State Mill Likely to Lose $60K Due to MF Global Collapse(AP) — North Dakota's state-owned flour mill likely will lose at least $60,000 because of the collapse of a commodities broker the mill has used to guarantee prices for the wheat it buys, a state audit says.
By: Dale Wetzel, Associated Press
(AP) — North Dakota's state-owned flour mill likely will lose at least $60,000 because of the collapse of a commodities broker the mill has used to guarantee prices for the wheat it buys, a state audit says.
The Mill and Elevator was a longtime client of MF Global Holdings Ltd., a New York-based company that filed for bankruptcy last October. Vance Taylor, the mill's general manager, said Tuesday that the mill had $408,000 in its MF Global account when the company collapsed.
"We've been working with them for years. They're one of the largest brokerage firms and one of the most respected at the time," Taylor said. "Obviously, they're not now."
About $292,000 has been recovered, said Ed Barchenger, the mill's comptroller. The audit estimates the mill eventually will get back $346,800, which would leave a loss of $61,000. The recovery is not assured.
Investigators say MF Global was using clients' money for its own operations and that more than $1.2 billion went missing. Auditors and a bankruptcy trustee are sorting through the company's finances.
The company's problems have been the subject of congressional hearings. MF Global's chief executive officer was Jon Corzine, a former New Jersey Democratic governor, U.S. senator and chief executive of Goldman Sachs, an investment banking firm.
Taylor said the mill used MF Global and another brokerage, ADM Investor Services Inc., of Chicago, to buy wheat futures as part of its operations, primarily on the Minneapolis Grain Exchange.
The exchange is one of the primary markets for hard red spring wheat. North Dakota is a leading producer of the wheat variety, which the mill buys to grind into bakery flour.
Agriculture Commissioner Doug Goehring said he was not aware the mill was using MF Global for commodities trades, but said he would have had no concerns about doing so.
"There hadn't been any previous issues," Goehring said Tuesday. "I would have had no reason to suspect (problems), no concerns."
Goehring is a member of the state Industrial Commission, which is the mill's board of directors. Its other members are Gov. Jack Dalrymple and Attorney General Wayne Stenehjem.
"What MF Global did was irresponsible and unimaginable," Goehring said. "Somebody knowingly moved funds for the company's own purpose."
The loss will put a small dent in the mill's finances. It made $2.2 million in profits during October, November and December, according to its most recent financial results.