May 28, 2019
Transportation Secretary Elaine Chao came under fire from ethics experts and reporters after The Wall Street Journalrevealed Tuesday that she still owns shares in a major construction company that provides materials for road-paving despite pledging to divest from the company in the ethics agreement she signed before her confirmation in early 2017.
"Elaine Chao just threw her hat into the ring for the Trump admin's worst self-enriching action."
"The road to tyranny is paved with corrupt intentions: Elaine Chao just threw her hat into the ring for the Trump admin's worst self-enriching action--retaining shares in a construction-materials company more than a year after she promised to relinquish them," the consumer advocacy group Public Citizen tweeted in response to the report.
Shares of Vulcan Materials Co. "have risen nearly 13 percent since April 2018, the month in which Ms. Chao said she would be cashed out of the stock, netting her a more than $40,000 gain," the Journal noted. "The shares, now worth nearly $400,000, were paid out to Ms. Chao in April 2018, as deferred compensation for the roughly two years she served on Vulcan's board of directors before being confirmed as secretary of transportation."
\u201cWhy this matters? @apmreports tracked Vulcan\u2019s stock in 2017. It spiked whenever Chao or @realDonaldTrump talked infrastructure $. https://t.co/26UMBOyVm0 Cc: @TMannWSJ\u201d— Tom Scheck (@Tom Scheck) 1559045433
A Department of Transportation spokesperson told the Journal that the 2017 ethics agreement failed to account for Vulcan's compensation policy and the agreement's language "is being clarified to avoid confusion." The spokesperson also said DOT's top ethics official determined that Chao owning the shares does not present a conflict of interest, but the secretary will continue to recuse herself from decisions involving the company--another pledge she made in the agreement.
Walter Shaub, who resigned as director of the Office of Government Ethics in mid-2017 over clashes with the Trump administration, agreed that Chao's ownership of Vulcan shares likely is not a legal conflict of interest but criticized her decision to retain the shares.
"If you look at her ethics agreement, it provides for a complete disentanglement of her interest from Vulcan Materials, and that's what was represented to the Senate," Shaub told the Journal. "For the head of the DOT to have a financial interest in an asphalt company, that is not sending a message to employees of DOT that she is making ethics a priority."
Shaub, who is now a senior adviser at Citizens for Responsibility and Ethics in Washington (CREW), added in a series of tweets that "the ethics agreement is supposed to be binding. Changing it post-confirmation is a bait-and-switch on the Senate."
The Senate confirmed Chao in a 93-6 vote in January of 2017. Republican Senate Majority Leader Mitch McConnell, Chao's husband, abstained.
The Journal pointed out that "Ms. Chao's decision to retain the shares and recuse herself from matters that might affect Vulcan stands in contrast to the way previous transportation secretaries have handled potential conflicts of interest."
"I basically sold everything," Mr. LaHood said. "The ethics police told me to do it, so I did it."
The newspaper reported that other government officials--including Federal Railroad Administrator Ronald Batory as well as Jeffrey Rosen, who served as Chao's top deputy before becoming deputy attorney general--have divested from companies that posed potential conflicts.
However, as Carrie Levine, a money in politics reporter at the Center for Public Integrity, acknowledged on Twitter Tuesday, "this resembles ethics issues of two other cabinet members"--Commerce Secretary Wilbur Ross and Treasury Secretary Steven Mnuchin.
\u201cAnd ethics officials agreed to revise Treasury Secretary Mnuchin\u2019s ethics agreement after he sold a company to his wife that he had previously agreed to completely divest. https://t.co/CS72k16or4\u201d— Carrie Levine (@Carrie Levine) 1559040363
"It is pretty unusual," Levine concluded, "to have three cabinet secretaries who either haven't complied with their original ethics agreements or have belatedly gotten revisions."
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