The U.S. Postal Service will pay $ 120 million over the next five years to a major logistics entrepreneur that Postmaster Louis DeJoy previously helped run and with whom his family has financial ties, according to financial disclosure statements from DeJoy.
The new contract will deepen the postal service’s relationship with XPO Logistics, where DeJoy served as general manager of supply chain from 2014 to 2015 after the company purchased New Breed Logistics, the trucking company he owned for over 30 years. Since becoming Postmaster General, DeJoy, companies controlled by DeJoy and his family foundation have sold between $ 65.4 million and $ 155.3 million of XPO shares, according to financial information, tax documents. foundation and securities deposits.
But DeJoy’s family businesses continue to lease four office buildings in North Carolina to XPO, according to its financial information and state property records.
The leases could generate up to $ 23.7 million in rent for DeJoy businesses over the next decade, according to a person who shared details of the deals with the Washington Post but spoke anonymously to discuss financial arrangements confidential. In 2018, when DeJoy was on the company’s board of directors, XPO reported similar numbers to the Securities and Exchange Commission. The leases run until 2025 and can be extended until 2030, according to the documents.
Postal service spokesman Jeffery Adams said DeJoy was not involved in the procurement process for the XPO contract, which was a tender. DeJoy’s leases to XPO were approved by ethics officials before DeJoy took office in June 2020, according to an unreported general investigation by a Postal Services inspector as the properties were leased to an entrepreneur and not to the agency itself. DeJoy is being recused from any matter involving XPO, Adams said.
DeJoy’s leases have alarmed some ethics watchers.
“There is no doubt that he continues to take advantage of a postal service contractor,” said Virginia Canter, chief ethics counselor for the Citizens for Responsibility and Ethics watch group in Washington. “He can comply with these technical legal requirementsâ¦ but that creates an apparent problem as to whether it is in his financial best interests to continue to develop a policy that would benefit entrepreneurs like XPO.”
The previously unreported deal will see XPO take over operations at two crucial sorting and distribution facilities in Atlanta and Washington, DC.The agency awarded the company the contract in April, but XPO is a longtime postal supplier with dozens of other active contracts with the postal service. for trucking and logistics assistance.
DeJoy’s 14-month tenure in the Postal Service has been the subject of controversy throughout. Congressional Democrats and independent postal experts accused him of slowing mail delivery ahead of the November 2020 presidential election – accusations he denied. He is the subject of a federal criminal investigation for allegations of campaign finance abuse. A spokesperson for DeJoy said in June that DeJoy “has always been scrupulous in adhering to campaign contribution laws and has never knowingly violated them.”
DeJoy has repeatedly said in testimony to Congress that he will meet all ethical requirements.
âLDJ Global Strategies, of which Mr. DeJoy is the majority shareholder, leases certain commercial buildings to XPO. Such leases were disclosed by Mr. DeJoy in his public financial disclosure report, âAdams said in a statement. In addition, the Government Ethics Office has approved Mr. DeJoy’s recusal agreement regarding XPO as an appropriate remedy to resolve any issues regarding the possible emergence of a conflict of interest regarding this landlord / tenant relationship. . “
XPO spokesman Joseph Checkler said the company’s contracts with the postal service were awarded through regular procurement mechanisms.
DeJoy has strong ties to the logistics industry. He turned his family’s trucking business into a shipping heavyweight after a landmark deal with the Postal Service in the early 1990s. He sold the business to XPO in 2014 for $ 615 million.
DeJoy typically owned commercial properties leased to XPO and shares of the company through individual limited liability companies and his family foundation, according to his financial information, his wife’s financial information and documents filed with the SEC. (DeJoy’s wife Aldona Wos was then President Donald Trump’s Ambassador-designate to Canada and filed separate ethics forms in 2019.)
Three limited liability companies – 4000 Piedmont Parkway Associates, 4035 Piedmont Parkway Associates and LMD Properties – own the leased buildings, according to North Carolina real estate records. DeJoy identifies himself as a âmanaging memberâ of the three companies in his financial statements.
Another limited liability company, the Louis DeJoy Family Partnership, held its XPO shares.
The three limited liability companies that rented buildings from XPO did not own XPO shares. DeJoy’s family charitable foundation held assets of XPO, according to the Inspector General’s report, although the investigation does not include the number of shares or their value.
The Inspector General’s report says a postal service ethics lawyer recommended DeJoy divest himself of certain assets to avoid conflicts of interest – including shares in XPO, Amazon and UPS – or to sign a recusal memorandum reassigning the problems involving these companies to other agency managers.
Within nine days of taking office, DeJoy sold between $ 565,000 and $ 1.2 million in shares of UPS and Amazon, two of the Postal Service’s main competitors, according to his financial information. (Amazon founder Jeff Bezos owns The Washington Post.)
But the Inspector General’s report said DeJoy had initially explored alternatives to divesting XPO’s assets while remaining in compliance with ethical rules. DeJoy tasked Michael Elston, secretary of the agency’s board of directors, and Heather Clarke, DeJoy’s chief of staff who previously worked at the former DeJoy companies, to filter out issues involving companies with which DeJoy held investments, including XPO, according to the Inspector General’s investigation.
These questions were to be directed to David E. Williams, the agency’s chief operating officer. Williams retired in January. The Postal Service declined to provide the Washington Post with updated DeJoy screening processes.
On August 13, however, DeJoy informed postal ethics officials that he would begin divesting 14 companies in which he held assets and officials said they could present conflicts of interest, including XPO.
Over the next four months, he sold between $ 27.7 million and $ 107.8 million in shares of those companies. The vast majority – between $ 26 million and $ 103.6 million – were made up of XPO assets.
According to the Inspector General’s investigation, postal ethics officials initially determined that DeJoy did not need to disclose the assets of his family foundation because the organization had nonprofit tax status. But investigators later discovered that the foundation had a previously unknown account made up mostly of XPO assets.
The Inspector General’s office informed postal ethics officials of this account, and those officials asked DeJoy to hire an independent asset manager for the foundation, according to the report, which Mark Corallo, the DeJoy’s personal spokesperson said the foundation has since done.
When DeJoy stepped down from XPO’s board in 2018, according to SEC documents, the foundation held 484,340 XPO shares. These shares were reportedly worth $ 38 million when DeJoy took office. With the approval of postal ethics officials, the foundation’s assets were not included in DeJoy’s ethics forms. Adams said the foundation sold all of its XPO shares, although the Postal Service did not answer questions about when those sales took place.
Under the new postal service contract, XPO will take over two âsurface transfer centersâ which organize mailings and load them onto trucks.
The Postal Service struck the deal with XPO in April, but did not publicly discuss the deal until late June. The agency will subcontract work at four other facilities in San Francisco, Los Angeles, western Massachusetts and New Jersey over the coming months.
In each case, according to a presentation by agency executives made in June to a group of postal players, the postal service will relocate operations to buildings that can accommodate more parcel sorting machines. Nearly a dozen employees from each facility will move to the new buildings to handle the work of XPO contract workers, union officials involved in the moves said.
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Douglas MacMillan of the Washington Post contributed to this report.