Inspector General’s Report Cites Elaine Chao for Misuse of Office

WASHINGTON — The Transportation Department’s inspector general asked the Justice Department in December to consider a criminal investigation into what it said was Elaine Chao’s misuse of her office as transportation secretary in the Trump administration to help promote her family’s shipping business, which is run by her sister and has extensive business ties with China.

In a report made public on Wednesday, the inspector general said the Justice Department’s criminal and public integrity divisions both declined to take up the matter in the closing weeks of the Trump administration, even after the inspector general found repeated examples of Ms. Chao using her staff and her office to help benefit her family and their business operations and revealed that staff members at the agency had raised ethics concerns.

“A formal investigation into potential misuses of position was warranted,” Mitch Behm, the department’s deputy inspector general, said on Tuesday in a letter to House lawmakers, accompanying a 44-page report detailing the investigation and the findings of wrongdoing.

Ms. Chao, the wife of Senator Mitch McConnell of Kentucky, the Republican leader, announced her resignation on Jan. 7, the day after the Capitol riot. At the time of her departure, an aide to Ms. Chao said her resignation was unrelated to the forthcoming release of the investigation.

The investigation of Ms. Chao came after a 2019 report in The New York Times that detailed Ms. Chao’s interactions with her family while serving as transportation secretary, including a trip she had planned to take to China in 2017 with her father and sister. The inspector general’s report confirmed that planning for the trip, which was canceled, raised ethics concerns among other government officials.

Ms. Chao declined to respond to questions from the inspector general and instead provided a memo that detailed the importance of promoting her family as part of her official duties.

“Asian audiences welcome and respond positively to actions by the Secretary that include her father in activities when appropriate,” the September 2020 memo said.

The inspector general’s investigation detailed a series of instances where Ms. Chao directed her staff to spend federal government time and resources to help with matters related to the shipbuilding company and her father.

The Chao family company, Foremost Group, was responsible as of 2019 for a large portion of orders at one of China’s biggest state-funded shipyards, and has secured long-term charters with a Chinese state-owned steel maker, The Times reported. Foremost’s ships carry bulk cargo such as iron ore and coal, focusing on shipping those commodities to China.

“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,” said Representative Peter DeFazio, Democrat of Oregon and the chairman of the House Committee on Transportation and Infrastructure, which requested the investigation after the report in The Times.

The investigators found that Ms. Chao had used her staff to make extensive arrangements in 2017 for the planned trip to China, which was canceled just before her planned departure after ethics concerns were raised.

The trip had been scheduled to include stops at locations in China that had received financial support from her family’s company and also a meeting with “top leaders” in China that was scheduled to include her father and sister, but not other members of Transportation Department staff.

The investigators also found that she repeatedly asked agency staff members to help do chores for her father, including editing her father’s Wikipedia page, promoting his Chinese-language biography, and directing two staff members from the transportation secretary’s office to send a copy of her father’s book “to a well-known C.E.O. of a major U.S. corporation” to ask if he would write a foreword for the book.

In one instance, staff members for Ms. Chao’s office were assigned in 2017 to check with the Department of Homeland Security on the status of a work permit application for a foreign student studying in the United States who had received a scholarship from a Chao family foundation, the report said. The student, according to the report, had interviewed Ms. Chao’s father, James Chao, at the New York headquarters of the family’s shipping company in order to share Mr. Chao’s experience “with Chinese millennials.”

Transportation Department staff members were given the job of arranging details for James Chao’s trip to China in October 2017, including asking, through the State Department, for China’s transport ministry to arrange for two cars for the six-person delegation, which included Ms. Chao’s younger sister, Angela Chao, who had succeeded their father as head of the family shipping company, and Angela Chao’s husband, the venture capitalist Jim Breyer.

Ms. Chao’s trip to China that year was abruptly canceled after news organizations, including The Times, asked about the makeup of Ms. Chao’s delegation.

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