DOJ Declines Criminal Probe Into Former USDOT Secretary Despite New Damning Report
Washington D.C. – The United States Department of Justice (DOJ) is declining to open a criminal investigation into former U.S. Department of Transportation (USDOT) Secretary Elaine Chao despite the findings of a new report detailing how she used her position and USDOT staff members for her personal benefit.
For much of her tenure as USDOT Secretary during the Trump Administration, Elaine Chao was dogged by a series of ethics and criminal allegations.
Sec. Chao faced corruption complaints that included:
1. Steering more than $100 million in Department grant funds to the Commonwealth of Kentucky to aid in her husband’s (Senator Mitch McConnell) re-election efforts;
2. Violations of financial conflict of interest laws related to her ties with Vulcan Materials — a company that produces large stone and asphalt in which she owned stock and that also received USDOT grants; and
3. Using her position to promote the Foremost Group — her family’s international shipping business.
On March 2, 2021, the USDOT’s Office of Inspector General (OIG) released the findings of its investigation into these allegations.
In a letter addressed to Chairman of the U.S. House of Representatives Committee on Transportation and Infrastructure Peter DeFazio (D-OR), Deputy Inspector General Mitch Behm detailed the findings.
USDOT Grants Not “Steered” to Kentucky
Behm said the investigation into the more than $100 million in discretionary grants doled out in 2018 for infrastructure projects in Kentucky “did not find any irregularities,” nor did the Commonwealth “receive a disproportionate amount of DOT grant funds as a whole.”
“The Kentucky grants appear to be in line with expectations for the process,” Behm wrote. “Moreover, our review of the grant files and our interviews with DOT staff involved in the selection and award process did not find evidence of steering.”
However, Behm did note the Department failed to adequately document the “final project selections at the conclusion of the process” of awarding the grants.
No Evidence of Conflict of Interest With Vulcan Materials
Prior to serving as Secretary of Transportation, Secretary Chao sat on the Vulcan Materials board of directors.
After an investigation into whether she violated her Federal ethics agreement in which she promised to recuse herself from matters pertaining to Vulcan and to cash out the stock she owned in the company, Behm said investigators “did not identify any evidence of a financial conflict of interest.”
Misuse of Office For Personal Gain and to Benefit Family’s Shipping Business
In December of 2019, the USDOT OIG’s Office of Investigations opened a formal inquiry into additional allegations that Sec. Chao misused her position in pursuit of her own personal gain or for the benefit of her family members.
Specifically, investigators found damning evidence Sec. Chao engaged in a series of questionable ethical behaviors including: providing USDOT Public Affairs and media support to help her father promote his biography, and instructing Office of the Secretary (OST) staff members to perform personal tasks for her and her family members that were unrelated to her duties as USDOT Secretary.
OIG’s investigation detailed numerous such instances.
A review of DOT emails and interviews with staff revealed that OST staffers provided various media and public affairs support to the Secretary’s father in 2017 and 2018. In addition to the planned book signing in China, there were several additional instances where OST staff were directed to help promote Dr. Chao’s biography, Fearless Against the Wind. For example, in August 2017, the Secretary directed two OST staffers to send a copy of Fearless Against the Wind 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 foreword for the book and a sample foreword.
Emails revealed that the Secretary had asked a third staffer to edit the sample foreword. OIG’s review indicated that the Secretary involved OST staff in similar requests for forewords to Fearless Against the Wind to several other prominent individuals, such as leaders at three elite U.S. educational institutions.
OIG also found evidence that the former DOT Director of Public Affairs, Marianne McInerney, and OST staffers also drafted, edited, and implemented a media strategy and public relations plan. The employees who worked on this document were no longer employed by DOT during the investigation and would not consent to a voluntary interview.
OST staff were also involved in organizing events in 2018 on behalf of Sec. Chao’s father at Columbia University, SUNY Maritime College, Lloyd’s List, and Massachusetts Maritime Academy.
Further, OST staff was involved in helping draft, edit and promote a profile on the elder Chao in a chapter in Dynasties of the Seas, II (Dynasties), a book about international shipping firms, and Journeys – An American Story (Journeys), an essay collection that includes an essay by the Secretary about her family’s immigration story.
Dynasties was published on June 8, 2018, by Marine Money, Inc., and Journeys was published on July 3, 2018, by Rosetta Books.
OIG also found that, on January 6, 2018, the Secretary asked an OST staffer to edit her father’s Wikipedia page.
“In an interview with OIG in January 2020, the staffer confirmed that she edited the page and told OIG that they were the Secretary’s Wikipedia point person,” the report states.
That’s not all.
The OIG’s investigation also uncovered Department emails of several instances where the Secretary directed her staff to research and/or purchase personal items for her online, to include searching for free shipping and coupon codes.
These purchases were paid for using the Secretary’s personal credit card.
The staffer added that this practice also “helped keep the Secretary on time and avoid interruptions to the schedule.”
The report also noted that “none of the staffers interviewed by OIG described feeling ordered or coerced to perform personal or inappropriate tasks for the Secretary.”
In addition, none of the staffers indicated they received separate compensation from the Secretary for work performed.
USDOT General Counsel Defends Sec. Chao
In response to the OIG’s inquiry, USDOT General Counsel Steven Bradbury penned a memo dated September 24, 2020 and titled “The Importance of Asian Cultural Values to the Success and Effectiveness of Secretary Elaine L. Chao.”
First, Bradbury deals with the allegations of ethical improprieties involving Chao’s father and her family’s shipping business.
“The international shipping business founded by the Secretary’s father is not regulated by the DOT and does not have business before the Department — and if it ever did have a direct interest in any action to be taken by the Department, the Secretary would, of course, be recused from participating in that action,” Bradbury defended.
Next, he asserted Sec. Chao has an “extraordinary record of public service” and conducts business with the “highest standards of professionalism, competence, and ethical conduct.”
“Under her leadership, the Department of Transportation acts in accordance with the law, does not comprise on ethics, and never puts private interests above the interests of the American people. Any suggestion to the contrary based on her background and support of her family ignores the diverse cultural fabric and values upon which our country is founded,” the memo states.
DOJ Declines to Open Criminal Probe
On December 16, 2020, OIG referred this investigation to the DOJ, United States Attorney’s Office for the District of Columbia, for criminal prosecution.
The United States Attorney’s Office declined to open a criminal probe stating that there “may be ethical and/or administrative issues to address but there is not predication to open a criminal investigation.”
On December 17, 2020, OIG referred this investigation to DOJ Public Integrity Section for criminal prosecution.
The Public Integrity Section also declined to open an investigation.
“Based on the lack of prosecutorial interest from DOJ, OIG has determined it will close this investigation” the report concludes.