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The horrifying thing about MF Global is you can bring in someone with huge experience like John Corzine, who has seen whats gone on in the past three years, and yet he goes in and completely fails to prevent what has become the biggest blow-up since Lehmans indeed, it has been suggested that he instigated the disastrous trade, says Dermot Butler (pictured), chairman, Custom House Global Fund Services

Hes due to appear before a congressional House committee today 8 December and in a prepared testimony he plans on saying I simply do not know where the money is, or why the accounts have not been reconciled to date.

You go to MF Global because theyre a solid company, who have been around a long time. Unfortunately, Corzine has demonstrated extreme irresponsibility and clearly hasnt learned a thing. Its like 2008 never happened.

I feel sorry for all MF Globals clients and especially the farmers and ranchers who used MF Global to hedge their crops against future price volatility. Unfortunately a run-on-the-bank syndrome appears to have affected an awful lot of people who put their faith in MF Global.

It was triggered by the fact that someone at the firm made a serious error of judgement. This is, I think, a classic case of hubris.

My understanding is that those MF Global clients with cash in their account at the start of day on 31 October have been paid or have applied to the judge to allow them to receive 60 per cent of what they had there. However, I know of one fund that liquidated all their positions on 31 st October and although they had cash at the end of the day theyre not getting the same treatment as those who had cash at the beginning of the day. Hopefully itll all get ironed out but it might take a long time to work through the bankruptcy courts.

The need to allocate blame in these disastrous situations is both obvious and understandable. Take the Walkers non-executive directors (NEDs) of the doomed Bear Stearns hedge fund that folded in 2007. I gather theyre being sued because they didnt pick up on style drift. Subject to their Directors Service Agreement, I personally have some sympathy for them. I sit on the board of several funds and receive reports from administrators, investment managers etc, confirming theyve done what they are contracted to do. Am I allowed to rely on that or do I actually have to go and check every single transaction? Thats not what a NED is supposed to do. He/she is supposed to interrogate and get comfortable answers.

I dont know what went wrong at MF Global, or where the money went, but it seems possible that during the day they were putting up margins against their own positions, which they were taking out of client accounts. If, at the end of the day, when they closed their trading books, they put the money back, anyone looking at their balance on a daily basis would think thats okay — theyre covered. No problem. And then one day they cant put it back and theyre not covered. However, the only way to discover the on-going problem would have been be to perform checks on a real-time, intraday basis.

As Ive said for many years now: No regulation stops a crook.

Certainly, theres a strong argument for regulators having real-time access to fast-moving markets like futures. If it happens itll put more of a burden on administrators to do things in real-time. At the moment, the majority would be stretched to do this. We could do it with a couple of clients but not all.

Id like to go back to the earlier point on the role that NEDs play. There have been various noises in the media recently about the efficacy of NEDs and whether they sit on too many funds. Well, its a very easy argument to make but it depends how the NED operates. Even the most diligent NED could not have known about the intra-day irregularities at MF Global.

I know one Cayman corporate director who sits on about 100 funds. He has a team of support staff who read the reports that come in and highlight any problems. If there are any they simply say the administrators report is clean except there was a minor price error on page x due to the following. The Director can look at that straight away and get to the bottom of the issue.

Granted, the Weavering case hasnt helped but it was extreme. To throw it back on all NEDs and suggest theres a fundamental issue with the governance of all funds boards is unjustified in my view.

Another point that has cropped up recently is whether representatives of a funds administrators should sit on the board of the fund because of perceived conflicts of interest.

Halfway through a meeting I attended the other day, someone from a major and very vocal institution said that no administrator should sit on the board, but was quite happy to let the investment manager do so. Doesnt that represent even more of a conflict of interest? He wants more independent investment managers on the board of funds, rather than administrators. But because the majority of investment managers will inevitably be traditional long-only managers, many wont have the slightest idea what a complex derivative is.

How is that more preferable to using administrators who have experience at working with a wide range of hedge fund strategies and understand exactly what theyre doing? Theyre going to pick anomalies up and act on them far quicker than, say, an investment manager from Edinburgh, whos never had to spell hedge.

Even if there are conflicts of interest, which may happen from time to time, its not as if theyre difficult to resolve or manage.

Dont get me wrong I am in favour of greater corporate governance for Directors of all companies not just funds but pendulums can swing too far.