Democratic lawmakers on Wednesday accused President Donald Trump’s administration of improperly awarding $700 million in pandemic relief loans to a trucking company under the guise of national security, over the objection of Department of Defense officials.
In an investigation released by the House Select Subcommittee on the Coronavirus Crisis, officials said the money provided to YRC Worldwide Inc. (now known as Yellow Corp.) in summer 2020 had more to do with potential political advantages for Trump than any real military or national security needs.
“Political appointees fast-tracked approval of a substantial national security loan to Yellow despite the assessments of [defense] career officials that the company was not ‘critical’ to national security and provided Yellow with terms that violated CARES Act risk and interest rate requirements,” the investigation report states.
“The loan to Yellow — which totaled 95% of the funds disbursed under the national security loan program — was approved months faster than smaller, less risky national security loans made to other applicants.”
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The report alleges that former Defense Secretary Mark Esper intervened after lower-ranking officials rejected the proposal, signing a letter certifying that the company’s services were “critical to maintaining national security.”
Last month, officials at Yellow reached an unrelated settlement with the DoD over allegations of overcharging the government for delivery services. That required the company to pay penalties amounting to nearly $7 million.
But the latest allegations suggest the company received nearly 100 times that amount in undeserved money through the pandemic loan program.
Trump officials had no public comment on the report.
The company has denied any wrongdoing. In a statement to the Washington Post, Yellow lawyers accused the committee of conducting a partisan investigation and said the financial aid received “broad support from numerous members of Congress on both sides of the aisle.”
Several Democratic lawmakers and officials from the International Brotherhood of Teamsters publicly supported the financial aid when it was awarded nearly two years ago.
The Kansas-based trucking firm handles about one-third of all Defense Department shipments that do not require a full truck and trailer. In their application for pandemic loans, company officials said the money was needed to offset losses and maintain critical services for the military.
But the committee report said department officials assessed that the workload could be handled by other companies, and Yellow’s work did not constitute a critical national security service.
After rejecting the proposal, Department of Treasury officials (including former department Secretary Steve Mnuchin) pressed Esper to reconsider.
In emails obtained by the committee, lobbyists for the company said that political strategists in the administration were “almost giddy” at the prospect of the loans helping secure more blue-collar votes for Trump’s re-election campaign.
After Esper’s letter, the company received $700 million in low-interest loans, much of which was used for non-pandemic purposes and costs, the report states.
The committee has asked the Department of Treasury for a full investigation into its findings.
“Political appointees risked hundreds of millions of dollars in public funds against the recommendations of career Department of Defense officials and in clear disregard of provisions of [legislation] intended to protect national security and American taxpayers,” committee Chairman Jim Clyburn, D-S.C., said in a statement.
Leo covers Congress, Veterans Affairs and the White House for Military Times. He has covered Washington, D.C. since 2004, focusing on military personnel and veterans policies. His work has earned numerous honors, including a 2009 Polk award, a 2010 National Headliner Award, the IAVA Leadership in Journalism award and the VFW News Media award.