Watchdog Slams Pentagon for ‘Inexcusable’ Response About Loan
(Bloomberg) -- A congressional oversight panel accused U.S. Department of Defense officials of stalling and giving unsatisfactory answers about a $700 million loan to a struggling shipping company.
The Congressional Oversight Commission said the Pentagon failed to explain why YRC Worldwide Inc. should qualify for a loan from stimulus funds meant for companies critical to national security. The delay is “inexcusable,” and the loan puts taxpayer money in a “precarious” position, according to a report released Tuesday.
“The Department of Defense has yet to provide the commission a satisfactory explanation for how YRC is critical to national security,” the panel said in its report. “The commission also has serious concerns about the Treasury’s decisions regarding the terms and conditions of the loan.”
The lawmakers called on Treasury Secretary Steven Mnuchin, Defense Department Undersecretary Ellen Lord and Director of National Intelligence John Ratcliffe to testify a Dec. 10 hearing. Mnuchin has agreed to appear, Lord said she was unavailable and Ratcliffe hasn’t yet replied, according to the commission.
The money for the $700 million loan came from a pot of $17 billion included in the March coronavirus relief legislation for the Treasury Department and Department of Defense to lend money to companies critical to national security.
YRC, a Kansas-based company that ships electronics and supplies to military locations around the world, received the largest loan by far from that fund with 10 other companies that qualified for loans receiving $35.9 million combined.
According to the report, the Pentagon didn’t consider alternatives to using YRC, which is the fifth-largest trucking company in the country. The terms of the loan may also have been ill-advised because the company has poor credit ratings and weak liquidity, according to the report.
The congressional panel has been questioning the YRC loan for months. In July, it said the company was at risk of bankruptcy because of a heavy pension burden and has been rated non-investment grade for more than a decade.
The commission is a bipartisan panel, with two Democrats -- Representative Donna Shalala and former Elizabeth Warren aide Bharat Ramamurti -- and two Republicans -- Senator Pat Toomey and Representative French Hill. It has operated without a chairman to serve as a tiebreaker since it was formed in March; House Speaker Nancy Pelosi and Senate Majority Leader Mitch McConnell were supposed to jointly appoint a leader.
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