You Stand Relieved, Mr. Corzine

| About: MF Global (MFGLQ)
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We believe trading is combat. We only wish that the men and women in command of financial intuitions in our country felt the same way. They don't.

On the night of April 26, 1952, the aircraft carrier USS Wasp was conducting flight operations approximately seven hundred miles west of the Azores. Escorting the Wasp as part of the carrier group was the USS Hobson, a small destroyer-minesweeper. The escort ship is there for rescue purposes in the event of a crash or a man overboard. The Wasp turned into the wind to recover her aircraft from night operations.

It was dark, and the ships were running with minimum lights. This was protocol for a carrier at night back then for two reasons. The Cold War was just underway, and Soviet subs were doing their best to keep track of our carriers. Sailing with minimum lights made it harder to track the ships. Lights also distorted the flight deck crew and aviators night vision, so less was better. Though not in this case.

The commanding officer of the Hobson mistakenly ordered his ship across the carrier's bow and the Wasp struck the vessel amidships. The force of the tremendous collision rolled the destroyer-minesweeper, breaking her in two. She went to the bottom in four minutes with 176 of her crew, including her Commanding Officer.

The incident was the subject of an intense investigation, and the Naval Court of Inquiry determined that one person, the captain of the Hobson, was solely responsible for the disaster. Yes, others were blameworthy, but ultimate responsibility rested with the commanding officer.

In an article about the mishap shortly thereafter, the Wall Street Journal wrote the following:

"On the sea, there is a tradition older than the country itself - it is the tradition that with responsibility goes authority and with both goes accountability …

"It is cruel, this accountability of good and well-intentioned men. But the choice is that, or an end to responsibility, and finally, as the cruel sea has taught, an end to the confidence and trust in the men who lead.

"For men will no longer trust leaders who feel themselves beyond accountability for what they do."

Read this sentence again:

"For men will no longer trust leaders who feel themselves beyond accountability for what they do."

The words identify the culture of leadership that has served the Navy for several hundred years. It's a culture the business world should adopt without exception. But of course it never will.

Take former commanding officer and potential future federal prisoner Jon Corzine.

As his ship, MF Global (OTC:MFGLQ), rolled over and sank due to his own bad bets on European debt he apparently (let's say "allegedly") gave direct orders to his subordinates to execute illegal activities - and eventually lied to Congress under oath - or MF Global was a leaderless organization with people doing whatever they wanted to do. Either way there's only one person responsible for the sinking of the MF Global - Jon Corzine.

The WSJ reported over the weekend that emails have surfaced showing that Corzine gave direct orders to use $200M in customer accounts - money from mom and pop farmers - to cover a margin call from J.P. Morgan Chase (NYSE:JPM) as the stern of the mighty MF Global slid beneath the waves. Under federal regulations customer and firm money must not be co-mingled. Why? Exhibit A.

To cover his bad bets he took money that was not his and used it to pay of his bookie. Now he doesn't know where $1.6B went. Must be nice to not worry about where you placed that kind of coin.

Now it appears he's going to his subordinates under the bus. "Since I had no personal knowledge of the issues, I asked senior people in the back office and the legal department to become directly involved." Emails show this was not the case. He gave the order.

Even if you did not Mr. Corzine, guess what? You alone are accountable. Period. It doesn't matter if the Commanding Officer of a ship is sound asleep in their stateroom and the ship runs aground - they're responsible. Period. "But I was asleep and didn't know!" Capt. Corzine might say in front of Congress, or hopefully a grand jury.

It doesn't matter Skipper - you alone are responsible for this ship and the training of her crew. You failed in your mission. You stand Relieved.

Responsibility should never be "pushed downhill." Nothing is more debilitating for an organization. If the Navy had chosen to make a scapegoat of the young sailor who was at the helm of the Hobson that fatal night, they would've crushed centuries of tradition at sea.

Firing Line: No military or business can achieve their missions without the highest degree of trust and accountability. There was ultimately only one man responsible for the Hobson tragedy. Let's see if this time around Wall Street and the government gets it right and makes the MF Global tragedy serve as notice to all financial heavies - no matter what - you are the one in charge, for better or worse. But the former head of Goldman Sachs (NYSE:GS), U.S. senator, and governor of the great state of New Jersey may once again prove that justice for the rich and powerful is a lot different than mom and pop farmer.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.