The congressional commission created to oversee the distribution of Coronavirus Aid, Relief and Economic Security Act funds is continuing to press the Treasury and Defense departments about why Yellow Corp., formerly YRC, received a massive loan.
In its latest report, the Congressional Oversight Commission continues to investigate the circumstances under which Yellow Corp. received a $700 million loan through the CARES Act. After more than a year collecting information from the Treasury and Defense departments, the commission has more questions regarding the trucking company’s designation as “critical to maintaining national security.”
In July 2020, Yellow Corp. received funds through the CARES Act. That money is intended to help businesses affected by the pandemic. However, the Overland Park, Kan.-based trucking company began a financial struggle in 2019 after the Justice Department announced a lawsuit claiming the company overcharged the Defense Department by potentially millions of dollars. Consequently, lawmakers are questioning Yellow Corp.’s eligibility for the loan.
The coronavirus relief bill created the Congressional Oversight Commission to monitor the $500 billion allocated to the Treasury Department, including $17 billion reserved for “businesses critical to maintaining national security,” according to the bill. That money has been left mostly untouched.
A total of $753.9 million has been given to 11 businesses as part of the national security loan program. However, 95% of that money was for Yellow Corp.’s loan.
“The Treasury has defined a ‘business critical to maintaining national security’ as a business that is at the time of its application performing under a defense contract of the highest national priority or operating under a top-secret facility security clearance,” the commission stated in its July 2020 report. “YRC apparently did not meet either of the two national security eligibility criteria.”
Since May 2021, the commission has requested documents from the Treasury and Defense Department regarding Yellow Corp.’s loan. The Treasury sent the commission letters of support for the trucking company that the Treasury received from members of Congress. A second round of questions was sent to the departments in October.
Each time, the Defense Department has delayed its response to the commission’s letters. Although the commission has been transparent about the contents of the Treasury’s responses, it only states that it “received a letter from the Defense Department.”
On Feb. 28, the commission issued a third letter to the Treasury and Defense departments. This time, commissioners want documents relating to communications between the agencies and representatives of Yellow Corp., including lobbyists. Both agencies have notified the commission that they are still preparing responses.
Yellow Corp.’s financial struggles
The federal government faces criticism for handing over $700 million to a struggling company with questionable national security credentials.
Recent financial problems for Yellow Corp. can be traced back to when it was sued by the U.S. government. A separate complaint filed by shareholders claims the company knowingly withheld information contained in the lawsuit, including a federal investigation. Stock prices began to drop after the Department of Justice announced the lawsuit in December 2018.
In March, Yellow Corp. settled its case with the federal government for nearly $7 million.
Yellow Corp.’s cash flow was nearly $16 million in the red in the first quarter of 2020. In the second quarter – before the Treasury Department announced the loan details – the company reported an operating cash flow of nearly $214 million, nearly matching 2019’s annual cash flow.
However, the company had to suspend health benefits to all employees in May 2020. Yellow Corp. was delinquent in paying health contributions for work performed that March. LL
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April 05, 2022 at 02:47AM
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Yellow Corp. CARES Act loan still under investigation - Land Line Media
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