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Friday, October 23, 2020

Louis DeJoy Forced To Divest From Former Company That Contracts With Postal Service

Topline

Postmaster General Louis DeJoy has divested from XPO Logistics, his former employer and a U.S. Postal Service contractor, watchdog group Citizens for Responsibility and Ethics in Washington reports, after DeJoy’s continued investment in XPO came under considerable scrutiny for being a potential conflict of interest.

Key Facts

A certificate of divestiture from the Office of Government Ethics dated Oct. 9, which was obtained and made public by CREW, shows that DeJoy has been asked to divest from his shares in XPO, and can defer paying capital gains taxes on the sale of his XPO shares.

OGE issues certificates of divestiture in cases where the agency directs a federal employee to sell or divest from an asset “in order to avoid a conflict of interest or the appearance of one.”

DeJoy’s financial disclosure forms show that the postmaster general had at least $30 to $75 million invested in XPO, a shipping logistics company that contracts with USPS and, critics have noted, could potentially financially benefit if USPS were to be privatized.

While DeJoy has said that his investments were cleared by USPS ethics officials, the investments have come under fire from ethics experts and Democratic critics, and DeJoy’s potential ethical violations are reportedly under investigation by the USPS inspector general.

Richard Painter, the former ethics chief under President George W. Bush, previously testified to Congress that DeJoy should be fired for his XPO holdings, saying it was “very likely” that DeJoy had violated federal conflict of interest rules due to his investments “unless he has recused from so many matters at the USPS that he is not fully functioning as Postmaster General.”

Big Number

$286 million. That’s the amount that XPO has been paid by the U.S. Postal Service since 2013, according to documents obtained by the New York Times and published in September. That amount includes $14 million that had been paid so far since DeJoy took office in June, which marked a significant increase over the $3.4 million paid over the same time period in 2019. XPO has attributed the increase to an expanded contract that was changed in December, before DeJoy started at USPS, and an XPO spokesman previously told Forbes that $10.4 million of the $14 million were payments for work that was performed before DeJoy took office.

Crucial Quote

“How can you run the post office and make decisions…if you own millions of dollars of stock in a company that is trucking the mail around?” Painter testified to Congress in September. “It doesn’t make any sense. So either [DeJoy] has not been doing his job, over the past 13 weeks or so, or he’s committed a crime that could be a felony.”

Chief Critic

DeJoy has defended his investments in the past as being ethically sound despite the controversy. “I have a significant investment in XPO Logistics, which I vetted before with the ethics department of the Postal Service and I was given specific types of guidelines that I needed to adhere to,” DeJoy testified to House lawmakers in August. “It’s a very, very small part of the Postal Service business I have nothing to do with. I comply with all ethical requirements and we have an OIG investigation.” The USPS has not yet responded to a request for comment about the divestment, but spokesman David Partenheimer previously told the Times that DeJoy “correctly stated that he has ‘nothing to do with’ XPO’s contracts with the Postal Service.”

Key Background

DeJoy has drawn significant criticism amid his tenure as postmaster general. In addition to the XPO holdings, critics have also pointed to other aspects of DeJoy’s financial portfolio that could be problematic, including reported stock options in Amazon—which DeJoy has denied holding—and financial filings that show an investment of between $2 to $11 million in private equity firm Warburg Pincus. The firm helped orchestrate a merger between XPO and New Breed Logistics, which DeJoy ran, and has a financial stake in multiple logistics companies that True North Research executive director Lisa Graves testified to Congress “could financially benefit from privatizing or parting out the U.S. Postal Service.” DeJoy has also been heavily scrutinized for his history as a major GOP fundraiser, particularly in light of a report in the Washington Post that alleged DeJoy pressured New Breed Logistics employees to donate to Republican candidates and then reimbursed them through company bonuses, which could constitute an illegal straw-donor scheme if true.

Further Reading

In reversal, Postmaster General Louis DeJoy agrees to divest from XPO Logistics (CREW)

Postmaster General Louis DeJoy Should Resign Over ‘Obvious Financial Conflicts Of Interest,’ Experts Testify (Forbes)

Return To Sender: 56% Want USPS Postmaster DeJoy To Resign (Forbes)

Here Are All The Postal Service Leaders’ Ties To Trump And The GOP (Forbes)

Watchdog Files FEC Complaint Against Louis DeJoy As Outrage Over Alleged Campaign Finance Violations Grows (Forbes)

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