WASHINGTON – The Department of Defense has provided few details to a congressional oversight committee on why a troubled trucking company, YRC Worldwide, was deemed essential to national security, a designation that earned him a $ 700 million stimulus loan.
The loan, which was approved in July by the Treasury Department, has been the subject of a Congressional inquiry into whether the money was properly granted and why YRC, which ships military supplies, has been named as essential for national security. The Congressional Oversight Commission, which was set up to police stimulus funds, also examined whether YRC’s ties to the White House were a factor in a loan.
In a letter to members of the commission, the Defense Ministry provided a limited explanation of why YRC deserved so much government assistance.
The letter, which was reviewed by the New York Times, said YRC was eligible for the loan because it was the Defense Department’s largest domestic shipping provider, carrying food, electronics and d ‘other supplies to military bases across the country. The explanation echoed the rationale shared by the Treasury Department when it approved the loan in July, but provided no additional reason why the company, which was on shaky financial bases and had been sued by government, is expected to receive a bailout when other transportation providers have been available.
YRC lost over $ 100 million in 2019 and was being sued by the Justice Department for defrauding the federal government for a period of seven years. The case is not resolved.
The Defense Department said in the letter that it has access to other shipping companies such as FedEx and UPS. YRC is the fourth largest small freight shipping company in the United States.
When asked why the company was considered essential to national security, Ellen M. Lord, Under Secretary of Defense for Acquisition and Sustainment, wrote: “It is important that our troops have the supplies they need to be able to carry out their duties and defend the country.
The Defense Ministry confirmed that it sent the letter to members of the commission last week. Amber Venzon, the chief clerk of the Congressional Oversight Committee, did not immediately respond to a request for comment.
In a Report of the Congress Supervisory Commission Earlier this month, the Treasury Department said that YRC provides 68% of the Department of Defense’s small cargo transportation and provides services to the Department of Homeland Security and the U.S. Customs and Protection Agency. borders. As to why this made him critical to national security, the Treasury turned to the Secretary of Defense, Marc Esper, who is responsible for this certification.
A new commission report released Friday did not understand the Pentagon letter, but noted that it had been received and expressed frustration with the Pentagon.
“The committee finds the Defense Ministry’s delay inexcusable and its responses incomplete,” the report said. “The committee looks forward to continuing the discussion on this issue in its November report. “
In the letter, Ms Lord said the Defense Department had not contacted other trucking companies to see if they could meet its needs if YRC downsized or ceased operations and said the agency no had not developed contingency plans in the event of YRC shutting down.
Members of the Commission had raised concerns that the company may have received a loan due to its White House ties. YRC is financially supported by Apollo Global Management, a private equity firm with close ties to Trump administration officials.
Lawmakers on both sides wrote to the Treasury Department earlier this year urging the Trump administration to support YRC, which employs 30,000 workers.
The $ 17 billion fund to help businesses deemed essential to national security was created from the $ 2.2 trillion economic relief legislation passed by Congress in March. Businesses can apply for the loans to the Treasury Department, which must have the Defense Department claim that they meet national security requirements.
The Pentagon said in the letter that 19 other companies had been certified critical to national security through the program. YRC is the only company to have received a loan to date.