UPDATE 3-MF Global exec tied to money transfers clams up
* MF Global assistant treasurer declines to testify
* House oversight panel probes missing customer money
* Other MF Global execs say talking to law enforcement
* More than $1 billion in customer funds still missing
By Sarah N. Lynch and Aruna Viswanatha
WASHINGTON, March 28 (Reuters) - An MF Global executive, who has emerged as a central figure in the desperate shifting of funds before the brokerage's collapse, refused to answer questions on Wednesday, frustrating lawmakers probing why more than $1 billion in customer money is missing.
Assistant Treasurer Edith O'Brien and other mid-level MF Global executives, people who had operational control over money transfers at the brokerage, were called to testify before the investigations panel of the House Financial Services Committee.
O'Brien, a demure-appearing brunette dressed in a somber black dress suit, was excused after refusing to answer questions. The others remained to take scathing questions from the lawmakers who likened the missing customer funds to a grand heist.
The executives were unable to say why the money is missing, and who was responsible for it, keeping open the mystery nearly five months after MF Global filed for bankruptcy and former Chief Executive Jon Corzine resigned from the firm.
"Obviously there was a terrible failure here of some kind, but what it was, I don't know," said MF Global General Counsel Laurie Ferber.
Lawmakers were angered by such non-committal answers.
"Bonnie and Clyde, they were chumps," said Republican Representative Steve Pearce, referring to bank-robbing duo from the 1930s. "You guys have people send things electronically...and nobody's responsible, and you can't even declare that it was robbed or stolen."
O'Brien was the star witness, especially after the congressional panel released last week details of an email from O'Brien that said a $175 million transfer, that may have included customer funds, was "Per JC's [Jon Corzine's] direct instructions."
Corzine, a former U.S. senator and a governor of New Jersey, has maintained that he "never intended" to break any rules and did not give instructions to misuse customer funds.
O'Brien refused to elaborate to lawmakers. "On advice of counsel I respectfully decline to answer based on my constitutional right," she told subcommittee chairman Randy Neugebauer when asked whether she gave Corzine assurances that the fund transfer was proper.
The U.S. Constitution protects individuals from being forced to testify against themselves.
MF Global filed for protection from creditors on Oct. 31 after investors and customers became rattled over the firm's $6.3 billion bet on European sovereign debt and downgrades by credit rating agencies, resulting in a liquidity crunch.
MF Global customers are frustrated. A total of about $3.9 billion has been recovered so far but sizeable individual sums remain missing.
"Everyone seems to continually point in Edith's direction, and for her not to provide any information or insight she has, it's really disappointing," said Angela Wisdom, vice president of Wisdom Financial Inc, a California firm that is still short about $20 million it held at MF Global. "Every person they bring into these hearings, they can't answer these questions."
NO SMOKING GUN
There has so far been no smoking gun to suggest criminal intent, although federal investigators have been looking at whether any criminal wrongdoing might have taken place.
The three MF Global executives who stayed to answer questions - Ferber, Chief Financial Officer Henri Steenkamp, and Christine Serwinski, former chief financial officer of the company's brokerage unit - revealed that they have been talking to the Justice Department.
Steenkamp said his lawyers provided a proffer, or an informal document that describes information he would be able to provide in exchange for immunity, to "all of the regulatory agencies and investigative offices."
Serwinski said she talked to investigators twice, and Ferber said she is cooperating with the Justice Department and is scheduled to meet with them on April 6.
All three indicated no when asked if they had been offered immunity by the Justice Department.
Committee members, including the ranking Democrat, Michael Capuano of Massachusetts, questioned the propriety of MF Global officials' actions.
"Apparently nobody did anything wrong, but there's a billion dollars missing," Capuano said. He later questioned whether the court-appointed trustee for MF Global, Louis Freeh, should be paying bonuses to top executives during the bankruptcy.
Investigators are looking at whether any of MF Global's $175 million transfer to a JPMorgan Chase & Co account on Oct. 28, three days before its Chapter 11 filing, represented money from customers. Raiding customer funds is a violation of federal regulations.
Diane Genova, JPMorgan's deputy general counsel, in written testimony for Wednesday said Corzine "assured" the largest U.S. bank that matters were being handled properly.
Corzine did not testify on Wednesday, but he had specifically named O'Brien on Dec. 15 before the same committee, saying she assured him that the transfer was proper.
Ferber said she resisted providing broad written assurance to JPMorgan that MF Global was complying with rules to segregate customer funds. She said a letter suggesting narrower language was drafted, but not signed.
Serwinski said in her written testimony that by Oct. 27 she was "not comfortable" with putting customer funds at risk even overnight, after having learned there had been a "substantial deficit" in one metric on the company's books the day before.
Under questioning, she told lawmakers she would not have approved the $175 million transfer had she known then what she knows now.
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