Three airline industry companies slated to receive $ 338 million in public funds to save jobs in hard-hit industry have laid off thousands of workers anyway, according to Treasury disclosure documents and data public statements on layoffs.

The biggest company, Gourmet Door, is a global food processor for airlines and is part of a Swiss conglomerate owned by the private equity firm rich Malaysian businessman Richard Ong. Gate Gourmet is set to get $ 171 million from the federal program to bail out the airline industry, even after reporting the layoffs of thousands of workers at airports in half a dozen states, including California, Georgia, New York and Illinois in recent months, according to public filings. The exact number of workers who lost their jobs is not clear.

“These grants are meant to save jobs and only to save jobs,” the representative said. Katie porter, D-CA, who has supported the aviation worker assistance program. Every payment that the Treasury makes “despite clear indications that the recipient company is laying off workers or reducing hours is an abuse of the program and of taxpayers’ money.”

While the more well-known Paycheck Protection Program was aimed at small businesses, the airline industry’s provision – known as the Payroll Support Program – allowed large companies to obtain advantages. It was based on a proposal from the unions in the airline industry and the main Democrats.

The program provided for a special deal for the airline industry and its workers: airlines and contractors could apply to the Treasury for government assistance to pay their workers and, in return, agree not to make any layoffs until the end of the day. September 30. The idea was, essentially, for the money to flow from employers to workers.

Payroll assistance consists mainly of grants and partly of low-interest loans. The program allowed many workers to keep their wages and benefits even as demand for air travel plummeted. The money is paid as it goes; the government is disclosure than the total amounts it plans to give to each company.

Treasury Secretary Steven Mnuchin hailed the effort as “an important CARES Act program that will support American workers and help preserve the strategic importance of the airline industry.”

The program has worked widely for employees of major carriers like American and United, who have signed their payroll support agreements with the Treasury. in April. The major airlines have not laid off workers, although many fear they will start doing this once the deadline has passed.

But at least three entrepreneurs – Gate Gourmet and based in Illinois Flying Food Tariff and based in texas G2 secure staff – seem to benefit from a loophole in the law: they laid off workers and then got the money from the federal government.

The amount of payroll support subsidies is calculated on the basis of a company’s salary costs between April and September 2019, before the pandemic. The idea was that companies would quickly sign deals with the Treasury after the CARES law was passed in late March, and then be barred from making layoffs until September, as the government paid the companies’ payroll costs.

Gate Gourmet, unlike the airlines, did not sign its deal with the Treasury until June 19. In the months between the inception of the program and the signing date, the company reported a spate of layoffs in state statements. The company employs 27,000 people worldwide, according to LinkedIn.

But the amount of money the companies received from the government was based on their workforce before the pandemic and before layoffs. Rather, a job-saving program is used to get money from the government for the wage costs of a reduced workforce.

A spokeswoman for the Treasury Department said the agency’s hands are tied. “The CARES Act requires the Treasury to provide payroll support to eligible applicants, and it does not require former employees to be rehired. The Treasury implemented the CARES law as drafted.

It is not clear whether the Treasury raised the issue of the layoffs with the company. Mnuchin has wide discretion over many programs in the CARES Act, and experts told ProPublica he could have exercised it here.

Adding to the mystery surrounding the Gate Gourmet grant, the Teamsters, who represent some of the company’s workers, issued a Press release at the beginning of April by announcing that Gate Gourmet had filed its request for Payroll Support with the Treasury. The Treasury spokeswoman did not respond to questions about why so much time had passed between Gate Gourmet’s candidacy and the signing of the payroll support agreement in mid-June.

Porter, the congresswoman, said “the layoff of thousands of employees between submitting a payroll support request and finalizing the terms of the deal with the Treasury is a flagrant violation of intent. of Congress to create the “payroll support program.”

Gate Gourmet spokesperson Nancy Jewell said in a statement: “To ensure the long-term sustainability of our business in the United States, layoffs and time off were needed in these unprecedented times.” She added, “We are committed to meeting all of our obligations and will use all funds from the CARES Act exclusively for the continued payment of employee wages, salaries and benefits. “

Jewell did not respond to questions about the size of the company’s workforce, its relationship with the Treasury, or the terms of its payroll support grant.

On April 1, just a few days after the program was created, Gate Gourmet hiring Washington lobbying firm Hannegan Landau Poersch & Rosenbaum to “provide advice on funding the CARES Act,” according to public documents.

Sara Nelson, President of the Association of Flight Attendants-CWA and a leading supporter to expand the program, said in a statement that “the payroll support program has been successful in protecting the jobs and health care of nearly two million aviation workers and the integrity of the program is vital . The Treasury should investigate this gross misconduct and recover the funds. “

Flying Food Group, another airline catering company, said it has laid off more than a thousand workers since the passage of the CARES Act, including hundreds in Hawaii and California. G2 Secure Staff, which provides a variety of services at airports, said it laid off hundreds of workers on the day the bill was signed. Flying Food Group is expected to receive $ 85 million in government assistance and G2 is expected to receive $ 81 million.

Flying food group hiring law firm Greenberg Traurig will lobby on pandemic rescue issues on March 19.

Neither Flying Food Group nor G2 Secure staff responded to requests for comment.

There is no comprehensive national database on layoffs. When companies lead certain types of layoffs, they are required to file notices with employees, their representatives and state governments. ProPublica reviewed data on these advisories provided by dozens of states with major airports across the country. But the data may not capture all layoffs.

If you have any information about the Payroll Support Program or Treasury Rescue Programs, contact Justin Elliott by email at [email protected] or via Signal at 774-826-6240.

Doris Burke and Mollie Simon contributed reports.

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