Elaine Chao used DOT staff to aid personal errands, father’s business, inspector finds

Former Transportation Secretary Elaine Chao repeatedly used her staff and her position of power to boost the reputation of her shipping magnate father and otherwise aid her family, the Department of Transportation's inspector general concluded in a report released Wednesday.

The internal watchdog faulted Chao for four kinds of ethics violations, including planning to bring relatives on an official trip to China and requiring DOT's public affairs staff to help market a book written by her father. It found she also had employees handle personal errands such as shipping Christmas ornaments.

Some of the inspector general's conclusions back up reporting by POLITICO and The New York Times on the deep entanglement of Chao's family with her work at the agency.

The IG's report and related documents "demonstrate that Secretary Chao used her official position and taxpayer resources for the benefit of herself and her family,” said Rep. Carolyn Maloney (D-N.Y.), chair of the House Committee on Oversight and Reform, in a statement late Wednesday. "Secretary Chao’s flagrant abuse of her office provides further evidence that additional ethics and transparency reforms are needed.”

Investigators from the IG’s office referred their findings to the Justice Department’s U.S. Attorney’s Office and its Public Integrity Section in December, but both offices declined to open criminal investigations.

Chao, who left office in January, was one of the most experienced Washington insiders in then-President Donald Trump's cabinet — and certainly no novice when it comes to federal ethics rules. She had previously spent eight years as President George W. Bush's Labor secretary.

The government watchdog didn’t find evidence to back up other allegations against Chao, including suggestions that DOT was steering disproportionate amounts of grant money to Kentucky, the state that her husband, Senate Minority Leader Mitch McConnell, has represented since the 1980s. Chao focused on that aspect of the report in her response to the IG's findings.

"This report exonerates the Secretary from baseless accusations and closes the book on an election-year effort to impugn her history-making career as the first Asian American woman appointed to a President's Cabinet and her outstanding record as the longest tenured Cabinet member since World War II," a Chao spokesperson said in a written statement.

But the report cited evidence that Chao had, indeed, used her power in ways that advanced her family's interests. Among the report's findings are:

— Chao made extensive plans to include family members in stops she planned to make on a trip to China in 2017, including visits to Shanghai Maritime University and the Shanghai Jiao Tong University, both of which received funding from her family's charitable foundation. The Times has first raised ethics questions about the trip, which the department ultimately canceled.

— She told DOT public affairs staff to help her father, James S. C. Chao, a New York City-based shipping magnate, with marketing for his book, along with developing — and in some ways helping to implement — a media strategy surrounding his work. Chao directed her staff to help arrange a book signing as part of the China trip, and the staff was involved in curating a list of his awards and helping edit his Wikipedia page, the report says.

— Chao and DOT staff used a DOT-owned lighting kit for an interview about her father and his book which took place in New York City. Afterward, the agency's media center staff was unable to find the kit.

Chao did agree to refrain from scheduling media events involving her family without consulting with DOT’s ethics office, the report noted. This occurred after POLITICO reported in 2018 about a series of media appearances she had made with her father, in which she promoted his personal story, his shipping business and his book.

She also asked her staff to inquire about the status of a work permit application for a foreign student studying at a U.S. university who had received an award from her family's philanthropic foundation, the inspector general found. And the report concludes that Chao used DOT resources and staff for personal tasks, such as checking on repairs at a store for her father and having DOT employees send Christmas ornaments to her family.

"Please call the [redacted] owners and tell them to expedite," Chao wrote in one email to a department staffer regarding the repair.

"I used to go into the store with Dr. Chao... tell them I am SOT," she added, using an abbreviation for "secretary of transportation."

Language describing the item that was being repaired or what store was involved is blocked out in the publicly-released version of the report.

The report includes a response to investigators in which Chao, through then-DOT general counsel Steven Bradbury, referred to a previously written memo on "filial piety" that Bradbury had authored on her behalf.

The memo, dated Sept. 24, 2020, notes that expressing respect toward one's parents is a "core value in Asian communities."

“If the Secretary focused only on herself in media interviews or in cultural or social interactions involving Asian communities and neglected any mention of her parents or inclusion of her one living parent, her father, with these audiences, her reputation and stature as a government official would be diminished considerably in the eyes of many Asians and Asian Americans,” Bradbury wrote in the memo.

House Transportation Chair Peter DeFazio (D-Ore.), one of two lawmakers who requested the investigation, welcomed the report but faulted its timing and the lack of consequences for Chao.

“While I commend the Department of Transportation’s Office of Inspector General for conducting this review, I am disappointed that it was not completed and released while Secretary Chao was still in office,” DeFazio said in a statement. “I am even more disappointed that the Department of Justice declined to further pursue the matters that the IG’s office substantiated in its investigation.”

The inspector general didn’t find evidence to back up other allegations of misconduct by Chao. Those include several raised by POLITICO’s reporting that involved DOT's pattern of providing discretionary grant money to Kentucky.

The inspector general also looked at the frequency of meetings between Chao and her top officials with Kentucky leaders, but wrote that there is “no standard by which to judge whether the number of meetings from one’s home state is so excessive as to raise ethical issues.” The IG also found no “irregularities” in the department’s grant awards to Kentucky, though it noted ongoing criticisms of the lack of transparency in DOT’s grantmaking process.

The inspector general’s office had already opened a preliminary review of Chao’s potential misuses of her office before the committee asked it to. The office decided there wasn’t enough evidence to warrant a formal investigation into grant awards or Chao’s financial interest in Vulcan Materials, a company that produces crushed stone and asphalt, but moved forward with a formal investigation into “potential misuses of position.”

President Joe Biden's Transportation secretary, Pete Buttigieg, was quick to distance himself from his predecessor's ethics woes.

Buttigieg "made it a point to have an ethics briefing during his very first day on the job," a DOT spokesperson said when asked for comment about the IG report on Chao. The spokesperson added that Buttigieg "is committed to upholding the highest ethical standards for himself and his team at the Department of Transportation."