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Senior officials in the Trump administration have turned down Pentagon officials for providing hundreds of millions of dollars in aid to a politically connected transportation company in a pandemic after a concerted lobbying effort, according to documents released by Democrats in the House of Representatives on Wednesday.
In 2020, defense officials at the Department of Defense decided they didn’t have to certify that Kansas-based Yellow Corp. is crucial to maintaining national security, which would mean the company could not qualify for a loan program set up by Congress earlier in the pandemic, an investigation has found. They announced this decision to the Ministry of Finance on June 24, 2020, according to emails cited in the report.
But Trump’s appointees ignored the decision after a new phone call between Treasury Secretary Stephen Mnuchin and Defense Secretary Mark T. Esper on June 26, 2020, was set up to discuss “YRC and DOD certification,” according to a Democrat report. . (Yellow Corp. was formerly called YRC Worldwide.) Esper then described the company as “critical to maintaining national security” for the purpose of the loan.
“As we said earlier, one of the ways companies could be considered for loans from the Ministry of Finance was a certificate from the Ministry of Defense that the applicant’s business is crucial to maintaining national security,” the spokesman said. Ministry of Defense Jessica Maxwell. “DOD uses the same criteria used for other funding opportunities under the CARES Act to evaluate DOD certification companies for loans from the Ministry of Finance. However, DOD has not made final decisions on the granting of these loans. The Ministry of Finance has made final decisions and decisions. “
The $ 700 million loan to Yellow Corp. was the largest granted to any company through the program for businesses that are crucial to national security, and the Ministry of Finance received nearly 30 percent stake in the company in exchange for the loan. The loan came after several Democrats and Republicans in Congress wrote letters to the Treasury and the Pentagon, advocating on behalf of the Yellow. Previous emails published by the Coronavirus Subcommittee have shown that lobbyists for the International Brotherhood of Crews, representing the yellow drivers, have also been involved in loan discussions.
Two years after the pandemic, lawmakers and government observers are just beginning to uncover how trillions of dollars in congressional aid have been spent – or misused – as federal agencies have raced to close huge gaps in the U.S. economy. Last month, for example, the Justice Department said it had found nearly $ 8 billion in alleged fraudulent claims for pandemic relief.
In a letter to the commission in response to the report’s findings to The Post, the company’s lawyer, Mark E. Kasowitz, said the commission had adopted a “partisan approach” and traded in “baseless speculation and fabrications” and that the transport company was requested Pentagon certification in a “completely transparent manner”.
Yellow worked hand in hand with senior union leaders to garner support for its loan application, and in fact received widespread support from numerous members of Congress on both sides of the aisle, who acknowledged Yellow’s criticism and called on the Treasury to approve the application. of Yellow, “Kasowitz wrote.
Yellow’s loan was intended to cover the losses associated with the pandemic, and the subcommittee expressed dissatisfaction with the fact that the company is using more than half of the money spent on new investments in tractors, trailers and technology.
Jamie Pearson, then Chief Financial Officer of Yellow, later wrote to investors that “as we kept our hand in the jar of cookies, we thought we would try to catch up while we did so,” according to an email received. from the House of Democrats. Capex refers to capital expenditures.
“Yellow’s intention to use the loan funds, including for capital expenditures, has been the subject of extensive negotiations with the Ministry of Finance,” Kasowitz wrote. In an apparent reference to Pearson, Kasowitz said the “former employee” had made a “careless and frivolous remark”.
“The YRC loan saved 25,000 union jobs in the midst of the worst economic crisis since the Great Depression and preserved the health benefits of 30,000 American families in the midst of the pandemic,” said a former Treasury Department official. “This prevented a massive disruption of the national supply chain on which the Department of Defense and millions of American businesses and consumers depend, and was done on a fully secured basis under conditions that bring significant profits to the American taxpayer.
