A Democratic-led House oversight panel is investigating whether a $700 million coronavirus-relief loan to financially troubled trucking company
was improperly issued and used.
The investigation, announced Wednesday by the Select Subcommittee on the Coronavirus Crisis, seeks to determine whether the funds were improperly distributed, “whether Yellow provided inaccurate or misleading information in seeking to obtain a national security loan, and whether loan funds were inappropriately used for purposes unrelated to losses caused by the coronavirus crisis,” according to a June 3 letter
Rep. James Clyburn
(D., S.C.), the subcommittee’s chairman, wrote to Yellow Chief Executive
The probe follows months of scrutiny by a separate bipartisan congressional panel into the loan to Yellow, which accounted for almost all the federal coronavirus aid funding to businesses deemed crucial to national security. The government has said it provided the loan because the company is a key supplier of military shipping services.
Yellow, then called YRC Worldwide Inc., is one of the largest U.S. trucking companies and had been struggling to turn its operations around when the coronavirus pandemic hit, plunging the company into a liquidity crisis.
The Overland Park, Kan.-based trucking company said it would fully cooperate with the Select Subcommittee.
Yellow applied for the loan “after significant adverse impact by the pandemic” and will repay the loan in full, the company said in a statement. The carrier handles a significant portion of the Defense Department’s less-than-truckload shipments, it said, “and we stand by this national security designation.”
The investigation also seeks information and documents tied to the 2020 loan from the Treasury and Defense departments, including communications with Yellow, the White House and
Apollo Global Management Inc.,
one of Yellow’s largest creditors.
“The Select Subcommittee is concerned that the previous Administration may have mismanaged the national security loan program and squandered taxpayer funds in a manner not authorized by law,” Mr. Clyburn wrote in separate letters to Treasury Secretary
and Defense Secretary
A Treasury Department spokeswoman said the agency is “monitoring its borrowers closely for compliance with applicable requirements. We will continue to be responsive to all oversight bodies, including the Congressional Oversight Commission.”
The Defense Department didn’t immediately provide comment.
An Apollo spokeswoman said the firm “was not involved at all in the company’s decision to seek the Treasury funds and did not advocate on their behalf.” Apollo’s funds don’t own or control Yellow, she said, nor does the firm hold equity in the company.
The Congressional Oversight Commission, which was formed to monitor the dispersal of coronavirus-relief funds, said in an April 30 report that the Treasury and Defense departments “made missteps” by labeling Yellow critical to national security, and has pressed the agencies on whether the loan was appropriate given the company’s financial difficulties before the pandemic.
Yellow used much of the loan to replace trucks and trailers in its fleet “as a part of a long-term capital investment plan, which appears to be at odds with the Cares Act,” Mr. Clyburn wrote in his letter to Mr. Hawkins.
Write to Jennifer Smith at [email protected]
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