* CFO Steenkamp said he knew little about missing funds
* Trustee report shows Steenkamp closely involved
* Email shows Steenkamp worried about customer funds
* Rep. Neugebauer said looking at any "inconsistency"
By Aruna Viswanatha
WASHINGTON, June 8 When Henri Steenkamp, MF
Global's chief financial officer, appeared before two
congressional panels about the firm's collapse, he said he was
in the dark over how some $1.6 billion in customer funds went
But a report from the bankruptcy trustee filed this week
paints a different picture of an executive closely involved as
the firm's liquidity was stretched and it began tapping into
customer accounts to help fund operations.
Congressional investigators have flagged the discrepancies
and said they plan to examine them further.
"We're looking closely at all aspects of the MF Global
collapse ... We'll be paying close attention to any apparent
inconsistency in Mr. Steenkamp's testimony," said Republican
Representative Randy Neugebauer.
Steenkamp has been a central figure for lawmakers and
investigators such as the Justice Department and the Commodity
Futures Trading Commission who are probing why the firm imploded
and left hundreds of farmers and traders without access to funds
they thought were safe at the commodities brokerage.
A lawyer for Steenkamp did not respond to multiple attempts
to reach him for comment. In April Steenkamp said his lawyer had
offered a "proffer" to investigators, which describes
information a witness could offer. The status of that proffer is
An examination by Reuters of the contrasts between
Steenkamp's sworn testimony and internal company emails included
in the trustee report show a series of stark differences.
Experts said any testimony from Steenkamp was unlikely to
rise to the level of perjury. But it does get him unwelcome
attention at a time when he is handling investigators' questions
about his role at the collapsed firm.
At a December hearing, Steenkamp told lawmakers he "had no
knowledge that customer funds were transferred into the
broker-dealer" until the day before MF Global filed for
bankruptcy on Oct. 31, and it was not part of his job to be
"involved in the process of client funds", according to a
transcript of the hearing.
"I did not authorize, approve or know of any transfers of
customer funds for any house or broker/dealer purposes," he
But in an email on Oct. 6 Steenkamp worried that the firm's
broker dealer unit was relying too heavily on extra funds in an
account holding customer assets. He told MF Global's then CEO,
Jon Corzine, and other executives at the firm that they needed
to address the issue of dipping into those funds every day since
they were "volatile" and "unreliable".
" e need to address ... the situation of our broker-dealer
that is currently unable to fund itself, and more worrying ...
having us dip into FCM excess every day. This should be
temporary but is becoming permanent," he wrote, according to the
FCM refers to MF Global's "futures commission merchant", or
its commodities broker unit.
The trustee, James Giddens, said on Monday that he believed
there may be grounds to sue Steenkamp and other MF Global
executives for breach of fiduciary duty and negligence.
The contrasting descriptions of events could also prompt new
Congressional hearings into the matter.
Ben Becker, a spokesman for the Senate Agriculture
Committee, which heard testimony from Steenkamp in December,
said: "If false testimony was delivered to a congressional panel
while under oath, that is a serious offense. The committee will
examine any cases of potential wrongdoing and plans to hold
additional hearings to continue its probe into the collapse of
MF Global collapsed in late October after investors and
customers became rattled over the firm's $7 billion bet on
European sovereign debt and downgrades by credit rating
agencies, resulting in a liquidity crunch.
In his 275-page report released this week, Giddens, the
trustee liquidating the company's broker-dealer unit, portrayed
a firm desperate to plug holes as MF Global's liquidity
When Neugebauer, at a March hearing before a House Financial
Services panel, asked Steenkamp whether managing the company's
liquidity was something he was involved in, Steenkamp
sidestepped the question.
"Sir, there were many things going on at that point in
time," he said.
As Neugebauer asked two more times and told Steenkamp "this
is not rocket science here", Steenkamp responded that he was
only looking at liquidity "on a global consolidated basis" and
was not focused on what was happening in Chicago, where MF
Global's commodities broker operations were based.
But Steenkamp's name appears on emails described in the
report that detail liquidity issues involving Chicago
On one email two weeks before the company collapsed, for
example, a treasury official told Steenkamp that liquidity was
so strained that the broker-dealer would be relying upon a $16
million buffer in customer accounts.
That buffer appeared to include a portion of the funds that
would go beyond a dollar-for-dollar calculation of what MF
Global would be required to hold, the trustee said.
Steenkamp's involvement in trying to address liquidity
issues may not have been limited to the final weeks of the firm.
In July 2011, for example, he asked the CFO of MF Global's
broker-dealer unit to review customer accounts to consider
whether $250 million could be "loaned" overnight on a regular
basis to support operations in New York.
He reviewed the data and recommended tapping the accounts
below a threshold designed to fully protect the customer funds.
At the March hearing, Neugebauer repeatedly pressed
Steenkamp on how hands-on he was with the money transfers.
As Steenkamp repeatedly said he didn't know about the
transfers, Neugebauer told him: "I am appalled that you can't
answer a simple question ... I think you're not being honest
with this panel."
Congress has held multiple hearings and most of the
executives called to testify, including former New Jersey
governor Corzine, submitted themselves to hours of public
questioning, under oath. Only former Assistant Treasurer Edith
O'Brien, who was involved in many of the money transfers being
scrutinized, invoked her constitutional right against