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Ethics probe led to criminal referral involving Elaine Chao, Transportation Dept. inspector general says

Elaine Chao, The Trump administration's Transportation secretary.T.J. Kirkpatrick/NYT

WASHINGTON - The Transportation Department’s internal watchdog found evidence of potential ethical violations by then-Secretary Elaine Chao and referred the case to the Justice Department for prosecution in December, but it declined, according to documents released Wednesday.

Investigators from the Transportation Department's Office of Inspector General said Chao used government employees to perform private tasks, some of which were meant to aid her father, James Chao. The family patriarch founded the Foremost Group, a shipping company now headed by Chao's sister.

Investigators noted a range of potential issues. The report said Transportation Department staff were told to help promote the elder Chao's biography and to maintain a list of his awards. Chao also told federal employees to send the biography to the chief executive of a major U.S. corporation to request that he write a foreword, according to the report.


It noted evidence that the department's former director of public affairs drafted and launched a media and public relations strategy to build his profile.

Chao also tapped public employees for personal tasks such as arranging Christmas ornaments, investigators said.

The U.S. attorney's office "stated that there may be ethical and/or administrative issues to address but there is not predication to open a criminal investigation," investigators from the inspector general's office said.

The IG's office also said it had looked into allegations that Chao had improperly steered resources to Kentucky, which her husband, Senate Minority Leader Mitch McConnell, a Republican, represents in the Senate, but did not find evidence of that.

Chao and her supporters pointed to areas where the inspector general did not find wrongdoing as an endorsement of her approach to governance.

"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," a Chao spokesman said in a statement.


The spokesman declined to respond to the potential ethical problem areas identified by the inspector general, instead pointing to supportive comments from Republicans in Congress, including Rep. James Comer, R-Ky., who said in a statement that the report "makes clear the Democrats' partisan attacks launched against former Secretary Chao are baseless."

Investigators described a series of potential ethical issues.

As secretary, for example, Chao instructed political appointees to contact the Department of Homeland Security about "the status of a work permit application submitted by a foreign student studying at a U.S. university who was a recipient of Chao family philanthropy," according to investigators.

In another episode, Chao told government employees to include her relatives in preparations for high-level official meetings that were to take place in 2017 in China, where investigators said her family members were to participate alongside senior U.S. officials.

Local officials from China's Jiangsu province and Chao's father met in her office at the Transportation Department's Washington headquarters in May 2017 to discuss the trip, along with representatives of unspecified holding companies, investigators said. The trip ultimately was canceled that fall, around the time other U.S. officials raised concerns, as the New York Times reported in 2019.

Investigators also described Chao using work time of department employees for personal matters.

Among them, according to a description from investigators, was Chao emailing a staff member in her office with the subject line "Xmas ornaments." The email directed the staff member to "sort out and fedex on Monday to Dr. Chao, and my sisters. Please draft a cover note - let me see it-telling them what we are sending."


Investigators also raised the issue of Chao appearing jointly on videos with her father.

One such video raised particular concerns "because it featured the Secretary talking about official matters such as the Administration's priorities for transportation as well as commentary about the written biography of her father," according to a letter from Deputy Inspector General Mitch Behm to Rep. Peter DeFazio, D-Ore., chairman of the House Transportation Committee. DeFazio was among those in Congress who asked for the investigation.

He commended the Office of Inspector General for its review but said he was disappointed that it was not released while Chao was in office and that the Justice Department did not pursue the matters.

"Public servants, especially those responsible for leading tens of thousands of other public servants, must know that they serve the public and not their family's private commercial interests," DeFazio said in a statement.

The letter from Behm described the formal investigation into "potential misuses of position" and was accompanied by a redacted version of the resulting report, which outlined the evidence uncovered and the ethical rules at issue.

"This report does not make any conclusion regarding the compliance of the Secretary or any other Federal employee with any ethical principle or rule," the document states.

Justice Department officials did not immediately respond to questions Wednesday night on their decision not to pursue the matters documented in the report.


Rep. Carolyn Maloney, D-N.Y., chairwoman of the House Oversight Committee, had also requested the inspector general's investigation.

The inspector general's report and other documents obtained by congressional investigators "demonstrate that Secretary Chao used her official position and taxpayer resources for the benefit of herself and her family," Maloney said in a statement. "Secretary Chao's flagrant abuse of her office provides further evidence that additional ethics and transparency reforms are needed."

The Office of Inspector General said Chao, given the chance to respond to the ethical concerns, pointed to a memorandum drafted by the Transportation Department's general counsel, Steven Bradbury, and provided to investigators.

The September 2020 memo was titled "The Importance of Asian Cultural Values to the Success and Effectiveness of Secretary Elaine Chao." Investigators said it was written by Bradbury and reviewed by Chao and two other department staff members.

"As the eldest daughter, she is expected to assume a leadership role in family occasions that honor her father and her late mother," the memo reads. If she neglected to mention her one living parent "her reputation and stature as a government official would be diminished considerably in the eyes of many Asians and Asian Americans."

Bradbury, according to investigators, said that “Secretary Chao cannot be divorced from her father’s story and that this concept is important to keep in mind, but does not excuse all of the issues discussed with OIG, such as the Secretary’s use of subordinates to perform personal tasks,” according to the report released Wednesday.