Fresh outrage as well-connected firms nab US loans

Billionaires such as Kanye West and a defence lawyer for President Trump were recipients of federal Paycheck Protection Program loans, according to US media reports

by AFP
Fresh outrage as well-connected firms nab US loans
Businesses such as the Yeezy brand run by US rapper Kanye West, seen in a photo from 2019, received aid under President Donald Trump's economic relief program it was revealed this week, along with other billionaires. Trump defence attorney Mark Kasowitz was also a recipient of Paycheck Protection Program loans along with  members of Congress, according to US media reports. Photo: Angela Weiss / AFP.

A centrepiece of US President Donald Trump's economic relief program was under renewed scrutiny on Tuesday following revelations it aided white-shoe lobbying firms and businesses linked to Kanye West and other billionaires.

Besides West's Yeezy brand and law firms connected to famed trial lawyer David Boies and Trump defence attorney Marc Kasowitz, recipients of Paycheck Protection Program (PPP) loans included the PF Chang's restaurant chain and businesses linked to several members of Congress, according to US media reports.

The controversy is the latest to befall the PPP, which was launched in April as a key job-saving program in the immediate wake of coronavirus shutdowns that shuttered countless businesses and led to tens of millions of layoffs.

The program provides forgivable loans to coronavirus-impacted small businesses to cover employee salaries and some expenses.

Architects of the program at the US Treasury Department and Small Business Administration emphasised the need to make money immediately available to embattled companies.

That led to heavy criticism after large, publicly traded firms like Ruth's Chris steakhouse snagged loans from the program, which had been pitched as a saviour for mom-and-pop businesses.

The Treasury Department subsequently tightened the rules to exclude larger companies with access to funds from public markets.

The Trump administration defended the program on Monday as it released identifying data on firms accounting for about 75% of the more than $520 billion lent so far. The administration had resisted releasing the information, but relented following bipartisan calls for transparency.

"The PPP is providing much-needed relief to millions of American small businesses, supporting more than 51 million jobs and over 80% of all small business employees, who are the drivers of economic growth in our country," US Treasury Secretary Steven Mnuchin said.

'Limited safeguards'

But the latest revelations seem certain to amplify questions about how the program has been administered.

The recipients include the Church of Scientology, various businesses connected to the family of Jared Kushner, a White House adviser and the husband of First Daughter Ivanka Trump, and Foremost Group, a shipping business owned by the family of Transportation Secretary Elaine Chao, the wife of Senate Majority Leader Mitch McConnell, according to reports in US media. 

Also receiving funds were several entities that rent space in buildings belonging to the Trump Organisation, as well as a company whose investors include the husband of House Speaker Nancy Pelosi, who leads the Democratic opposition to Trump in Congress.

A report released late last month by the Government Accountability Office (GAO) said that as of June 15, the SBA had not provided details on how it planned to follow up on a pledge to review loans of more than $2 million, or said what oversight plans it had for loans below that amount.

"The limited safeguards and lack of timely and complete guidance and oversight planning, have increased the likelihood that borrowers may misuse or improperly receive loans proceeds," the GAO said.

Another loan that got attention went to the Ayn Rand Institute, a California-based research organisation that preaches "laissez-faire capitalism" and "a complete separation of state and economics," according to its website.

On Twitter, the Ayn Rand institute posted an essay that defended accepting US government funds.

"It would be terrible injustice for pro-capitalists to step aside and leave the funds to those indifferent or actively hostile to capitalism," said the essay. "It is anti-capitalist, statist policies that have turned this nature-made storm into a made-in-DC cataclysm."

AFP