Ethics issues continue to swirl around PMG DeJoy

Washington Postal Scene by Bill McAllister

A week after the Washington Post published two articles that raised ethics issues about Postmaster General Louis DeJoy, DeJoy proclaimed the week of Aug. 16-22 as “Ethics Awareness Week” at the United States Postal Service.

DeJoy did not cite his own problems, but he praised the public’s long-standing admiration of the USPS as a trusted branch of the federal government.

The Postal Service has “always [had] making ethical behavior a priority,” he said.

DeJoy, his spokesmen have consistently said, believes all his actions have been proper under the Postal Service’s ethics rules.

But the latest disclosures are once again focusing critical attention on the nation’s top postal official.

The Post reported on Aug. 9 that the USPS will pay $120 million during the next five years to XPO Logistics Inc. of Greenwich, Conn. New Breed Logistics, a logistics company that DeJoy once ran, was purchased by XPO Logistics in 2014. Postal officials said DeJoy had no role in creating the agreement.

“Since he became postmaster general, DeJoy, DeJoy-controlled companies and his family foundation have divested between $65.4 million and $155.3 million worth of XPO shares, according to financial disclosures, foundation tax documents and securities filings,” the Post said.

“But DeJoy’s family businesses continue to lease four North Carolina office buildings to XPO, according to his financial disclosures and state property records,” the Post added.

On Aug. 13, the Post reported that DeJoy purchased $305,000 in bonds from an investment firm that has Postal Service board of governors chairman Ron Bloom as a vice chairman.

Bloom fired back in a statement issued by a postal executive, stating that he sits “on the other side of an information wall” from the side of Brookfield Asset Management, the firm that sold the bonds to DeJoy. Bloom also said he knew nothing about DeJoy’s purchases.

“I received no benefit whatsoever when Brookfield bonds are bought or sold,” he told the Post.

“Brookfield has no business relationship with the USPS, therefore there is no basis for a conflict,” Bloom said.

Academics with a background in ethics are divided over the propriety of the two actions.

Robert Deitz, a George Mason University instructor who was general counsel at two large government agencies, told Linn’s Stamp News that DeJoy’s family receiving monies from a USPS contract with a company that acquired his former North Carolina logistics firm “stinks to high heaven.”

But Deitz said he saw no issues with DeJoy’s purchase of bonds from an investment firm where the chairman of the board of governors works.

The Post quoted Kathleen Clark, a law professor at Washington University in St. Louis, who saw a problem with the bonds.

“I’m stuck on DeJoy’s purchase of bonds from a company in which his quasi-boss is a managing partner because I wonder whether it affects Bloom’s ability to protect the public interest in his assessment of DeJoy’s performance as postmaster general,” she told the paper.

DeJoy has acknowledged he is under investigation by the FBI over donations his former employees in North Carolina made to Republican candidates he supported.

What troubles mail industry officials is that the Postal Service’s board of governors now appears split along partisan lines between the majority six members appointed by former President Donald Trump and a three-member minority named by President Joe Biden.

“These stories are concerning and worthy of attention in their own right, but our hope is that the board focuses on its oversight mission rather than retreating into parochial camps based on degrees of loyalty to the PMG,” said Michael Plunkett, president of the Association for Postal Commerce.

“It looks like the two political parties are playing tug of war over whether the PMG goes or stays,” said Stephen Kearney, executive director of the Alliance of Nonprofit Mailers.

“If that’s true, the rate-paying customers and the American public bear the collateral damage,” Kearney said.

There is no question that DeJoy’s arrival at postal headquarters 14 months ago has added a political dimension to what Congress had envisioned as the nonpolitical job of postmaster general.

Rep. Gerald Connolly, D-Va., chairman of the House of Representative’s Subcommittee on Government Operations that oversees the USPS, called the postmaster general “a walking conflict of interest” after the Aug. 9 Post article was published. He also didn’t like the Aug. 13 Post article about Bloom’s firm having DeJoy as a customer, saying both Bloom and DeJoy should be removed.

What troubles Plunkett and Kearney is the continuing focus on DeJoy.

“I worry that this attention will cause the PMG and his loyalists on the BOG [board of governors] to close ranks,” Plunkett said.

The governors, Plunkett and Kearney said, appear indifferent to the health of the mailing industry.

“The current activity related to the board of governors is not conducive to rational solutions to USPS’s problems,” said Kearney, a former senior postal executive.

“The fact that most on the board have little to no experience with the Postal Service or its customers and doesn’t listen to customers, is very troubling,” Kearney said.

Despite the two critical Post articles, the postmaster general seems far from immediate danger.

For one thing, the Trump-appointed governors lined up solidly behind DeJoy’s 10-year plan to rescue the USPS from its massive deficits on Aug. 6.

The opposition of two of Biden’s new appointees failed to move any of the six governors named by Trump.  A third Biden appointee did not speak at the Aug. 6 meeting.

After all, it was the governors appointed by Trump who selected DeJoy, a major Trump financial backer, to be postmaster general.

The recent actions of the Trump-appointed governors have made clear that they still like DeJoy.

As board of governors chairman Bloom, a Trump-appointed Democrat, explained in an April interview with the Atlantic: “[DeJoy’s] earned my support, and he will have it until he doesn’t. And I have no particular reason to believe he will lose it.”

According to Philadelphia lawyer David Fineman, a Democrat who served as chairman of the board of governors during 2003-05, the bigger issue is not simply whether or not there is a proven conflict of interest charge.

Recalling his testimony before the House Committee on Oversight and Reform on Sept. 11, 2020, Fineman drew a distinction.

“I said the issue is not whether there is a conflict of interest, rather is there ‘an appearance’ of a conflict of interest,” he told Linn’s.

That is the standard judges use when being challenged about sitting on a particular case, Fineman said.

And Fineman said that is the test that should be applied “to any situation in government.”

“American taxpayers must have confidence that government officials are holding positions of power, not for individual gain, but to serve the taxpayer, or in this case, the ratepayers’ interest and not their own self interest,” he said.