confidence in futures and derivatives markets, which are under the jurisdiction of the our Committee," the agriculture committee’s Republican chairman, Frank Lucas of Oklahoma, and ranking member, Democrat Collin Peterson of Minnesota, said in a joint statement. "Jon Corzine’s testimony is critical to fulfill our objectives on behalf of our constituents."
While Corzine’s counsel–including noted New York defense attorney Andrew Levander–likely will advise him against answering questions, the former governor may use the opportunity to defend himself in other ways, said Pitt, who is a chief executive of consultancy Kalorama Partners.
Corzine may deliver a carefully scripted statement at the start of the hearing explaining his limitations in responding to specific questions given the ongoing investigation of the collapse. He may say that while he has "no culpability" in any wrongdoing, or that press reports have "grossly exaggerated" his involvement, his desire to help law enforcement precludes from him answering questions, Pitt said.
"‘The committee’s questions come at an inopportune and inappropriate time,’" Pitt said Corzine might say, adding that he may offer to be more candid at a later date.
A spokesman for Corzine, Steven Goldberg, declined to comment.
Next week’s hearing is the first of many congressional inquiries that Corzine has been asked to testify before. The Senate Agriculture Committee asked him to appear for a hearing on Dec. 13, while a House Financial Services subcommittee wants him to appear on Dec. 15. It’s not known if he will appear at these, or whether the committees will subpoena him as well.
The event promises to be a spectacle, even if it offers no insight into how and why the firm blew up so spectacularly, experts said.
It also promises to be somewhat historical. Julian Zelizer, a congressional historian with Princeton University, could not recall another time when a former member of Congress has been ordered back to answer questions on his actions after he left public office.
Zelizer said Corzine’s mind likely will be fighting two fronts: defending the investigation into MF Global and protecting his legacy as the progressive politician.
One thing is clear, though, Zelizer said. Corzine will find no friends among former Democratic allies whose attentions have turned to the upcoming political season.
"He’ll be alone as he speaks."
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• MF Global shortfall now may be $1.2 billion, trustee says
• Corzine's MF Global files for bankruptcy protection