House Subcommittee on Government Operations holds hearing to investigate alleged conflicts of interest and corruption by Postmaster DeJoy – Updated

Members and witnesses spar over allegations of business conflicts, straw donations and financial corruption.

By Cecilia Markley

Rep. Gerry Connolly, chairman of the House Subcommittee on Government Operations, gives his opening statement at a hearing about allegations of corruption against Postmaster General Louis DeJoy. Screenshot of hearing by Cecilia Markley

The House Subcommittee on Government Operations discussed allegations of corruption and straw donations against Postmaster General Louis DeJoy in a hearing last Monday.

DeJoy, who was appointed by the United States Postal Service Board of Governors on May 15 and assumed office June 15, has been steeped in controversy since the beginning of his tenure, particularly surrounding his previous jobs and relationship with the Republican Party and President Donald Trump. 

DeJoy testified before the House Oversight and Reform Committee on Aug. 24, where he defended himself against questions from Democratic members about his handling of mail-in voting and election security, his relationship with the president and his qualifications for the job.

Less than two weeks after the August testimony, The Washington Post released a bombshell investigative piece alleging that DeJoy had illegally reimbursed employees after they donated to political candidates under pressure from him during his time at logistics and transportation company New Breed Logistics, an act known as straw donations.

The Washington Post’s accusations of DeJoy’s alleged straw donations were among the issues discussed at Monday’s hearing, in addition to alleged financial conflicts of interest and other corruption since assuming office.

In addition to The Post’s story, The New York Times released a piece alleging that DeJoy has maintained at least a $30 million stake in his former employer, XPO Logistics, a major U.S.P.S. contractor, since his tenure as postmaster general. The Postal Service paid XPO Logistics and its subsidiaries $14 million in ten weeks under DeJoy, compared to only $3.4 million in the same time frame in 2019 and $4.7 million in 2018.

Lisa Graves, executive director of the watchdog group True North Research, testified before the committee virtually, and called for DeJoy to be fired and investigated for the alleged crimes of straw donations and financial conflicts of interest, as well as mishandling of the Postal Service.

Graves cited changes to the Postal Service DeJoy announced in July, such as the reduction of overtime for employees, removal of over 600 mail sorting machines and implementation of stricter schedules for mail truck drivers as reasons he should be fired.

Richard Painter, former chief White House ethics lawyer under President George W. Bush, testified in person before the committee about his concern that DeJoy had broken the law both before and during his tenure as postmaster general. Painter referenced the stories in The Post and The Times as evidence.

“I will not opine as to whether Mr. DeJoy violated campaign finance laws,” Painter said. “I will say that if the stories reported in The Washington Post and The New York Times are true, or any piece of those stories is true, about reimbursement of employees for campaign contributions, that is a straw donor arrangement and that is a felony. People go to jail for that.”

Painter also said he believed that DeJoy may have violated federal law barring government employees from engaging in financial conflicts of interest.

Rep. Jackie Speier (D-Calif.) asked Painter if he was concerned about financial conflict of interest concerning The Postal Service’s increased payments to XPO Logistics under DeJoy’s tenure.

“It’s illegal for any United States government official to participate in a particular matter that has an effect on their financial interest, and I’m afraid that the postmaster general could be doing just that,” Painter said.

Rep. Gerry Connolly (D-Va.), the committee chair, cited concerns with actions DeJoy has taken during his tenure, such as a recent decision to send an informational mailer to every residential address in the country. Connolly said sending all households identical mailers was misleading and confusing.

“Over the weekend, the Postmaster General sent every home in America a mailer instructing all who seek to vote by mail to request a mail-in ballot, sending misinformation and confusing voters in nine states that already send out such ballots,” Connolly said.

The nine states Connolly referenced automatically send all registered voters mail-in ballots. This contradicts the information on the Postal Service’s mailer that recommended voters request their mail-in ballots at least 15 days before Election Day.

Connolly made it clear that he did not think DeJoy was fit for the role of postmaster general and said he should never have been appointed.

“Leading the postal service, serving everyone in our country, and particularly during this pandemic, is a responsibility to bestow upon only the most qualified and honorable of leaders,” Connolly said. “It’s a job for those who are ready and willing to listen to the millions of stakeholders: mail recipients, mailers, voters, unions, veterans, older Americans, Congress and so many others, to connect the United States as Benjamin Franklin foresaw and serve as the thread that unites our society’s many fabrics.”

David Fineman, former chairman of the Postal Service board of governors, echoed Graves’ and Painter’s concerns in his testimony about DeJoy’s alleged financial conflict of interest. During questioning from Rep. Carolyn Maloney (D-N.Y.), Fineman explained why he would not have considered appointing DeJoy for postmaster general.

“If you’re asking me whether I would have chosen him, the answer would be no,” Fineman said. “It’s apparent that there was a conflict of interest to begin with, that he still had an interest in one of the largest contractors with the United States Postal Service.”

While Democrats on the committee concentrated their questions mainly on DeJoy, Republicans focused theirs on reforms at the Postal Service more broadly.

Rep. Jody Hice (R-Ga.), the committee’s ranking member, called for comprehensive postal reform and criticized the hearing itself as partisan in his opening statement.

“The U.S.P.S.’s current business model is not financially sustainable because of such things as declining mail volumes, increased compensation costs and rising unfunded liabilities,” Hice said. “Hopefully, we will be able to move forward with genuine efforts for postal reform, rather than these types of hearings that are nothing more than a kangaroo court to score political points.”

Michael Plunkett, president and CEO of the Association of Postal Commerce, an association of businesses that use and support the mail, testified before the committee about his desire for Congress to focus on broad Postal Service reforms rather than funding for mail-in voting.

“Despite persistent, doom-laden stories about imminent collapse, the Postal Service has adequate resources and capacity to successfully navigate the 2020 election cycle,” Plunkett said. “We respectfully urge Congress to return to the task of enacting comprehensive postal reform legislation to secure the future of the Postal Service.”

Committee members did not reach a consensus on future actions to take, concluding the hearing divided about how to move forward, with the Democrats wanting to pursue further actions against DeJoy and the Republicans wanting to seek larger reforms at the Postal Service.

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