Almost as soon as the yellow loan was announced in July 2020, it raised serious questions from supervisors. The Congressional Oversight Committee, a separate body set up by the Care Act, wrote last year that it believed the Treasury Department and the Pentagon had made “mistakes” in believing the company was eligible for the loan.
“I do not believe that this company qualifies for this funding,” said French Hill (R-Ark.), A member of the commission, in a recent interview, noting that Yellow had received most of the total 735.9 million dollars allocated under the national security program. “Ninety-five percent of the money in this pot went to a company that I don’t believe qualifies for.”
In a statement Tuesday, Hill added that the committee is now focusing on how to prevent similar awards in the future.
The new findings, published in a 28-page report, show the extent to which Trump’s top officials have gone behind the scenes to abolish career officials and provide the money.
“Today’s report on the elected subcommittee’s staff reveals another example of the Trump administration neglecting its duty to be a responsible taxpayer’s master,” said James E. Claiborne (DS.C.), who led a commission of investigators. federal spending on pandemic aid said in a statement. “Political appointees risked hundreds of millions of dollars in public money against the recommendations of DOD officials and in blatant disregard for the provisions of the Care Act designed to protect national security and American taxpayers.
Pandemic loan for troubled transport company backed by Trump from White House, emails show
In response to the commission, Kasowitz noted that Treasury’s stake in the company is now worth nearly $ 70 million, an approximately 50 percent increase since the loan began, and that the company has paid more than $ 25 million in interest on the loan.
According to the commission, the yellow lobbyists identified the then White House chief of staff Mark Meadows as a “key actor” in the matter and said they had spoken to him directly at least three times. Meadows offered to call Mnuchin about the loan application on May 25, 2020. On the day the loan was announced, Mnuchin sent an email to Meadows, emphasizing the decision. A Meadows spokesman declined to comment.
Earlier loan oversight reports have sometimes expressed distrust of Pentagon officials’ responses to why yellow is considered critical to national security, noting that the agency has informed Congress that “it has not even considered whether the services it receives from YRC, can be obtained elsewhere. “But documents released Wednesday revealed that lower-level defense officials did take this factor into account when determining that Yellow was not eligible for the loan.
“There are many other transport companies that do this,” said a note from career officials.
Yellow says it provides 68 percent of the “less than a truck” shipment – a category of cargo – to the Department of Defense. However, a review of career staff found that the company handled only 34 percent of such shipments – half of what Yellow said in its statement. The finance ministry cited the figure of 68 percent in its news release announcing the loan.
In a letter to a congressional committee, Kasowitz said Yellow was firmly behind her claim that she was then responsible for handling 68% of DoD’s LTL cargo “and that any allegation that the company overestimated the percentage of the business it handles for the Pentagon, it is “clearly useless.”
In a separate statement to The Post, a company spokesman said the lower rating Pentagon staff had made was based on a “complete picture” of all the delivery services Yellow provided to the Department of Defense through multiple contracts.
Career officials have also expressed concern over a Justice Department lawsuit against the truck company, the investigation found. The fact that other companies provide the same service, combined with litigation, led employees to believe that “we should not provide DOD recommendation and certification for them”, according to an excerpt from a note in the subcommittee’s report. Last month, the company agreed to pay $ 6.85 million to resolve the allegations without admitting responsibility.
Defense Ministry spokeswoman Jessica Maxwell said in a statement that the Treasury was responsible for making final decisions on the loans. Career officials at the Ministry of Finance did not take part in the decision, according to a person familiar with the matter, who spoke on condition of anonymity to reflect internal discussions.
The employees’ note also noted the political pressure on the loan, noting that many members of Congress had contacted the Pentagon to demand that the yellow be certified. A oversight report last year also cited letters from eight members of Congress, Democrats and Republicans to Mnuchin in April 2020. Yellow significantly increased its lobbying spending in 2020, eventually paying lobbyists $ 570,000 that year in compared to zero in 2019, according to federal disclosures.
After the career staff recommended not to be certified …
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