Nearly four months after he assumed the role of postmaster general, Louis DeJoy has agreed to divest his controversial interest in U.S. Postal Service (USPS) contractor XPO Logistics. The Office of Government Ethics (OGE) determined that it was necessary for DeJoy to divest in order to comply with federal conflict of interest statutes, regulations, or other such provisions. The delayed divestiture also allows DeJoy to defer paying capital gains taxes on the sale of his shares, despite having been in a position as postmaster general to affect the value of those shares for months now.
DeJoy had initially planned to retain his interest in the company, and USPS ethics officials had backed that decision. CREW and others raised concerns about that decision because his investment in a USPS contractor created the potential for DeJoy to make official decisions as postmaster general that could benefit his personal finances. Indeed, the agency’s payments to the company have increased during DeJoy’s tenure.
President Trump’s decision to hold onto his own business interests while serving as president, despite the thousands of conflicts doing so has created, has normalized corruption inside his administration. Trump’s conduct has emboldened other officials to try to hold onto assets that pose obvious conflicts with their official responsibilities. DeJoy agreeing to divest of XPO is a reminder that, thankfully, some checks on official abuse still exist.
DeJoy disclosed having XPO stock worth between $30 and $75 million and additional call options related to the company in the financial disclosure report he filed when he started working at USPS. In the past three fiscal years, USPS paid XPO $130 million for its services as a contractor.
OGE issued a certificate of divestiture to DeJoy on October 9, 2020 that will allow DeJoy to defer paying capital gains taxes on sales of his 355,000 shares of XPO stock and additional call options related to the company. OGE issues these documents to officials who “reasonably need” to divest an asset that conflicts with their official duties as a way to ease the financial burden of complying with conflict of interest laws and provisions.
DeJoy has been reluctant to part with his XPO stock and options. In testimony before Congress on August 24, DeJoy downplayed concerns about his stake in the company. He claimed that while he has a “significant investment” in the company, “[i]t’s a very small part of the Postal Service business that I have nothing to do with.”
DeJoy’s initial decision to retain his interest in the company relied on an explanation from a USPS ethics official that divestiture was not necessary because DeJoy would not make decisions affecting the company’s contracts with USPS. The ethics official said that should any decisions affecting XPO reach DeJoy, he could recuse from those matters and, as a last resort, divest his interest in the company if recusal was not possible. That official also told CNN that “no such issue has arisen.” It’s not clear whether that changed, triggering DeJoy to divest, or whether OGE found the explanation lacking.
In August, CREW wrote to DeJoy calling on him to divest his interest in XPO and explaining that the recusals he may have implemented were not sufficient to address the conflicts raised by his investment in the company. CREW detailed how changes affecting contractors like XPO that were implemented after DeJoy became postmaster general posed a conflict for him. DeJoy’s conflicts have attracted additional scrutiny from Congress and the USPS inspector general who is reportedly investigating DeJoy’s conflicts of interest and conduct in office.
The issuance of the certificate of divestiture may provide an explanation as to why OGE has delayed certifying DeJoy’s financial disclosure and periodic transaction reports, the earliest of which they should have received on August 6. OGE may have insisted that DeJoy agree to divest his interest in XPO as a condition of certifying his financial disclosure and periodic transaction reports. According to copies obtained by CREW, OGE still has not certified DeJoy’s reports as of October 15.
The ethics agreement of Aldona Wos, DeJoy’s wife and President Trump’s nominee to serve as ambassador to Canada, also hints at OGE’s possible role in getting DeJoy to agree to divest his interest in XPO. In her ethics agreement, which was subject to review by OGE, Wos committed to divest her imputed interest in XPO within 90 days of her pending confirmation. Because the postmaster general is not subject to confirmation by the Senate, OGE did not sign off on DeJoy’s ethics documents before he assumed his role at USPS, which may explain why he agreed to divest his interest in XPO only after OGE began reviewing his financial disclosure report while his wife committed to divest from the company when she was nominated to her post.
While it is undoubtedly a good thing that DeJoy has agreed to divest his stake in XPO, his delayed divestiture will not absolve him of possible conflict of interest violations related to the company that he may have committed in the months that he worked at USPS while retaining a significant interest in the company. Congress and USPS’s inspector general must continue to investigate DeJoy’s conduct during that time to determine whether he violated conflict of interest laws or provisions.