On Eve of $41 Billion MF Global Bankruptcy Filing, Jon Corzine Was Château Shopping in France
http://www.vanityfair.com/online/daily/2012/01/february-magazine-jon-corzine-mf-global-chateau-goldman-sachs
In an exclusive report from three of Vanity Fair’s premier business writers—contributing editors Bryan Burrough, William D. Cohan, and Bethany McLean—the February issue delivers a sprawling account of the personal and professional battles of Jon Corzine, the former Goldman Sachs C.E.O. and ex-politician whose helming of MF Global resulted in a notorious $41 billion filing for bankruptcy and a $1 billion loss in firm equity. According to the piece, for the fiscal year that ended in March 2011, MF Global recorded day-one gains of $85 million on the former New Jersey governor’s risky trades on European sovereign debt and other assets, thanks to an accounting ploy. Because there were barely any expenses associated with such trades, the gains were almost pure profit.
“Corzine would later tell investors that he made a $6.3 billion bet on sovereign debt, but the company’s filings made it look like he had a much bigger long position at the end of June 2011—$11.4 billion, offset by ‘short’ positions of almost $5 billion,” Vanity Fair reports. One analyst says: “If those trades had not been there, MF Global would have been forced to sell or go out of business.”
As federal authorities searched for the brokerage house’s more than $1 billion in missing customer money, friends and former associates of Corzine weighed in on the ways his personal quirks informed his management style. “On this, Jon became a zealot,” one person says of Corzine’s European-debt trades. “He managed the process soup to nuts,” says a former employee. “He knew every number back and forth. He’d talk to the accountants and the board. He’s not a detail-oriented guy, but on this he knew every detail.”
“I think he is the most competitive guy in the world,” says a person who was close to him at MF Global, explaining why Corzine took the job in the first place—despite prime opportunities both on Wall Street and in Washington, where he was frequently invoked as a possible Treasury-secretary successor to Timothy Geithner. “He knows there are people out there who don’t like him, and he wants to prove them wrong. He’s very focused on reputation and how he’s perceived. He wants to be perceived as a winner, and he will do what it takes to get there.” Says a former colleague, “He wanted to be in the game, to prove he was back, to prove he was the man.”
“There are a lot of us who consider Jon to be a friend and mentor,” says a former Goldmanite. “That group is horrified (by the scandal).” He continues: “There is another group who thinks this is par for the course.”
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