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DOT Chief Target Of Ethics Probe Into Maritime Connections

DOT Chief Target Of Ethics Probe Into Maritime Connections

U.S. lawmakers have launched an investigation into charges that Department of Transportation (DOT) Secretary Elaine Chao has used her office to benefit herself and her family's ties to maritime shipping.

The investigation, to be conducted by the U.S. House of Representatives' Committee on Oversight and Reform, cites several news reports published earlier this year by the New York Times and others that Chao has used her position as head of DOT to benefit Foremost Shipping Group, which operates a fleet of foreign-flagged ships used to transport bulk goods and materials such as grain, iron ore, and coal, and is headed by her sister Angela.

In a Sept. 16 letter to Chao, committee Chairman Elijah Cummings (D-Maryland), Cummings asserts that the reports suggest that Chao was in a position to "elevate Foremost Group's status with the Chinese government, which extended hundreds of millions of dollars in low-interest loans" to Foremost to make ship purchases.

"In addition, you have appeared alongside your father [James Chao], the founder of Foremost Group, in at least a dozen Chinese media interviews – many of which were behind the official seal of the Department of Transportation," the letter states. "During some of these interviews, your father touted your influence within the United States government and boasted about his access to President Trump on Air Force One."

Cummings' investigation is also looking into the extent to which Chao was involved in decisions to reduce funding for DOT programs that benefit U.S.-flagged vessels that operate in foreign trades that could benefit Foremost Group, which operates foreign-flagged ships exclusively.

The letter outlines DOT's budget requests in 2018 and 2019, which sought more than an $80 million cut in from the government's Maritime Security Program, which subsidizes 60 U.S. flagged commercial vessels that are on-call for use by the Department of Defense as needed for sealift capacity. DOT also requested "millions of dollars" in cuts for federal grants and loans for U.S. shipyards and shipbuilders, according to the letter.

"Given the decline in the number of U.S.-flagged vessels in foreign trade, DOT's approach to these programs may threaten national security by increasing the likelihood that our military will be dependent on foreign-flagged vessels during times of war or emergency."

In addition to her maritime connections and interests, Cummings' committee also wants to investigate Chao's failure to divest her ownership in Vulcan Materials, a major U.S. construction company, before starting her position as DOT Secretary. Chao, who was sworn in on Jan. 31, 2017, did not divest her 3,000 shares of common stock, worth more than $300,000, until June 3, 2019, after news reports of her failure to divest, according to the letter.

A DOT spokesperson acknowledged that the agency had received the committee's letter seeking "information on a variety of topics based on publicly available information and news coverage," in response to a request seeking comment, adding that "media attacks targeting the Secretary's family are stale and only attempt to undermine her long career of public service."

Cummings has asked Chao to respond to a list of 18 information and document requests by Sept. 30. The list includes communications between herself or any DOT employee and Angela Chao, James Chao, or other current or former employees of Foremost Group about official meetings and travel, starting from January 2017. Also requested are the number of enforcement actions brought by DOT for violations of "cargo preference" regulations which require federal agencies to transport certain percentages of government cargo on U.S. flag vessels.

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