A Kansas trucking company whose CEO sits on a Trump-appointed coronavirus advisory board received a $700 million loan for a 30% stake in the company even though the company lost $100 million in 2019 and was under investigation for defrauding the government, reports from The New York Times, via Yahoo.
YRC Trucking, formed in 2009 with the merger of Yellow Trucking and Roadway, received the loan just six weeks after a Justice Department hearing into the company allegedly defrauding the government over a seven year period.
The loan was made from a pot of $17 billion Congress set aside for aiding vital businesses during the coronavirus, and it was made at the discretion of Treasury Secretary Steven Mnuchin. Mnuchin had received a request from Kansas republican Senator Jerry Moran to help the company.
The company received the $700 million loan just six weeks after Moran asked Mnuchin for help, accounting for 4% of the total funds available in the aid pool.
A July report from the Congressional Oversight Commission, a legislative panel set up to review the distribution of $2.2 trillion in aid to prevent waste, fraud and abuse, questioned the investment given the precarious financial situation the company was in before the cash injection.
The loan is also under scrutiny because Apollo Global Investment made a $600 million investment in YRC last year. Apollo co-founder Josh Harris advised the White House on infrastructure investment and was invited by Jared Kushner, a senior presidential advisor and President Trump’s son-in-law, to join the White House staff in 2017.
Later that same year, Apollo gave Kushner Properties a $184 million loan to refinance a skyscraper the company owned in Chicago.
When the YRC loan from Treasury was announced, Mnuchin stated that the company was vital to the operation of the Defense Department. “This loan will enable a critical vendor to the Department of Defense to maintain significant employment while providing appropriate compensation to taxpayers” and estimated that 30,000 trucking jobs would be saved.
YRC employs just 19,000 people.
The federal loan boosted the company’s stock price by more than 70%, although it has since fallen. As of March, the company had more than $800 million in debt on the books. It has been floundering since 2009, when competitors FedEx and Conway started grabbing up market share thanks to lower pricing and more efficient trucking fleets.