Postmaster General Louis DeJoy’s financial holdings in former employer XPO Logistics and other private sector firms are an “enormous” financial conflict of interest that should result in his resignation or firing, experts testified to a House Oversight subcommittee Monday, as scrutiny has intensified into possible campaign finance violations before DeJoy arrived at the U.S. Postal Service and how his ties to the private sector and GOP might affect his work as postmaster general.
DeJoy has at least $30 million invested in XPO Logistics, a USPS contractor that has been paid $14 million by the agency since DeJoy took office in June alone, and receives more than $2 million per year through warehouse and office space his LLCs lease to XPO, True North Research executive director Lisa Graves highlighted in her written opening statement to the House as a reason why DeJoy should “resign, or be fired.”
Financial filings by DeJoy’s wife Aldona Wos also show that DeJoy has between $2 million and $11 million invested in private equity firm Warburg Pincus, which orchestrated the merger between XPO and DeJoy’s previous company, New Breed Logistics, and currently holds stakes in a number of logistics companies that Graves testified “could financially benefit from privatizing or parting out the U.S. Postal Service.”
Richard Painter, the former chief ethics lawyer under President George W. Bush, testified that it is “difficult to imagine” that DeJoy “has not participated in particular USPS matters that likely have had a direct and predictable financial effect on XPO Logistics,” and based on the current information, it is “very likely” that DeJoy has violated federal conflict of interest rules “unless he has recused from so many matters at the USPS that he is not fully functioning as Postmaster General.”
Painter testified that if Bush were still in office, “Mr. DeJoy’s resignation likely would have been requested by the White House.”
The witnesses who testified Monday also took issue with a recent Washington Post report alleging that DeJoy pressured New Breed employees to donate to Republican candidates between 2000 and 2014 and allegedly used company bonuses to reimburse employees who donated, with former Federal Election Commission Chair Ann M. Ravel saying DeJoy’s alleged actions would be the “poster child” for an illegal straw-donor scheme.
Painter said that while there are insufficient facts to yet prove that the allegations—which would constitute a felony—warrant criminal prosecution, in the Bush administration the “very existence” of the reports alleging the potential crimes “likely would have led to a request for a resignation.”
“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. “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.”
DeJoy has previously denied in congressional testimony that he has any improper financial conflicts of interest, and spokesman Monty Hagler said about the alleged campaign finance violations that DeJoy worked at New Breed with the Federal Elections Commission “to ensure that he, New Breed Logistics and any person affiliated with New Breed fully complied with any and all laws.” The USPS Board of Governors has also continued to express support for DeJoy amid the allegations, with board member John Barger testifying to senators last week that the board is “tickled pink” with DeJoy as postmaster general. Republicans criticized Monday’s House hearing as politically motivated, with Rep. Jody Hice (R-Ga.) calling it “an absolute farce.”
In her testimony Monday, Graves also raised concerns about DeJoy’s political donations to GOP candidates and the Trump campaign around the time of his appointment, noting that DeJoy “made a dramatic increase” in his donations directly after the postmaster general opening was announced, which “exceed[ed] the amount he gave in the prior four years.” Former USPS Board of Governors Chairman David Fineman also testified he was “extremely concerned” about changes undertaken at the USPS under DeJoy and that they “seriously [threaten] voters’ ability to have their votes counted.”
DeJoy has come under significant criticism since starting as postmaster general in June, as changes he’s implemented have sparked nationwide mail delays and sowed fears about his ties to President Donald Trump ahead of the November election. DeJoy’s alleged financial conflicts of interest and potential campaign finance violations have also come in addition to other damaging allegations about his time at New Breed, including allegations that the company had a history of worker mistreatment, court documents alleging DeJoy forged his brother’s signature on bank documents in a bid to force him out of the company, and a USPS audit showing that New Breed’s contracts with the agency may have cost the USPS $53 million as compared with other potential contracts. Lawmakers have been heavily scrutinizing DeJoy’s appointment as postmaster general by the USPS Board of Governors, as DeJoy was suggested by Republican members of the board, rather than an outside executive search firm, and may have been able to evade a background check as a result.
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