Inspector General Slams USPS on Property Sales, Leases

July 1, 2015

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Berkeley residents have stopped the sale of the
historical post office - for now. 

(This article first appeared in the July-August 2015 issue of The American Postal Worker magazine.)

In April, the USPS Office of Inspector General (OIG) issued a scathing report on the Postal Service’s transactions with CBRE, which serves as its exclusive agent for real estate transactions.

The report recommends that the USPS terminate its contract with CBRE, the world’s largest real estate company. The OIG also referred numerous USPS-CBRE transactions to its Office of Investigations for possible criminal charges.

The report points out that USPS management permits CBRE to represent both the Postal Service and the businesses and individuals that are buying and leasing property from the USPS.

“These transactions are inherently risky and create conflicts of interest whereby CBRE may not negotiate property sales and lease transactions in the Postal Service’s best interest,” the report concludes. CBRE frequently solicited appraisals for USPS properties it sold, the report found, including in cases where there were “potential relationships between the buyer and CBRE.”

Until the relationship is terminated, management should modify the contract to prohibit CBRE from collecting commissions from opposing parties and prohibit dual agency representation, the report says.

APWU President Mark Dimondstein called the report “a stinging indictment” of the way the USPS has sold post offices and other postal facilities and “a condemnation of the cozy relationship” between postal management and CBRE.

“The U.S. Postal Service belongs to the people of this country,” Dimondstein said. “We must not permit postal executives and the Board of Governors to sell our beautiful historic buildings at a discount; nor should we permit CBRE to drain the Postal Service treasury with lease deals that benefit the real estate firm at the expense of postal customers and the American people.”

USPS, Lessors Bamboozled

In addition to acting as dual agents, lessors reported numerous inappropriate practices to the OIG:

  • Lessors said they were told that if they did not agree to pay CBRE a commission, the company would find another building and discontinue the lease. “This does not provide the Postal Service with best value from such a contractor,” the OIG concludes.
  • Lessors said CBRE informed them that they could recover commission fees by increasing USPS rents.
  • CBRE made the process for commissions appear to be mandatory, lessors reported, despite the fact that the Postal Service had no such requirement.

As a result of these questionable transactions, the Postal Service could be overpaying an estimated $9.5 million per year for leases negotiated by CBRE, the report concludes.

Not the Only One

“Regrettably, CBRE is not the only private, for-profit company that is treating the U.S. Postal Service like a private piggy bank,” Dimondstein said. 

“The Inspector General also should examine the role of CBRE CEO Robert Sulentic, who sits on the Staples board of directors while the USPS is reducing hours or shuttering post offices and encouraging customers to take their mail to Staples stores,” he added.

“This report shows we need to protect the USPS from corporate pirates who would plunder it,” the union president added.

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