Yellow Faces House Probe Over $700 Million Covid-Aid Loan
A House panel is scrutinizing a $700 million national security loan given to trucking company Yellow Corp. from pandemic relief funds during the Trump administration.
The investigation is the latest in a series of inquiries by the Select Subcommittee on the Coronavirus Crisis Congress into the trillions of dollars in aid that were approved by Congress under former President Donald Trump. Democratic Representative Jim Clyburn, chairman of the panel, announced the probe Thursday in an interview on Bloomberg Television’s “Balance of Power” program.
The $700 million loan to Yellow amounted to 95% of the $735.9 million disbursed as part of a Cares Act program to offset losses for businesses critical to national security, according to letters seeking information Clyburn sent to the Treasury and Defense departments as well as the company and another Pentagon contractor.
“It’s very questionable if they were deserving of that loan,” Clyburn said. “My select subcommittee has the responsibility to look into all of these matters.”
The company said in a statement on Thursday afternoon that “last year, after significant adverse impact by the pandemic, we applied for and received a Cares Act loan, which we will repay in full.” The company added that “as part of Cares Act loan requirements established by Congress, Yellow was designated as critical to maintaining national security by the secretary of Defense.”
Under scrutiny is whether there was faulty or inaccurate information in securing the loan, the high level of risk associated with it, and an ongoing lawsuit brought by the government against the company.
Yellow said in the statement that “we understand and respect the fact that the select subcommittee has an important job to do and intend to fully cooperate with its members while we continue moving the economy forward.”
The committee has given the company a June 17 deadline to provide documents and other information, which Clyburn says in a statement could determine whether the funds were diverted to “waste, fraud, or abuse through the previous administration’s process for approving this substantial loan.”
“The select subcommittee is concerned both with Yellow’s receipt and use of a national security loan under the Cares Act, and with the Trump administration’s apparent mismanagement of this program,” said a letterdated Thursday to Darren Hawkins, Yellow’s chief executive officer.
The letter says the determination that Yellow was “critical” to national security was based on its having provided trucking services to the Defense Department. But it says that claim is undermined by the department’s “own findings that the company engaged in a years-long scheme of unlawful conduct in providing those very services.”
In 2018, the Department of Justice sued the Overland Park, Kansas-based company, formerly YRC Worldwide Holdings Corp., for alleged overcharging of the Pentagon, in a case that is still pending. Clyburn’s letter also says Yellow recently agreed to settle a securities fraud lawsuit brought by investors related to the company’s alleged overcharging practices and the federal investigation.
Along with the letter to Yellow’s CEO, the committee on Thursday has sent letters to the departments of Treasury, Defense, and a defense contractor, Crowley Maritime Corp. The letters say the Government Accountability Office, a separate oversight panel “and even President Trump’s own Treasury Secretary, Steven Mnuchin, have raised significant concerns about the previous Administration’s implementation of the national security loan program and the loan to Yellow in particular.”
In testimony to a House panel in 2020, Mnuchin had called the loan risky, while saying that he still expected it would be paid back.
This article originally appeared on Bloomberg