Trump officials give pandemic loan to transportation company despite objections

WASHINGTON — Democratic lawmakers Wednesday released a report alleging top Trump administration officials made a $700 million pandemic-fighting loan in 2020 to a struggling transportation company, over objections from professional Defense Department officials.

A report released by the House Democratic House Subcommittee on the Coronavirus Crisis describes the role of corporate lobbyists in the early months of the pandemic in helping to secure public funds as trillions of dollars of aid poured into the economy. . It also suggests that senior officials such as Steven Mnuchin, former Treasury Secretary, and Mark T. Esper, former Secretary of Defense, intervened to secure special treatment for the trucking company Yellow Corporation, despite concerns about its eligibility for aid funds. . .

“Today’s report from the elected members of the subcommittee reveals yet another example of how the Trump administration is ignoring its commitment to responsibly manage taxpayer dollars,” South Carolina Representative James E. Clyburn, the Democratic chairman of the subcommittee, said in a statement. Political appointees risked hundreds of millions of dollars of public funds in defiance of the advice of professional US Department of Defense officials and in clear disregard for the provisions of the CARES Act, aimed at protecting national security and American taxpayers.

The $2.2 trillion pandemic relief package passed by Congress in 2020 included a $17 billion money bank created by Congress and overseen by the Treasury Department to help companies deemed critical to national security. In July 2020, the Treasury Department announced a $700 million loan to trucking company YRC Worldwide, which has since changed its name to Yellow.

According to the report, Yellow’s lobbyists were in close contact with White House officials throughout the loan process and discussed how the company is hiring drivers as drivers.

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

The loan prompted immediate questions from watchdog groups because of the company’s close ties to the Trump administration and as it faced years of financial and legal turmoil. The firm lost more than $100 million in 2019 and was sued by the Justice Department over allegations that it defrauded the federal government for seven years. It’s recent agreed to pay $6.85 million. to resolve allegations “that they knowingly made false claims to the U.S. Department of Defense by systematically inflating prices for freight carrier services and making false claims to cover up their misconduct.”

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

According to the report, Defense Department officials recommended that the certification be withdrawn due to allegations that the company had overcharged the government. They also noted that the work the company has done for the federal government, including delivering food kits, protective gear and other supplies to military bases, could be replaced by other trucking firms.

But the day after a Defense Department spokesman notified a Treasury official that the company would not be certified, one of Mr. Mnuchin’s aides set up a phone call between him and Mr. Esper.

After the call, Mr. Esper confirmed that the company was critical to national security, and a week later the loan was approved.

Mr. Mnuchin then sent Mr. Meadows an email containing news reports praising the loan. He highlighted positive comments from James Hoff, longtime president of the truckers union, who directly approached President Donald J. Trump for the loan, according to documents in the report.

Mr Mnuchin and Mr Esper declined to comment.

In a congressional hearing before leaving office at the end of 2020, Mr. Mnuchin said the loan was appropriate and necessary to preserve jobs and provide transportation services to the Department of Defense. Legislators from both parties, such as Sen. Ron Wyden, Democrat of Oregon, and Pat Roberts, former Republican Senator of Kansas, sent letters to Mr. Mnuchin urging him to consider the loan application.

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

The report accuses Yellow of misrepresenting its business in order to secure a loan. He claimed to be providing the Department of Defense with a larger share of the freight service than the Department had intended. Posts included in the report also showed a company executive discussing the use of funds to cover capital investments when the aid money was to be used to offset losses from the pandemic. The executive said the company had a hand in the cookie jar.

Along with the release of the report, Mr. Clyburn sent a letter to the Inspector General of the Treasury Department asking for an investigation into whether Yellow violated the False Claims Act.

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