* MF Global administrator eyes $3 billion damages from PwC
* Corzine was NJ governor, Goldman co-chairman
(Adds additional Corzine testimony)
By Jonathan Stempel
NEW YORK, March 9 Former New Jersey Governor Jon
Corzine defended his big bet on European sovereign debt at MF
Global Holdings Ltd, and said market confusion over the wager
and changing advice from auditor PricewaterhouseCoopers LLP
were factors in the brokerage's rapid collapse.
Corzine, also a former New Jersey senator and Goldman Sachs
co-chairman, made his comments on Thursday at a trial
where MF Global's bankruptcy plan administrator is seeking about
$3 billion from PwC for the auditor's alleged negligence.
PwC faults Corzine's own decision-making for MF Global's
Oct. 31, 2011 bankruptcy.
Corzine's appearance in Manhattan federal court marked a
rare return to the spotlight for the 70-year-old, after MF
Global's demise upended his four-decade career and sparked
Congressional and regulatory probes.
MF Global's downfall followed news about Corzine's European
debt wager, a big quarterly loss, and two downgrades of the
brokerage's credit rating to "junk" status, causing a cash
crunch as customers, investors and lenders fled.
There was a "loss of confidence and trust," Corzine said
during 4-1/2 hours of testimony for the administrator. He has
also testified about MF Global before Congress.
Corzine said he had begun building what became a $6.3
billion bet on short-term sovereign debt from five western
European countries in the summer of 2010.
He said he thought the bonds were "relatively low risk,"
would help him restore MF Global to profitability, and would
advance his plan to transform the futures and commodities
brokerage into a full-service broker-dealer.
The administrator has said PwC improperly let MF Global keep
the bonds off its balance sheet, through the brokerage's use of
so-called "repurchase-to maturity" transactions.
Corzine said he had no problems with that advice, though
Goldman had treated similar transactions differently.
"We had a full discussion with PwC and our audit committee
and our internal staff," Corzine said.
PwC's advice "gave me comfort," reflecting the auditor's
"strong reputation," he added.
But in early October 2011, Corzine said he was "surprised"
when PwC said MF Global should record a loss on a future tax
benefit that had been on its financial statements.
MF Global ultimately on Oct. 25, 2011 reported a $119.4
million charge related to the benefit, as well as more details
about the European debt, which Corzine said would give investors
"a full understanding of what it was we owned."
But Corzine said there was "confusion" in the market that
the European debt caused MF Global's overall loss.
"If the market understood we did not lose this money on the
Euro sovereigns, we would have been in a much more secure
position," he said.
A lawyer for PwC will cross-examine Corzine on Friday.
Corzine testified two months after agreeing to settle a U.S.
Commodity Futures Trading Commission civil lawsuit by paying a
$5 million fine from his own pocket, a rare step, and accept a
lifetime ban from registering with that agency.
He and other MF Global officials have also reached nearly
$200 million of settlements with the administrator and former
investors. Insurance covers much of those payouts.
Corzine has not been accused of intentional misconduct, but
a Congressional panel in November 2012 blamed his risky bets and
"dereliction of his duty" for MF Global's demise.
Separate probes uncovered no criminal wrongdoing at MF
Corzine said he now runs a family office that focuses on
charitable giving and investing his family's money.
The case is MF Global Holdings Ltd as Plan Administrator v
PricewaterhouseCoopers LLP, U.S. District Court, Southern
District of New York, No. 14-02197.
(Reporting by Jonathan Stempel in New York; Editing by David
Gregorio and Lisa Shumaker)