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New documents detail conflicts of interest DeJoy faced as post office head

Though the Post Office says DeJoy followed the guidelines set by the agency’s ethics office, a government watchdog group says the documents raise questions about how the agency handles ethics challenges.
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New documents detail more than a dozen conflicts of interest Postmaster General Louis DeJoy faced because of his and his family’s investments in a number of companies closely tied to the U.S. Postal Service. 

DeJoy, who was appointed to lead the Postal Service in May 2020 and faced ethical concerns and criticism last year, initially recused himself from decision-making related to those companies in July and early August 2020. He fully divesting himself of them later in August — months after he took the top job

The U.S. Postal Service said DeJoy acted in compliance with ethics regulations and followed a 60-day review by the Office of Ethics, which concluded Aug. 14, 2020. It maintains he did not recuse or divest himself because of outside pressure and added that DeJoy filed a public financial disclosure on his first day at work as postmaster general, which started the ethics review.

The documents, which detail DeJoy’s investments and initial efforts regarding potential conflicts of interest, were obtained by the government watchdog group Citizens for Responsibility and Ethics in Washington, or CREW, through a Freedom of Information Act request that was ultimately fulfilled by court order. They show that DeJoy had conflicts of interest relating to the company where he served as a chief executive, XPO Logistics, as well as 13 other major companies that have relationships with the Postal Service.

Image: U.S. Postmaster General DeJoy testifies at House Oversight Committee hearing on slowdowns at Postal Service on Capitol Hill in Washington
U.S. Postmaster General Louis DeJoy testifies before a House Oversight and Reform Committee hearing on slowdowns at the Postal Service ahead of the November elections on Capitol Hill on Aug. 24, 2020.Tom Williams / Pool via Reuters file

DeJoy and two trusts he managed held substantial investments in companies including AT&T, CVS, Verizon, UnitedHealth, Lockheed Martin, Capital One, Discover Financial Services, Dominion Energy, Honeywell International, IBM, Regions Bank, Travelers Insurance and JPMorgan Chase, according to an August 2020 holdings disclosure. The documents contain two letters that appear to show DeJoy began the formal recusal process for the first dozen companies and XPO Logistics in July and JPMorgan Chase in August. It remains unclear whether he was involved in Postal Service decision-making regarding those companies before he started that process. 

A federal employee cannot hold stocks that have an aggregate market value of more than $15,000 in any company without recusing or divesting themselves from it, according to federal code. The documents state that DeJoy and his family’s investments in those 13 companies all exceeded that amount, but they do not provide a definitive value. 

Noah Bookbinder, the president of CREW, said the documents raise concerns that DeJoy, a Trump donor who took over the Postal Service in June 2020, could have taken advantage of his position in the months before he recused himself. 

Bookbinder said the documents appeared to show that DeJoy and the Postal Service believed recusing him from decision making regarding the agency’s relationship with these companies would be enough, but Bookbinder called that conclusion “woefully inadequate.”

“Everybody knows that he has these interests,” he said. “And so even then there are going to be potentially incentives, even if he’s not in the room, for others to make decisions that could benefit him.”

Facing pressure from Congress and ethics groups, DeJoy ultimately took action to divest two months after he was appointed to the position. Regardless if DeJoy was involved in decisions about the companies in which he had an interest, Bookbinder said any delay in formally recusing and later divesting himself gave an appearance of a conflict.

“There was a period of time where the head of the Postal Service was making decisions when there could have been a conflict, and he could have been thinking about his own financial interest, rather than the interest of the Postal Service and the country,” Bookbinder said, referring to the months after DeJoy became postmaster general and before he recused himself. “That’s significant.”

Recusal and divestiture are commonplace for federal employees to resolve a potential conflict of interest. Recusal, according to the federal code, bars officials from acting on contracts, claims, drafting regulations or making determinations that could affect their financial interests, and it also prohibits them from “direct and active supervision” of a subordinate in matters concerning their holdings.

