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DeJoy bought up to $305,000 in bonds from USPS board chair’s investment firm

Board of Governors Chairman Ron Bloom, a managing partner at the firm, has backed DeJoy’s plans to slow mail delivery and raise prices

Postmaster General Louis DeJoy departs a House Oversight and Reform Committee hearing in Washington on Feb. 24. (Al Drago/Getty Images)

Postmaster General Louis DeJoy purchased up to $305,000 in bonds from an investment firm whose managing partner also chairs the U.S. Postal Service’s governing board, the independent body responsible for evaluating DeJoy’s performance.

Between October and April, DeJoy purchased 11 bonds from Brookfield Asset Management each worth between $1,000 and $15,000, or $15,000 and $50,000, according to DeJoy’s financial disclosure paperwork. Ron Bloom, a Brookfield senior executive who manages the firm’s private equity division, has served on the postal board since 2019 and was elected its chairman in February.

DeJoy’s financial adviser purchased the bonds on the open market, Postal Service spokesman Jeffrey Adams said, and Bloom manages a division of Brookfield separate from the one that sells public securities.

Two ethics experts interviewed about the transaction disagreed over whether the bond purchases could cause conflict-of-interest issues in the agency’s top ranks. One argued that the transactions raise questions about oversight and governance at the nation’s mail service, which has taken on newfound prominence during the coronavirus pandemic and after the November election, in which nearly half of all voters cast their ballots through the mail. The other said financial connections between government officials could give off the appearance of conflicts without necessarily causing ethics problems.

Other elements of DeJoy’s financial ties have drawn close examination from ethics watchdogs. DeJoy-controlled companies lease four office buildings to global shipping behemoth XPO Logistics, DeJoy’s former company. XPO pays DeJoy more than $2 million annually in rent, The Washington Post previously reported. Brookfield also owns more than $500,000 in shares of XPO, according to its securities filings.

“I’m stuck on DeJoy’s purchase of bonds from the company in which his quasi-boss is a managing partner,” said Kathleen Clark, a law professor who studies government ethics at Washington University in St. Louis, “because I wonder whether it affects Bloom’s ability to protect the public interest in his assessment of DeJoy’s performance as postmaster general.”

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DeJoy’s personal spokesperson, Mark Corallo, referred questions to Adams of the Postal Service. He told The Post that DeJoy’s Brookfield bond purchases adhere to ethics regulations because the Postal Service does not do business with the firm.

Bloom in a statement released through Adams said his private equity division of the company sits “on the other side of an information wall” from other parts of the company that make investments, and that he had no knowledge of DeJoy’s purchases.

Brookfield’s private equity practice acquires and finances private corporations, among them a nuclear power infrastructure firm, Brazil’s largest private water company and an automotive battery manufacturer, according to its website. Brookfield has separate practices for public securities — which invest in publicly traded assets — real estate, infrastructure, renewable power and insurance solutions.

“I receive no benefit whatsoever when Brookfield bonds are bought or sold,” Bloom said in an email to The Post on Wednesday. “Brookfield has no business relationship with the USPS, therefore there is no basis for a conflict.”

A Brookfield representative did not respond to a request for comment.

Since Brookfield’s last securities filing, XPO spun off its global logistics division into a separate publicly traded company, GXO Logistics. According to the terms of the spinoff, shareholders will receive one share of GXO for each share they held of XPO at the time the companies divided.

DeJoy’s 14-month tenure at the Postal Service has faced controversy throughout. Congressional Democrats and independent postal experts accused him of slowing mail delivery ahead of the November 2020 presidential election — accusations he denied. He is under federal criminal investigation over alleged campaign finance abuses. A DeJoy spokesman in June said DeJoy “has always been scrupulous in his adherence to the campaign contribution laws and has never knowingly violated them.”

DeJoy has said repeatedly in congressional testimony that he would abide by all ethics requirements. On Friday, DeJoy declared the third week of August “Ethics Awareness Week.”

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Bloom probably derives no direct financial benefit from DeJoy’s purchase of the Brookfield bonds, since the transaction is very small compared with the investment firm’s total assets, said James Angel, a professor of finance at Georgetown University. Brookfield on its website says it manages $550 billion in assets. DeJoy also purchased the Brookfield bonds in a public offering, where any accredited investor could buy them.

DeJoy’s purchases were made by the postmaster general’s financial advisers and “were not conducted at [DeJoy’s] direction,” said Adams, the Postal Service spokesman.

Clark said that in general, investments placed by an asset manager on behalf of a public official do not exempt the public official from ethics regulations. Officials remain responsible for financial activity conducted in their name.

