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OIG Finds Chao Misused Her Position as Transportation Secretary But DOJ Declines to Investigate

On October 11, 2019, and December 20, 2019, Chairman Peter DeFazio of the House Committee on Transportation and Infrastructure requested that the Department of Transportation’s (DOT) Office of Inspector General (OIG) investigate reports of potential conflicts of interest and favoritism involving former Secretary of Transportation Elaine L. Chao. 

Citing multiple news reports, Chairman DeFazio expressed concerns about Secretary 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. The letter also noted questions regarding Secretary Chao’s actions relating to her family’s shipping business as well as her financial holdings in Vulcan Materials, a stone and asphalt producer. 

OIG said it had opened a preliminary review regarding the issues raised prior to receiving Chairman DeFazio’s letter as well as other matters.

Now, a preliminary review has 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, OIG concluded that a formal investigation into potential misuses of position was warranted but the Department of Justice has declined to investigate or prosecute Chao after OIG referred allegations of potential misuse of office for review.

DeFazio has responded to voice his disappointment that the review was not completed and released while Secretary Chao was still in office. He said he is even more disappointed at the Department of Justice’s decision to decline to further pursue the matters that OIG raised. 

 “The DOT Inspector General’s report, in addition to documents we obtained, demonstrate that Secretary Chao used her official position and taxpayer resources for the benefit of herself and her family,” said Chairwoman of the Committee on Oversight and Reform, Carolyn B. Maloney. “Secretary Chao’s flagrant abuse of her office provides further evidence that additional ethics and transparency reforms are needed.”

OIG’s report highlights four separate categories actions by Chao that appear to have violated federal ethics laws:

  • Secretary 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 a U.S. university who was a recipient of her family’s philanthropic foundation.
  • Secretary Chao made extensive plans to include family members in events during her 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 business. In an email about attendees for a meeting with “top leaders” (presumably of the Chinese government), Secretary Chao also instructed her staff to include her father, her sister, and her sister’s husband, while at the same time instructing them that for the DOT, the attendees would be “none.”
  • Secretary Chao directed DOT public affairs staff to provide support to her father, particularly in the marketing of his personal biography, to keep a running list of the awards her father received and edit her father’s Wikipedia page. Secretary Chao also “directed two OST staffers to send a copy of [her father’s book] to a well-known CEO of a major U.S. corporation (which is not regulated by DOT) along with a letter requesting that he write a forward for the book and a sample forward.” 
  • Secretary Chao also used DOT resources and staff for personal tasks, such as checking on repairs of an item at a store for her father and having them send Christmas ornaments to her family.

However, based on the lack of prosecutorial interest from the Department of Justice, OIG has determined it will close the investigation.

Read DeFazio and Maloney’s full response here

Kylie Bielby
Kylie Bielby has more than 20 years' experience in reporting and editing a wide range of security topics, covering geopolitical and policy analysis to international and country-specific trends and events. Before joining GTSC's Homeland Security Today staff, she was an editor and contributor for Jane's, and a columnist and managing editor for security and counter-terror publications.

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