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Treasury approves $700 million loan to company being sued for overcharging Pentagon

Treasury approves $700 million loan to company being sued for overcharging Pentagon
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The Treasury Department on Wednesday approved a $700 million loan to YRC Worldwide, a financially-troubled trucking company that is also being sued by the Defense Department (DOD) for overpricing shipping costs.

“We are pleased for Treasury to make this loan pursuant to the CARES Act,” Treasury Secretary Steven MnuchinSteven Terner MnuchinBiden's Treasury pick will have lengthy to-do list on taxes On The Money: Initial jobless claims rise for 2nd week | Dow dips below 30K | Mnuchin draws fire for COVID-19 relief move | Manhattan DA appeals dismissal of Manafort charges Mnuchin to put 5B in COVID-19 relief funds beyond successor's reach MORE said in a statement. “This loan will enable a critical vendor to the Department of Defense to maintain significant employment while providing appropriate compensation to taxpayers.” 

The CARES Act, just one of several pieces of coronavirus stimulus legislation, was passed by Congress and signed into law by President TrumpDonald John TrumpBiden adds to vote margin over Trump after Milwaukee County recount Krebs says allegations of foreign interference in 2020 election 'farcical'  Republicans ready to become deficit hawks again under a President Biden MORE in late March. 

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The government loan comes as the company has experienced competitive problems over the past five years, and YRC's stock dropped nearly 30 percent this year. It was only worth $70 million at the end of Tuesday, CNN reported.

In a statement, Treasury described YRC as a "leading provider of critical military transportation and other hauling services to the U.S. government and provides 68% of less-than-truckload services to the Department of Defense."

Under the loan agreement, the government will now own about 30 percent of YRC's stock, with the loans maturing September 2024.

The DOD sued the company in December 2018, alleging it overcharged the government for the movement of its shipments, according to the network.

The filed DOD complaint states that YRC "reweighed thousands of shipments and suppressed the results whenever they indicated that a shipment was actually lighter than its original estimated weight." The complaint alleges that this happened for seven years, costing the agency millions of dollars.

YRC told CNN that it is "a contractual dispute which originated in 2009 and predates the current board and CEO by more than a decade."

"A motion for dismissal has been pending for 10 months," YRC added. "There has been no impact on the Department of Defense relationship."