Trump officials handed $700m pandemic loan despite objections

WASHINGTON — Democratic lawmakers released a report on Wednesday alleging that top Trump administration officials issued a $700 million pandemic relief loan to a struggling trucking company in 2020 despite objections from government officials. Department of Defense career.

The report, released by the Democratic staff of the House Special Subcommittee on the Coronavirus Crisis, outlines the role of corporate lobbyists in the early months of the pandemic in helping secure government funds as billions dollars of relief money was injected into the economy. . It also suggests that top officials such as Steven Mnuchin, the former Treasury Secretary, and Mark T. Esper, the former Defense Secretary, have stepped in to ensure that the trucking company, Yellow Corporation, benefits special treatment despite concerns about his eligibility to receive relief funds. .

“Today’s select subcommittee staff report reveals yet another example of the Trump administration’s failure to live up to its obligation to be a responsible steward of taxpayers’ money,” Rep. James said. E. Clyburn of South Carolina, Democratic chair of the subcommittee, in a statement. Political appointees risked hundreds of millions of dollars in public funds against the recommendations of career DOD officials and in blatant disregard of provisions of the CARES Act designed to protect national security and American taxpayers.

The $2.2 trillion pandemic relief package that Congress passed in 2020 included a $17 billion kitty set up by Congress and controlled by the Treasury Department to help businesses deemed essential to national security. In July 2020, the Treasury Department announced it was providing a $700 million loan to trucking company YRC Worldwide, which has since changed its name to Yellow.

Yellow lobbyists have been in close contact with White House officials throughout the loan process and have discussed how the company employs drivers as drivers, according to the report.

Mark Meadows, the White House chief of staff, was a “key player” in coordinating with lobbyists for Yellow, according to correspondence obtained by the committee. The report also noted that the White House political operation was “almost giddy” in its efforts to help with the bid.

The loan raised immediate questions from watchdog groups because of the company’s close ties to the Trump administration and because it had faced years of financial and legal turmoil. The company had lost more than $100 million in 2019 and was being sued by the Justice Department for allegedly defrauding the federal government over a seven-year period. He recently agreed to pay $6.85 million to resolve allegations “that they knowingly made false statements to the United States Department of Defense by systematically overcharging for cargo carrier services and making false statements to conceal their misconduct.”

To qualify for a national security loan, a business had to be certified by the Department of Defense.

According to the report, defense officials had advised against certification due to accusations that the company had overcharged the government. They also noted that work the company had done for the federal government — which included shipping meal kits, protective gear and other supplies to military bases — could be replaced by other companies. trucking.

But the day after a defense official told a Treasury official that the company would not be certified, one of Mr. Mnuchin’s aides set up a phone call between himself and Mr. Esper.

Following the call, Mr. Esper certified that the business was essential to national security and a week later the loan approval was announced.

Mr Mnuchin then sent an email to Mr Meadows which included news stories praising the loan. He pointed to positive comments from James Hoffa, the longtime president of the Teamsters Union, who, according to report documents, made a direct appeal to President Donald J. Trump about the loan.

Mr. Mnuchin did not immediately respond to a request for comment and Mr. Esper declined to comment.

In a congressional oversight hearing before leaving office in late 2020, Mr. Mnuchin said the loan was appropriate and necessary to save jobs and maintain trucking services at the Department of Defense. Lawmakers from both parties, such as Sen. Ron Wyden, Democrat of Oregon, and Pat Roberts, the former Republican senator from Kansas, had sent letters to Mr. Mnuchin urging him to consider the loan request.

Yellow had many ties to the Trump administration. The company had financial backing from Apollo Global Management, a private equity firm with close ties to administration officials. Mr. Trump had chosen the company’s chief executive, Darren D. Hawkins, to serve on a coronavirus economics task force. And he had named the company’s former chief executive, William D. Zollars, to the board of governors of the US Postal Service.

The report accuses Yellow of misrepresenting his business to help secure the loan. He claimed to provide a greater share of trucking services to the Department of Defense than the department had estimated. Communications included in the report also showed a business executive discussing the use of funds to catch up capital investments as relief money was supposed to be used to offset losses from the pandemic. The executive said the company had “their hand in the cookie jar”.

Along with the report’s release, Mr. Clyburn sent a letter to the Treasury Department’s inspector general asking for an investigation into whether Yellow had violated the False Claims Act.

A law firm representing Yellow sent a letter to Mr Clyburn ahead of the report’s release defending the company’s actions and describing many of the allegations as “baseless”. The letter stated that the company had settled his dispute with the government last month.

The letter, which was written by Marc E. Kasowitz, who was previously Mr. Trump’s personal attorney, was provided to The New York Times by Heather Nauert, a Yellow adviser who was previously spokesperson for Mike Pompeo, Mr. Trump’s secretary. State.

Maggie Haberman contributed report.

Comments are closed.