When it comes to ethical behavior, “appearance” counts. If it looks unethical, chances are there is impropriety somewhere. Bill Zollars is a man about to do a lot of explaining about his “appearance.”
Zollars, YRC and the Pentagon
YRC Worldwide is a shipping services company that ships nearly 70 percent of the military’s LTL or “less than truckload” trucking shipments. Due to the coronavirus pandemic, YRC like many other companies had to lay off many workers and took huge losses. The company, in turn, owes more than $800 million to its creditors.
The former chairman of YRC is Bill Zollars. In 2011 he was accused of defrauding the Pentagon during his leadership. He was appointed to the board of the United States Postal Service in June 2020.
At the start of July 2020, the Treasury Department awarded YRC $700 million. The funds came from a pool of money designated for Pentagon contractors. The loan did not come out of CARES Act but for set-asides the government considers crucial to national security. Despite the financial fraud probe, his firm was given the loan without a resolution.
At the time the loan was extended YRC was supposedly only worth $70 million. In May 2020, strapped with debt, Zollars warned shareholders they could go out of business.
Interestingly, Salon reported (July 1, 2020) that, “Treasury Secretary Steve Mnuchin said that the funds will go to support about 30,000 jobs as well as ‘essential military supply chain operations’ on which 200,000 North American companies depend. The Treasury Department [Mnuchin] has not disclosed the terms of dividend payments to shareholders.” However, it has been noted that the government now owns about 30 percent of the company, at the same time the current administration said it wants to privatize USPS.
The day that the loan was made to Zollars’ company, the stock price dramatically rose, meaning Zollars personal wealth rose.
The connections get even more twisted from there. Zollars is a board member of Prologis, a company that among other activities rents industrial real estate not only to the USPS, but to UPS and FedEx. Prologis is a publicly-traded company and according to the HuffPost (August 28, 2020), as a board member he has been compensated in stock shares worth about $1 million along with options to buy more stock.
Connections of a Dubious Nature
Though I have abbreviated the twists and turns, it becomes abundantly clear that Zollars, appointed to the board of the USPS by the current administration is associated with companies that compete against the USPS. It also seems clear that while Zollars was chairman of YRC he was implicated with possibly defrauding the Pentagon.
While the probe of YRC was still active, YRC was not only given a huge bailout resulting in a stock price increase but that Zollars, the man associated with the wrong-doings of YRC was made a USPS board member.
In the absence of oversite, YRC may have taken liberties to benefit itself through the connections of Zollars and other executives. The executives all benefitted. They positioned YRC to be essential and yet, were the executives essential (or opportunists)?
Why would the government have chosen Zollars to be a USPS board member? I understand he knows logistics and knows government operations but surely there are other candidates they could have tapped who have not been under a federal probe. Therein lies the rationalization for this “look,” the fact that he hasn’t been indicted and that he knows logistics.
Why choose an executive with connections to companies that compete against the USPS? Again, there is a rationalization that they may not compete in the same niche (but they do) or that he has the experience to maintain a strict firewall (or does he?)
It is no secret that with Zollars’ hiring, the overwhelming balance of power of the board favors the current administration. This is not an ethical observation but simply wonders if the USPS, which wields a huge amount of power, is being seen as a political tool?
It would be a shame if the need for power overlooks many of the improprieties this potential scandal presents.
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