House Is Investigating Transportation Secretary Elaine Chao’s Possible Conflicts of Interest

The House Oversight and Reform Committee is investigating Transportation Secretary Elaine Chao’s potential use of her official position for her and her family’s benefit. 

“The committee is examining your misstatements of fact, your actions that may have benefited the company in which you continued to hold shares, and your compliance with ethics and financial disclosure requirements,” Chairman Rep. Elijah Cummings, D-Md. and Chairman of the Subcommittee on Economic and Consumer Policy Raja Krishnamoorthi, D-Ill. wrote in a letter to the secretary on Monday. The committee is requesting a slew of documents by Sept. 30 relating to Chao’s involvement with her family’s shipping company, potential financial conflicts of interest and official travel.

Chao’s father and sisters own a shipping company called Foremost Group, which has a fleet of foreign-flagged ships that transport materials to and from China. The committee cited reports that she allegedly used her role in the U.S. government to boost the company’s status, which federal regulations prohibit. It cited 2018 and 2019 budget requests in which her department wanted to cut millions of dollars from programs that support U.S. ships and shipbuilders. The committee believes such decisions could have been made to benefit Foremost Group.

“Given the decline in the number of U.S. flagged vessels in foreign trade, [the Transportation Department's] approach to these programs may threaten national security by increasing the likelihood that our military will be dependent on foreign-flagged vessels during times of war or emergency,” the committee wrote. 

Foremost Group has received hundreds of millions of dollars in low-interest loans from the Chinese government for its purchase of ships, according to the committee. Also, Chao has appeared in media interviews with her father, the founder of Foremost Group, with the Transportation Department’s official seal behind them where her father, “touted [her] influence within the U.S. government and boasted about his access to President Trump.” 

The committee also said Chao did not divest from Vulcan Materials Company, one of the nation’s largest construction companies where she served on the board of directors prior to becoming transportation secretary. “Vulcan’s annual revenue depends heavily on infrastructure funding allocated by [the Transportation Department],” the committee wrote. She has 3,000 “‘deferred stock units’ for serving as a director, giving [her] a significant and direct personal financial interest in the company.” 

Lastly, the committee is investigating Chao’s travel for possible ethics violations. In October 2017, the State Department raised ethics concerns over Chao’s upcoming trip to China because she was going to include some family members in official meetings with the Chinese government. Transportation wound up canceling the trip, but Chao did go in April 2018. The committee is requesting documents related to both trips as well as other potential travel by family members in government vehicles or aircraft.

A Transportation spokesperson told Government Executive: “The department has received a letter seeking information on a variety of topics based on publicly available information and news coverage. We look forward to responding to the Committee’s request. Media attacks targeting the Secretary’s family are stale and only attempt to undermine her long career of public service.”

Chao is married to Senate Majority Leader Mitch McConnell, R- Ky., who has come under his own ethics scrutiny recently. The Washington Post reported in August that McConnell supposedly lifted sanctions on a Kremlin-linked oil company in exchange for building a large aluminum plant in an area in Kentucky hit hard by job loss and the opioid crisis. McConnell denies he knew about it.