The complicated truth behind USPS chief DeJoy's divestment from Amazon stocks

At a contentious House hearing on Monday, DeJoy said he didn't have any current financial interests in Amazon, the multibillion-dollar online retailer in direct competition with the US Postal Service. DeJoy has been running the agency since June and has come under fire for instituting disruptive changes that could threaten the effectiveness of mail-in voting this fall.

The USPS chief struck an incredulous tone when pressed by Democrats, who were equally frustrated by his testimony. The showdown highlighted how difficult it is for lawmakers, and the public, to fully scrutinize the personal finances of DeJoy, a multi-millionaire megadonor. That's partially because of the complexity of his holdings, but also because federal disclosure forms aren't designed to handle the level of wealth of someone such as DeJoy. And USPS has been unwilling to fill in the gaps.

Most government employees don't have nearly the assets of DeJoy, the rare postmaster general to get the job without ever having worked for the USPS. Nor are they likely to have engaged in the sophisticated financial maneuvers that DeJoy employed to close out his holdings in Amazon. The options trades he made are complicated and nuanced, and some of those details are not easily understood from how they are listed on the forms.

There is also the issue that DeJoy's forms are based on self-reported information, and not subject to an audit, or even automatic review by the federal Office of Government Ethics. Instead, they were approved by the internal USPS ethics office.

DeJoy has been dogged by questions about his finances since his appointment was announced by the USPS board in May. CNN reported that when he took over USPS, he still owned a large equity stake of between $30 million and $75 million in his former company, XPO Logistics, which is a USPS contractor.

Ethics experts have said these holdings, especially the large XPO stake, create a significant conflict of interest for DeJoy. It's illegal under federal law for federal government employees or their spouses to have a "financial interest" in companies that intersect with their official duties.

Under oath this week, DeJoy said he has fully complied with all ethics laws and regulations.

Tough questioning in Congress

DeJoy's financial disclosure forms show that he sold Amazon stock on June 24, nine days after assuming the role of postmaster general. On the same day, DeJoy also bought back call options on his Amazon stock. A call option is a financial contract in which an investor buys the right, but not the obligation, to purchase a stock or other asset at a predefined price before a defined expiration date. If the seller of a call option already owns the underlying stock or asset, the call option is considered "covered."

When Rep. Jackie Speier, a California Democrat, questioned DeJoy about the two transactions, DeJoy said he "did not buy options," and claimed that he bought "covered calls back at a loss."

"That's what I did to get completely out of the stock, I had to unwind covered calls," said a visibly frustrated DeJoy, before adding, "I think you should get an understanding of what a covered call is before you accuse me of improprieties."

Nine days after becoming postmaster general, DeJoy was on his way to a meeting that related to a USPS contract with Amazon, he told lawmakers. DeJoy said he was informed by USPS ethics officials that he either needed to sell his Amazon holdings or recuse himself from reviewing some of the contracts.

DeJoy then called his broker and told him to sell his assets in Amazon, he testified.

But to completely divest himself from those assets, DeJoy said he had to sell his Amazon stocks and also needed to buy back the call options that he had previously sold to someone else, which involved his Amazon shares. This is what DeJoy described as a "covered call."

Later in the congressional hearing, Rep. Katie Porter returned to the topic. The California Democrat asked DeJoy if he, as of that moment, owned "any financial interest, whether options or stock, covered calls, bought or sold," adding, "Do you own any financial interest in Amazon?"

"I do not," DeJoy responded.

Clunky financial disclosures

This is the first time DeJoy has said publicly that he had divested his financial interest in Amazon. Previously, USPS spokespeople said DeJoy had complied with all federal ethics regulations, but they have not specified that DeJoy sold all of his investments in Amazon.

"He has known about the public's concerns regarding the Amazon entries in his disclosures for over a month now, and he never chose to provide the public with an explanation until now," said Walter Shaub, the former director of the Office of Government Ethics, who resigned in 2017.

This could have created a problem, given President Donald Trump's disdain for Amazon, and his reported effort in 2018 to pressure DeJoy's predecessor to raise prices on Amazon and other firms. Trump tweeted about this topic last week, for the first time since DeJoy took over.

Trump tweeted, "@Amazon, and others in that business, should be charged (by the U.S. Postal System) much more per package, and the Post Office would be immediately brought back to "good health", now vibrant, with ALL jobs saved. No pass on to customers. Get it done!"

DeJoy continues to own equity in XPO Logistics, a large transportation and logistics company that does business with USPS and has contracts with other US government agencies.

According to federal records, when he became postmaster general, DeJoy still owned a large equity stake in XPO Logistics of at least $30 million. Over the summer, federal ethics officials approved his decision to keep these assets. But Democratic lawmakers and outside experts with decades of experience in government have been raising red flags.

"We don't have an explanation for why he's being allowed to keep millions in postal contractor stock," Schaub said. "That's deeply troubling, and I think Americans deserve an answer."

At the House hearing this week, DeJoy said his XPO stake was "vetted before with the ethics department" at USPS and that he got "specific types of guidelines that I needed to adhere to."

"It's a very, very small part of the Postal Service business I have nothing to do with," he said.