Senators Advise Against Paying MF Global Bonuses
Senators are telling the trustee overseeing MF Global that it would be outrageous to pay bonuses to top executives of the collapsed brokerage firm that was led by former New Jersey Gov. Jon Corzine. They say it would be wrong to pay bonuses while about $1.6 billion of customers’ money hasn’t been recovered.
All the members of the Senate Agriculture Committee signed a letter sent Thursday to former FBI director Louis Freeh, who acts on behalf of MF Global creditors as trustee. The committee is one of several congressional panels investigating MF Global, which filed for bankruptcy protection Oct. 31.
“It is absolutely outrageous to propose paying bonuses to the very people who were responsible for the firm’s operational, legal and financial management at the time customer money disappeared,” the letter said.
The Wall Street Journal had reported last week that Freeh was planning to seek permission for paying bonuses.
Freeh has since said he hasn’t decided whether to ask the bankruptcy judge to approve bonuses for the executives. The Journal said Freeh planned to ask U.S. Bankruptcy Judge Martin Glenn to approve bonuses for Bradley Abelow, MF Global’s president and chief operating officer; Chief Financial Officer Henri Steenkamp, General Counsel Laurie Ferber and about 20 other executives, who are helping Freeh unravel the firm’s finances. The Journal story cited unnamed people familiar with the situation.
Freeh said in a letter Monday to Sen. Jon Tester, D-Mont., who earlier had objected to the payment of bonuses, that he hadn’t yet made any recommendations to the bankruptcy court or “any decisions on the subject, notwithstanding reports to the contrary that have appeared in the media.”
There was no immediate response from Freeh on Thursday to the letter from the Senate Agriculture Committee, which is led by Chairwoman Debbie Stabenow, a Democratic senator from Michigan.
Abelow and Steenkamp testified at congressional hearings in December that they did not play a role in any decision to transfer customers’ money.
No one has been charged in the MF Global case. The firm failed after a calamitous bet on European debt spooked its investors, trading partners and clients, becoming the eighth-largest corporate bankruptcy in U.S. history. Federal regulators, Congress and a federal grand jury in Chicago are investigating MF Global’s failure and the disappearance of customers’ money.
Much of the money belonged to farmers, ranchers and other business owners who used MF Global to reduce their risks from the fluctuating prices of commodities such as corn and wheat. Corzine, who was co-chairman of Goldman Sachs before going into politics and serving as a Democratic senator and governor of New Jersey, resigned as MF Global CEO in November. He has testified that he didn’t know any customer money was missing until Oct. 30, the day before MF Global’s bankruptcy filing.
Separately Thursday, another MF Global trustee, who is overseeing the liquidation of its brokerage operations, asked the bankruptcy court for permission to distribute an additional $685 million to customers. The trustee, James Giddens, already has returned $3.9 billion to customers.
In his latest request, Giddens is seeking permission to give $50 million to customers who traded on foreign markets, the first such payment to those trading on foreign exchanges. He also wants to distribute up to $600 million to customers who traded commodity futures on U.S. exchanges and $35 million to owners of physical property.
(Copyright 2012 by The Associated Press. All Rights Reserved.)