Inspector General Report Says Elaine Chao May Have Violated Federal Ethics Laws.

Two months after Elaine Chao resigned as Secretary of Transportation, in the wake of the January 6 attack on the Capitol, the Transportation Department responded to an October 2019 congressional request for an investigation of Chao, and forwarded to two House committees an inspector general report that identifies several areas where Chao apparently violated ethics rules. The report notes that in December 2020, the IG had “referred” its investigation to the Trump Justice Department and the US attorney’s office in Washington, DC, for possible criminal prosecution, and that both had declined to open an investigation. 

In a press release accompanying the release of the IG report, the House Committee on Transportation and Infrastructure and the Committee on Oversight and Reform listed four areas where Chao, who is married to Senate Republican leader Mitch McConnell, seemingly “violated Federal ethics laws.”

  • Chao tasked political appointees on her staff to contact the Department of Homeland Security regarding the status of a work permit application for a student studying at an American university who was a recipient of her family’s philanthropic foundation.
  • Chao made extensive plans to include family members in events during a planned, but subsequently cancelled, official trip to China in November 2017 that included intended stops at schools and other locations that had received support from her family’s international shipping business, the Foremost Group. In an email regarding a meeting with “top leaders” (presumably of the Chinese government), Chao instructed her staff to include her father, her sister, and her sister’s husband. Chao’s sister was head of the privately held shipping company founded by her father.
  • Chao directed her public affairs staff to provide support to her father, particularly in the marketing of his personal biography. This included keeping a running list of the awards her father received and editing her father’s Wikipedia page. She also instructed her staffers to send a copy of her father’s book to the CEO of a major American corporation with a letter requesting that he write a foreword for the book.
  • Secretary Chao used Transportation resources and staff for personal tasks, such as checking on repairs of an item at a store for her father and having her staffers send Christmas ornaments to her family.

Regarding the last item on the list, the IG report detailed one of the examples:

On September 24, 2017, Secretary Chao sent an email to an [Office of the Secretary of Transportation] staff member with the subject line, “Dr. Chao’s [redacted].” In the email, Secretary Chao stated, “He bought a new [redacted] at [the store] 2 years ago. 2 years later, it has malfunctioned. was bought from [redacted] their shop. It was returned to them for repair. The estimate was 6 weeks. [Foremost Group employee] has called and some parts had not come in and it will still require 2 more weeks. This is not right. Please call [redacted] owners and ask them to expedite. I used to go into the store with Dr Chao ….tell them I am SOT [secretary of transportation].” On September 30, 2017, Secretary Chao sent an email to two OST staff members, stating “please call [the store] again and check on status. Dr C still has not heard. Do they send [redacted] for repairs [redacted]? and thus have no control over how long it takes? [OST staffer]: If [OST staffer] is not around, please call [store] and check on when ready.” When asked about this incident in during his December 2020 interview with OIG, DOT General Counsel Steven Bradbury said these types of events should be avoided and ideally the Secretary would make other arrangements.

Tell them I am secretary of state. That certainly seems to have been an improper use of her government position.

A letter from the Transportation Department’s deputy inspector general to the two House committees notes that in October 2019 the committees requested information regarding “potential conflicts of interest and favoritism involving” Chao—specifically whether she or an aide helped steer Transportation Department grants to Kentucky, the state her husband represents in the Senate, and whether she had violated ethics rules by maintaining holdings in a stone and asphalt company called Vulcan Materials.

The IG says, “we concluded that there was not a sufficient basis to initiate a formal investigation into grant awards or the Secretary’s financial interest in Vulcan Materials. However, we concluded that a formal investigation into potential misuses of position was warranted. We initiated our formal investigation in December 2019.” That probe led to the report released today, which was finalized after Chao left office. 

The report adds that the IG “offered” Chao “the opportunity to share her thoughts regarding the ethics issues under investigation” and “was advised that Secretary Chao had nothing to add.”

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