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The Hill - Menendez Challenger Alleges Conflict of Interest in MF Global Hearings

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By Josh Lederman

Sen. Robert Menendez's (D-N.J.) Republican challenger has demanded that Menendez recuse himself from the Senate's examination of the collapse of MF Global, alleging a conflict of interest with former Gov. Jon Corzine (D-N.J.).

New Jersey state Sen. Joseph Kyrillos (R), who is running to unseat Menendez, argued there is no way for Menendez to thoroughly investigate the man who appointed him to the Senate in the first place.

Menendez's campaign ignored Kyrillos's request that he recuse himself, but charged Kyrillos with a hypocritical attack and of siding with Wall Street over the middle class.

Kyrillos accused Menendez, who sits on the Senate Banking Committee, of steering the panel's hearing last week away from questions about Corzine and how, under Corzine's watch as the head of the now-bankrupt brokerage firm, $1.6 billion of client money disappeared.

In the hearing, Menendez questioned James Giddens, an MF Global trustee, about whether the firm's liquidity issues and poor capitalization led to its demise, but didn't press the issue of how so much money disappeared without a trace.

Menendez owes his initial appointment to the Senate in January 2006 to Corzine, who tapped Menendez to fill his seat when he left the Senate to become New Jersey's governor. Menendez was elected later that year to a full term, and is up for reelection in November.

"People rightly find it inexplicable that there are no answers," Kyrillos told The Hill, adding that the Senate has a responsibility to get to the bottom of where the money went. "If you can't be objective and there isn't the confidence that you can roll up your sleeves and dig out the facts, seems to me it makes sense to step aside."

The focus of the Senate Banking Committee's inquiry has been forward-looking, seeking to identify steps that can be taken to prevent such situations from occurring in the future. The task of investigating potential wrongdoing and the disappearance of funds has primarily been taken up by other congressional panels, notably the House Financial Services Committee.

But Kyrillos said Menendez's judgment has been called into question by his refusal to raise tough questions about the man who was at the helm of MF Global when things turned sour.

Asked whether Menendez would agree to recuse himself, his campaign issued a statement attacking Kyrillos, but did not address the allegation of a conflict of interest.

"This is a pretty hypocritical attack coming from Republican Joe Kyrillos who has defended Wall Street and millionaires at just about every opportunity," said Michael Soliman, Menendez's campaign manager. "Sen. Bob Menendez has been a leader in fighting back for the middle class against the excesses of Wall Street and big banks."

Soliman added that Kyrillos had "sided with giant corporations to deny health care to people with pre-existing conditions" and refuses to make millionaires pay their fair share.

"It's laughable," Kyrillos said of the Menendez campaign's response. "He's the king of Wall Street contributions."

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