US DOT's Chao Refutes Ethics Violations

A Congressional investigation into allegations that U.S. Secretary of Transportation Elaine Chao has used her office to benefit her family's shipping company is being roundly rejected by the transportation chief.

In the first of a "rolling production of responses" to be sent to the U.S. House Committee on Oversight and Reform, U.S. Department of Transportation (DOT) Assistant Secretary for Government Affairs Adam Sullivan called the allegations "simply false."

Sullivan pointed out that even the reporter of a New York Times article that is the basis of the investigation had stated that the article did not assert a connection between Chao and Foremost Shipping Group, a foreign-flagged vessel-owning company started by her father and now headed by her sister Angela.

"Of course, the Secretary is not involved with the management or operations of Foremost Group and has no financial stake in the company," Sullivan wrote in his September 30 response letter to committee chairman Elijah Cummings (D-Maryland). "Nor does the Department of Transportation regulate, promote or benefit its business financially."

Cummings' investigation is also looking into the extent to which Chao was involved in decisions to cut $80 million in supplemental government funding for U.S.-flagged vessels that operate in foreign trades through DOT's Maritime Administration (MarAd) – cuts he asserted could serve to benefit Foremost Group, which operates foreign-flagged ships exclusively.

However, "the allegation that the Secretary has advocated to deprioritize or reduce funding for DOT programs that benefit U.S.-flagged vessels in foreign trade is not only baseless, but in fact the opposite is true," Sullivan stated. "Today MarAd has the largest operating budget in its history, in large part due to Secretary Chao's advocacy and leadership."

In addition to alleged maritime connections and interests, Cummings' committee is investigating Chao's failure to divest $300,000 worth of stock in Vulcan Materials, a major U.S. construction company, before starting her position as DOT Secretary. Sullivan responded that federal ethics officials determined that owning the stock never presented a conflict of interest.

"Moreover, the Secretary was recused from all matters involving the company while she held these stock interests. Although not required by law, the Secretary sold her shares in Vulcan when questions were raised and no longer has any financial interest in the company."

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