If that is too burdensome, an agency’s ethics office may call for an employee to divest if holding a financial interest could “cause a reasonable person to question the impartiality and objectivity with which agency programs are administered,” as stated in federal code.

The Postal Service said its Office of Inspector General had already confirmed in sworn testimony before Congress in February that DeJoy followed the guidance from the agency’s ethics staff and set up arrangements for people to screen his work for potential conflicts and that he had ensured that he divested appropriately. 

Partenheimer noted that DeJoy chose to divest from XPO Logistics at the conclusion of the 60-day ethics review, despite having a screening and recusal agreement in place.

“When and how he divested reflects the process he was instructed to follow by the Postal Service ethics office in compliance with federal ethics regulations,” Postal Service spokesman David Partenheimer said in a statement. “Additionally, the Postmaster General’s divestiture was fully approved by the Office of Government Ethics.”

The Office of Government Ethics approves all certificates of divestiture, and Partenheimer said that the office asked for additional information and took several weeks before approving the request on Oct. 9, 2020.

Bookbinder acknowledged the divestiture but said the documents still bring up three major concerns: the time needed to address the conflicts of interest, the agency process that initially allowed DeJoy to only recuse himself and the Postal Service’s refusal to provide the financial disclosure documents until a federal judge ordered it to.

“I think it really raises questions about whether we can trust DeJoy and trust the Postal Service to make the right call as issues arise in the future,” Bookbinder said. 

It is unclear if DeJoy was involved with the discussions, but JPMorgan Chase, for instance, said in August 2020 that it had held talks with the Postal Service several months before about installing ATMs in post offices, one of the ideas the agency has considered as it experiments with new financial services

On Aug. 3, 2020, DeJoy sent a letter, which is included among the documents, to the Postal Service’s board of governors saying he had a “financial interest in JP Morgan Chase worth more than $15,000.” In the letter, however, he wrote he was recusing himself “from participating personally and substantially in any particular matter that would have a direct and predictable effect on the financial interests of this company.”

DeJoy wrote that he would have his chief of staff and a special senior adviser “screen all matters assigned to me to ensure that I do not directly or indirectly participate in any matters involving JP Morgan Chase.” All work involving the bank was to be sent to David Williams, the Postal Service’s chief operating officer and executive vice president. 

Regarding his former company, XPO Logistics, an undated PowerPoint slide titled “Financial Conflicts of Interest” notes four XPO Logistics contracts and says, “Another senior postal manager should be assigned to screen and handle all XPO Logistics matters.” The Postal Service said in a separate court filing that the document was prepared to provide “guidance” regarding DeJoy’s “recusal obligations.”

The Postal Service awarded XPO Logistics a $120 million contract over five years in April, according to a Washington Post report. The company is to operate two key sorting and distribution facilities in Atlanta and Washington, D.C. 

A vocal critic of DeJoy’s tenure at the Postal Service, Porter McConnell, a co-founder of the Save the Post Office Coalition, said DeJoy’s experience in the private sector makes conflicts of interest a feature of his leadership. 

“There haven’t been postmasters who’ve had as little postal experience as Louis DeJoy and as much adjacent private-sector experience as he has had,” McConnell said. “In some ways, this is not just an ethical conflict — it’s inevitable. When you’re bringing in the fox to guard the henhouse, it’s weird if he weren’t a walking conflict of interest.”

DeJoy ultimately began the process of divesting on Aug. 14, 2020, according to submissions made to the Office of Government Ethics, but that occurred after he was called to testify before Congress.

Bookbinder said it is notable that DeJoy only divested when he faced immense pressure from Congress, advocates and ethics groups. 

“Only when there was a massive outcry did he at least partially back down,” Bookbinder said. “It seems like this is somebody who, on ethics and conflicts issues, his M.O. is to push the envelope to do what he wants to do and then back down only when there’s an outcry.”

CORRECTION (Oct. 21, 2021, 12:13 p.m. ET): A previous version of this article misstated when Louis DeJoy became postmaster general. He took over in June 2020, not May 2020 (when he was appointed).