In a reversal of the position he’s held for the last few months, Postmaster General Louis DeJoy has agreed to divest his stake in his former company, XPO Logistics. This divesting of shares from XPO Logistics will effectively eliminate any conflict of interest he has as a stakeholder in a major USPS contractor.
Postmaster General DeJoy Will Divest Tens of Millions of Dollars of XPO Logistics Stock
When DeJoy submitted a financial disclosure report around the time he started working at USPS, he disclosed a significant stake in his former company. According to the report, he held 355,000 shares of stock in XPO worth between $30 and $75 million. He also held call options to purchase additional shares at a lower-than-market-value price. The report also revealed that USPS has awarded $130 million in postal contracts to XPO over the past 3 years.
The United States Office of Government Ethics (OGE) issued a certificate of divesture to DeJoy on October 9th. Interestingly, this certificate will allow DeJoy to defer paying capital gains taxes on the sale of his shares and options.
The OGE issues these documents to officials who “reasonably need” to divest an asset that conflicts with their official duties. DeJoy, as Postmaster General, unequivocally falls into this particular category. The deferral of capital gains tax included in these certificates is a way to ease the financial burden of complying with conflict of interest laws and provisions.
DeJoy’s Stake in XPO was Always a Major Conflict of Interest
As soon as DeJoy became Postmaster General in May of 2020, the shipping community shed light on the fact that his stake in XPO presented a conflict. Initially, DeJoy had planned to hold onto his shares in the company, and USPS ethics officials supported that decision. However, others raised concerns that his position as a stakeholder in a significant USPS contractor would incentivize him to make decisions as Postmaster General to benefit his personal finances.
The Postal Service’s payments to XPO Logistics have certainly increased since Postmaster General DeJoy took office. However, this could be a result of growing volume throughout the USPS network, and totally innocuous. After all, eCommerce has surged amidst the Coronavirus pandemic. As Americans sheltered in place, more consumers turned to online ordering for essential and non-essential goods. This, in turn, resulted in all the major shipping carriers experiencing peak volume.
Ultimately, DeJoy’s divesture of stock is a good thing, since it eliminates any conflict of interest as the leader of USPS. That said, some have remarked that this decision is too little, too late. After all, divesting his shares now doesn’t absolve DeJoy of any possible conflict of interest violations related to XPO while he still held onto those shares during his first five months as Postmaster General.