Financial disclosures reveal business entanglements and likely conflicts of interest of Postmaster General, experts say

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Outside experts who spoke to CNN were shocked that Postal Service ethics officials approved the arrangement, which allows DeJoy to keep at least $ 30 million in XPO holdings.

DeJoy and USPS have said it is in full compliance with the regulations.

Leaping further alarms, on the same day in June that DeJoy gave up large amounts of Amazon shares, he bought stock options giving him the right to buy new Amazon shares at a price well below theirs. current market price, according to revelations.

DeJoy is already facing bipartisan criticism for implementing disruptive changes after taking control of the USPS on June 15, including the elimination of overtime for many workers. Democrats also claim he is intentionally slowing mail delivery to sabotage the absentee vote in the November election – a charge he denies.

Prior to joining the administration, Trump ally and fundraiser DeJoy was a member of the board of directors of XPO Logistics, a large transportation and logistics company that does business with the USPS and has contracts with d ‘other US government agencies, such as the Department of Defense. . In 2014, XPO acquired DeJoy company, New Breed Logistics, for $ 615 million.

These questions about DeJoy come at an unbelievably tense time at USPS. The agency is already strapped for cash and faces funding shortages. And two members of the board of governors resigned earlier this year, at least in part to protest the efforts of Trump aides to control the finances and operations of the USPS. DeJoy’s supporters say he’s the right fit for the job as he can streamline the struggling agency with his business expertise.

‘Do not pass the odor test’

U.S. Postmaster General Louis Dejoy arrives for a meeting at the Speaker's Office of House Representative Nancy Pelosi (D-CA) at the U.S. Capitol August 5, 2020 in Washington, DC.

Upon announcing DeJoy’s appointment, the USPS Board of Governors noted that New Breed “was a contractor of the United States Postal Service for over 25 years” and received high quality awards in the 1990s. The ad did not mention XPO’s permanent links with the USPS.

According to federal records, when he became Postmaster General, DeJoy still had a large stake in XPO, totaling between $ 30 million and $ 75 million. Federal ethics officials recently approved his decision to retain those assets, but outside experts with decades of experience in government are raising red flags.

“The idea that you can be a Postmaster General and own tens of millions of shares in a postal service contractor is quite shocking,” said Walter Shaub, the former director of the Office of Government Ethics, who resigned in 2017. “It could be that he intends to sell it, but I don’t understand the delay. He managed to let go of a lot of other things. And if he wasn’t ready to sell him, he shouldn’t have taken the job. ”

Schaub, who is now a senior advisor at Citizens for Responsibility and Ethics in Washington, suggested that if DeJoy does not divest his stakes soon, it could be interpreted as an illegal conflict of interest. Schaub also asked why ethics officials approved this arrangement.

It is illegal under federal law for federal government employees or their spouses to have a “financial interest” in companies that intersect with their official duties. Ethics experts who spoke to CNN said DeJoy could have alleviated these conflicts by opting out, agreeing in advance to recuse themselves from certain affairs, receiving legal waivers or even establishing blind trust.

“If you have a $ 30 million interest in a company, of course that will have an impact on you,” said Stuart Gilman, who spent 12 years at the Office of Government Ethics, where he was deputy director. “I guess there is a problem here. It certainly does not pass the odor test. “

Democrats call for investigation

A spokesperson for the USPS previously told CNN that DeJoy meets all ethical requirements. Federal ethics officials approved the financial deposits required by DeJoy in June, July and earlier this month.

“No problem with XPO’s postal service contracts has been presented to Postmaster General DeJoy, and such problems are not expected to reach this level,” Jessica Brewster-Johnson, advisor, told CNN. principal in ethics of the USPS.

A group of Senate Democrats, led by Massachusetts Senator Elizabeth Warren, asked the USPS Inspector General to investigate the policy changes imposed by DeJoy this summer and to examine whether DeJoy “met all the requirements. ethical requirements ”regarding personal finances and participation in XPO. A spokesperson for the USPS watchdog declined to say whether they are launching an investigation.

DeJoy made dozens of stock sales and purchases during his time at USPS. He divested at least $ 100,000 in XPO options, but apparently kept his larger holdings. He also holds options to buy an additional 270,000 shares in XPO, at varying prices going forward. These options all expire in November.

Around the time he took over the USPS, DeJoy bought and sold stocks or stock options in a wide range of industries, including healthcare companies like Johnson & Johnson and Abbott Laboratories. , who are involved in the response to the pandemic. He also sold shares of Coca-Cola and Uber, and bought shares of ExxonMobil. These financial transactions continued after DeJoy joined USPS, according to federal records.

Amazon Commerce

DeJoy’s trading in Amazon shares is also under scrutiny. According to his financial information, DeJoy held between $ 100,000 and $ 250,000 in Amazon stock when he joined the administration.

On June 24, DeJoy sold those shares, but on the same day he bought a new equity stake in the company, buying between $ 50,000 and $ 100,000 in stock options for Amazon. The stock options, which expire Oct. 16, give DeJoy the right to buy Amazon stock at a price of $ 1,960 per share. Amazon shares are currently trading over $ 3,100.

“It’s another conflict. He has the opportunity to buy. That means he’s betting the value of Amazon will increase, ”said Marcus Owens, a former senior IRS official with decades of experience in the area of ​​federal ethics. “Why is he investing in a competitor of the company he is supposed to manage? This is a classic case of investigation by an inspector general. ”

Given the president’s repeated criticisms of Amazon and its contracts with the Postal Service, these stock transactions have remained loyal to ethics experts. Trump has publicly attacked Amazon and the Washington Post, which is owned by Amazon founder Jeff Bezos. And Trump complained privately about the Washington Post’s coverage of attacking Amazon, the newspaper reported.

“It’s quite scandalous to go into government and then buy conflicting (interests),” Shaub said. “He partially eliminated a conflict of interest and then bought a new one the same day. ”

As recently as last week, Trump cited Amazon by name while criticizing USPS pricing.

The USPS maintains that DeJoy’s ownership of the XPO stake and these other assets is not in itself a problem. USPS officials also said their new leader was not trying to sabotage the 2020 election with postal delays and that he was following all proper ethics rules.

“I take my ethical obligations seriously and have done what is necessary to ensure that I am and will remain in compliance with those obligations,” DeJoy said in a statement to CNN.

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