Transportation Secretary Elaine Chao Still Owns Shares She Pledged To Divest
“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.”
Transportation Secretary Elaine Chao still owns shares in a major construction firm despite pledging to divest them, according to a new report by the Wall Street Journal. Chao had served on the board of the company, Vulcan Materials, for about two years before joining the Trump administration as head of the Transportation Department.
In part of her ethics agreement, Chao said she would end her financial interests in the company by taking “a cash payout for all of my vested deferred stock units” by April 2018. But a financial disclosure report released by the Transportation Secretary’s husband, Senate majority leader Mitch McConnell (R-KY), revealed Chao had maintained ownership of somewhere between $250,000 and $500,000 worth of Vulcan stock.
The Wall Street Journal estimates Chao has netted more than $40,000 from the stock since April 2018, the date she agreed to cash out on her shares. The Transportation Secretary has been one of the most vocal advocates of President Trump’s plan to invest $1 trillion into U.S. infrastructure, and critics are concerned federal funds would be directly allocated to Vulcan, one of the nation’s largest suppliers of construction materials.
Vulcan stock reached a 10 year high in the days following Trump’s election, and has surged nearly 13 percent since April 2018, as investors are optimistic the company would benefit from a federal infrastructure package.
Is Elaine Chao’s Stock in Vulcan an Ethics Violation?
Walter Schaub, former director of the Office of Government Ethics, told the Journal he did not believe Chao’s ownership of the shares was unlawful, but tweeted, its “Outrageous that the Transportation Secretary broke her pledge to the American people.”
“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.”
The Department of Transportation’s top ethics official said Chao’s share of ownership in the construction supplies company did not represent a conflict of interest, because the DOT head officially recuses herself from issues related to the company.
“It is unfortunate that members of the news media have attempted to substitute their opinions for the decisions of senior career ethics officials of the department, who have determined there is no conflict of interest as the secretary remains disqualified from matters directly involving the company mentioned. In her ethics agreement, the secretary agreed to resign from her board position and not participate in matters with a direct and predictable impact on Vulcan Materials, which she has followed,” the Transportation Department said in a statement.
Richard Painter, who was the top ethics lawyer under George W. Bush, criticized the statement, saying, “I don’t think it’s possible for Elaine Chao to do her job as Secretary of Transportation without participating personally and substantially in a matter that’s going to have a direct and predictable impact on Vulcan Materials.”