Outside experts who spoke to CNN were shocked that ethics officials at the postal service approved this arrangement, which allows DeJoy to keep at least $30 million in XPO holdings.
DeJoy and USPS have said he fully complied with the regulations.
Raising further alarms, on the same day in June that DeJoy divested large amounts of Amazon shares, he purchased stock options giving him the right to buy new shares of Amazon at a price much lower than their current market price, according to the disclosures.
‘Doesn’t pass the smell test’
According to federal records, when he became postmaster general, DeJoy still owned a large equity stake in XPO, totaling between $30 million and $75 million. Federal ethics officials recently approved his decision to keep these assets, but outside experts with decades of experience in government are raising red flags.
Schaub, who is now a senior adviser at Citizens for Responsibility and Ethics in Washington, suggested that if DeJoy doesn’t divest his holdings soon, it could be construed as an illegal conflict of interest. Schaub also questioned why the ethics officials approved this arrangement.
“If you have a $30 million interest in a company, of course it’s going to impact you,” said Stuart Gilman, who spent 12 years at the Office of Government Ethics, where he was the assistant director. “I would assume that there is a problem here. It certainly doesn’t pass the smell test.”
Democrats call for inquiry
A USPS spokesman previously told CNN that DeJoy followed all ethics requirements. Federal ethics officials approved DeJoy’s required financial filings in June, July and earlier this month.
“No issues relating to XPO’s Postal Service contracts have been presented to Postmaster General DeJoy, nor would any such issues be expected to rise to that level,” USPS senior ethics counsel Jessica Brewster-Johnson told CNN. “Decisions regarding XPO contracts are made at much lower levels in the organization. If, however, an issue relating to XPO came before Postmaster General DeJoy, he would be obligated to recuse himself or, if recusal were not practicable, the Ethics Office would require divestiture. To date, no such issue has arisen.”
The experts who spoke to CNN said this explanation was “sloppy” and “absurd,” particularly because the rules require top officials to avoid even the appearance of a potential conflict.
Federal records also show that DeJoy owned between $265,000 and $550,000 in UPS stock, but divested them after becoming postmaster general in June. Experts praised this move, because it eliminated a conflict of interest, as UPS is a direct competitor of the postal service.
DeJoy made dozens of stock sales and purchases around the time he started at USPS. He divested at least $100,000 in XPO options, but apparently held onto his larger equity stakes. He also owns options to buy an additional 270,000 shares in XPO, at varying prices in the future. Those options all expire in November.
Around the time he took over the USPS, DeJoy bought and sold stocks or stock options across a wide array of industries, including health companies like Johnson & Johnson and Abbott Laboratories, which are involved in the pandemic response. He also sold shares in Coca-Cola and Uber, and purchased shares of ExxonMobil. These financial transactions continued after DeJoy joined USPS, according to federal records.
DeJoy’s trades in Amazon shares are also facing scrutiny. According to his financial disclosures, DeJoy owned between $100,000 and $250,000 in Amazon stock when he joined the administration.
On June 24, DeJoy divested those shares, but the same day he bought a new financial interest in the company, purchasing between $50,000 and $100,000 in stock options for Amazon. The stock options, which expire on October 16, give DeJoy the right to buy shares of Amazon at a price of $1,960 per share. Shares in Amazon are currently trading at more than $3,100.
“It’s another conflict. He’s got the option to buy. That means he’s gambling that Amazon’s value is going to go up,” said Marcus Owens, a former top IRS official with decades of experience dealing with federal ethics rules. “Why is he investing in a competitor to the enterprise that he’s supposed to be managing? This is a classic case for investigation by an inspector general.”
“This is pretty outrageous, to come into government and then buy conflicting (interests),” Shaub said. “He partially eliminated a conflict of interest and then bought a new one on the same day.”
As recently as last week, Trump invoked Amazon by name while criticizing USPS’ price points.
The USPS maintains that DeJoy’s ownership of the XPO stake, and of these other assets, are not problematic on their own. USPS officials also say their new leader isn’t trying to sabotage the 2020 election with postal delays, and that he is following all appropriate ethics rules.
“I take my ethical obligations seriously, and I have done what is necessary to ensure that I am and will remain in compliance with those obligations,” DeJoy said in a statement given to CNN.