Inspector General’s report: Elaine Chao ethics questions merit further scrutiny

Allegations that former Transportation Secretary Elaine Chao may have violated ethics rules by using DOT staffers to help her family members merit further investigation, according to a report released from the agency’s Office of Inspector General.

In a letter responding to Chairman Peter DeFazio of the House Committee on Transportation and Infrastructure, Deputy Inspector General Mitch Brehm laid out the findings of an investigation that began in 2019, after media reports questioned the propriety of the then-secretary’s decision to include her family members in an official trip in 2017 to China. The trip was later canceled.

Also at issue were concerns that Chao may have benefited from a financial interest in a construction company, as well as allegations that she may have inappropriately directed federal grant monies to the state of Kentucky.

“Based on our preliminary review, 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,” Brehm wrote. “However, we concluded that a formal investigation into potential misuses of position was warranted.”

The OIG referred the findings of its investigations to the U.S. Attorney’s Office for the District of Columbia on Dec. 16, 2020, and the U.S. Department of Justice Public Integrity Section on Dec. 17, 2020. Both offices declined prosecution.

Report details

The letter includes a 38-page report which describes the investigation in detail. The report makes no formal conclusions as to whether any violations occurred, only that some of the incidents deserved additional scrutiny.

On Oct. 11, 2019, and Dec. 20, 2019, Rep. DeFazio, D-Ore., requested that the DOT’s Office of Inspector General investigate reports of potential conflicts of interest and favoritism involving the former secretary of transportation.

Citing multiple news reports, DeFazio’s letters expressed concerns about Chao’s meetings with local officials from Kentucky and the role of former chief of staff Todd Inman with respect to federal grants benefiting Kentucky. Chao is married to Senate Minority Leader Mitch McConnell, R-Ky. She resigned as DOT secretary on Jan. 7.

DeFazio’s letters also noted questions regarding Chao’s actions relating to her family’s shipping business as well as her financial holdings in Vulcan Materials, a stone and asphalt producer. The report did not recommend further investigation into those issues.

Prior to receiving DeFazio’s first letter, the inspector general’s office opened its own preliminary review covering similar matters related to Chao in response to questions raised in press reports and correspondence from the public, the OIG report states.

As part of its review, the office “obtained emails and grant documentation and conducted interviews” with senior DOT officials, including political and career staff.

The report cites four instances of potential ethics violations, including one instance in which Chao had DOT staffers help edit sections of her father James Chao’s autobiography.

She also directed other staffers to send copies of the book to business leaders and to heads of elite universities.

Chao’s family runs shipping business, the Foremost Group, founded by her father. Her sister Angela Chao serves as chairperson and chief executive.

According to a Sept. 24, 2020, memo drafted by one of Chao’s staffers, the secretary stated that “filial piety” was her motive to include her father and sister in the trip to China.

“Anyone familiar with Asian culture knows it is a core value in Asian communities to express honor and filial respect toward one’s parents, and this ingrained value of love, respect, and filial piety always takes precedence over self-promotion and self-aggrandizement, “ the memo states. LL