“He’s claiming that his agent didn’t act on his specific direction,” she said. “That’s not good enough for federal government ethics.”

Before DeJoy took office in June 2020, he instructed Heather Clarke, his longtime aide who is now his chief of staff, to tell his financial advisers not to make investments in the logistics sector and specifically in Amazon, UPS and FedEx, the Postal Service’s top competitors, according to a Postal Service inspector general investigation. (Amazon founder Jeff Bezos owns The Post.)

That inquiry did not say whether those instructions included a prohibition from investing in firms that employ the agency’s governors, all of whom at the time were investment bankers. It concluded that DeJoy “met all applicable ethics requirements related to disclosure, recusal, and divestment upon entering the position of postmaster general.”

The nearest policy the Postal Service’s ethics regulations contain about financial relationships between employees is its gift policy. Because governors are the top of the agency’s chain of command, but make less money than most employees because they work part-time, governors are “generally prohibited from giving a gift to or accepting a gift from a Postal Service employee,” Adams said.

The policy contains several exceptions, such as on traditional gift-giving occasions, like Christmas or birthdays, or when gifts have little intrinsic value, such as commemorative plaques. The standards allow investment activity “in terms generally available to the public.”

“The purchase of a corporation’s debt instrument (e.g., bonds issued by Brookfield) on the open market for one’s own portfolio is not a ‘gift’ to any other person under the federal ethics rules,” Adams wrote in an emailed statement, “including the employees of the corporation that issued the bond (e.g., Chairman Bloom).”

DeJoy’s Brookfield bond purchases did not undergo an advance review by federal ethics officials, Adams said, and there is no such requirement for prior clearance for any postal employee’s financial transaction.

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Public finance experts say associations between public officials like DeJoy and financial professionals like Bloom are not necessarily signs of misconduct, especially when those officials invest widely in public markets. “If you look closely enough, everything is connected,” said Angel, the Georgetown professor.

For that reason, he said, it can be difficult for government leaders, especially those who come from the private sector, to continue to be aggressive in the market while also avoiding holdings that could create the appearance of conflicts of interest.

“It is a challenge for public officials,” Angel said, “that on the one hand they want to invest and it helps to invest in the things you know. On the other hand we want our public officials to be working for the public.”

DeJoy is reliant upon Bloom’s support on the governing board to implement his controversial “Delivering for America” plan for the mail agency. Major components of the proposal, parts of which are already being implemented, would lengthen delivery times and raise prices, steps that agency leaders say are necessary to right the Postal Service’s finances.

The USPS is facing financial, service and public relations crises, but the president's new appointees could have an impact beyond restoring timely service. (Video: Joshua Carroll, Brian Monroe/The Washington Post)

The board in March, then entirely appointed by former president Donald Trump, endorsed the plan less than one month before President Biden’s three nominees were confirmed by the Senate. Since then, the balance of power — and support for the proposal — has shifted drastically.

Democratic governors Ronald Stroman and Anton Hajjar criticized planned service slowdowns during the board’s public meeting in August, dissent that represented a major break with convention in the normally stoic body.

Stroman called the plan “strategically ill-conceived” and said it “creates dangerous risks that are not justified by the relatively low financial return, and doesn’t meet our responsibility as an essential part of America’s critical infrastructure.”

“I ask why this change needs to be implemented now?” Hajjar said. “Why not wait until management implements the impressively innovative changes in the [Delivering for America] plan and see what can be achieved?”

Governor Amber McReynolds (I) had previously told The Post she was wary of “moving the goal posts on service” strictly to post better operating statistics.

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Bloom, a Trump-appointed Democrat, has faced immense pressure for months from fellow partisans in Congress to trigger a board vote to oust DeJoy. Instead, in an April interview with the Atlantic, Bloom declared, “He’s earned my support, and he will have it until he doesn’t. And I have no particular reason to believe he will lose it.”

As chairman, Bloom is effectively DeJoy’s main supervisor, because he controls the board’s agenda and direction. Postal operations and personnel decisions are specifically insulated from elected officials to prevent politicians from tinkering with the mail service, postal historians say. Governors are confirmed by the Senate and serve staggered seven-year terms. They may only be removed by the president “for cause.”

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Bloom’s board term expired in December 2020, and he currently serves in a one-year holdover term. The Postal Service’s vocal and politically active industry and labor groups have already begun jockeying for the Biden administration’s attention over whether Bloom should be nominated in December for another term.

Bloom did not answer The Post’s questions on whether he continues to support DeJoy or if he wants to be renominated.

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