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Privatization Nightmare: Sen. Dianne Feinstein's Husband Selling Post Offices to His Friends, Cheap

An investigative journalist conducts a year-long study of power, corruption, and public assets for sale.
 
 
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Editor's note: The following is an excerpt from the new book, Going Postal, in which investigative journalist Peter Byrne reveals the results of a year-long study into a privatization scheme that has enriched the powerful and robbed ordinary Americans.

Going Postal: Introduction

On July 27, 200 singing and chanting people demonstrated on the steps of the historic main post office in downtown Berkeley, Calif., to protest its upcoming closure and sale. A city council member took the microphone to angrily decry the closure. In fact, the Berkeley City Council had voted unanimously to oppose the sale. Why the day of rage?

When a post office closes, it is obviously that much harder to buy a stamp, pick up a package, send a registered letter, or purchase a money order. But inconvenience alone did not account for the existential angst being expressed by the mostly over-50 throng as it questioned the motives of the United States Postal Service for selling post offices all over the country to developers. "Which of our public assets will be privatized next?" speakers asked. "Streets? Schools? The Lincoln Bedroom?"

The Berkeley crowd is not acting alone: From the beaches of Santa Monica to the avenues of the Bronx to the orange farms of Nalcrest, Florida, people who like the U.S. mail are getting mad, "Hey, wait a minute, Mr. Postman! That is our community post office!"

To which the federal flak-catchers reply: "The Internet is killing us. The Postal Service is broke. We have to sell. Get used to it."

But email is not the problem and the budget deficit is easy enough to fix, so there must be other reasons for the forced sales, say save-the-post-office activists. Political reasons, they assert, pointing out that the realtor with the exclusive contract to negotiate sales for the Postal Service's $85 billion real estate portfolio is C.B. Richard Ellis (CBRE). And that the corporation is chaired by Richard C. Blum, who is the husband of U.S. Sen. Dianne Feinstein of California. The corporation's connection to a politically powerful family with a history of accessing public pension funds to make private investments has caused more than a few activists to suspect wrongdoing—even though no evidence of any conflicts of interest tied to the CBRE contract has been revealed.

Until now.

This year-long investigation has uncovered evidence of multiple conflicts of interest and problems with post office sales supervised by Blum's company:

  • CBRE appears to have repeatedly violated its contractual duty to sell postal properties at or above fair market values.
  • CBRE has sold valuable postal properties to developers at prices that appear to have been steeply discounted from fair market values, resulting in the loss of tens of millions of dollars in public revenue. In a series of apparently non-arm's length transactions, CBRE negotiated the sale of postal properties all around the country to its own clients and business partners, including to one of its corporate owners, Goldman Sachs Group.
  • CBRE has been paid commissions as high as 6 percent by the Postal Service for representing both the seller and the buyer in many of the negotiations, thereby raising serious questions as to whether CBRE was doing its best to obtain the highest price possible for the Postal Service.
  • Senator Feinstein has lobbied the Postmaster General on behalf of a redevelopment project in which her husband’s company was involved.

Backstory

Because the Postal Service is running an artificially created budget deficit, tens of thousands of jobs are being liquidated as post offices and mail processing facilities in towns and cities across the country are short-listed to be sold for ready cash. CBRE has already sold 52 of these properties, and hundreds more are on the chopping block.