Prior administrations might argue that the Transportation Secretary owning shares in the largest supplier of gravel mix used in road construction is an explicit conflict of interest. But according to a report from the Wall Street Journal, the DOT’s top ethics official has ruled that Secretary Elaine Chao’s ownership of shares in Vulcan Materials Co. does not constitute an ethical snag — despite Chao vowing to divest from the company in an agreement signed before her confirmation.
According to a financial disclosure form filed with the Office of Government Ethics, Chao was supposed to cash out her stock by April of 2018. However, Chao received her $400,000 divestment in company stock, which she has continued to hold. Since the April 2018 deadline, Chao’s shares in Vulcan have netted her an additional $40,000.
A Department of Transportation spokesperson who spoke to the Journal said that the ethics agreement Chao signed was “flawed,” because Vulcan policy requires that former directors — Chao served two years on the Vulcan board — be payed out in stock. The DOT’s top ethics official said that the shares are not a conflict of interest, because Chao has recused herself from participating in all matters involving Vulcan. Between 45 and 55 percent of the company’s shipments are used in projects funded by the government.
Walter Shaub — head of the Office of Government Ethics until July 2017, when he resigned over other Trump administration ethical conflicts — said that Chao’s financial relationship with Vulcan is not a legal conflict of interest, but does not look great either. “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 told the Journal.
Holding relevant business interests is a normal prospect for Department of Transportation officials entering their station. However, as the Journal notes, past DOT heads have handled their portfolios with a little more transparency than Chao:
“I basically sold everything,” Mr. LaHood said. “The ethics police told me to do it, so I did it.”
Jeffrey Rosen, who was Ms. Chao’s top deputy before becoming deputy attorney general, sold stakes in 16 companies upon joining the DOT, including Chevron Corp. , United Technologies Corp. and Home Depot Inc., according to ethics filings.
Federal Railroad Administrator Ronald Batory canceled stock awards from Consolidated Rail Corp., his previous employer, and sold his shares in Norfolk Southern Corp. and Union Pacific Corp. upon his confirmation to the job.
Chao’s Vulcan problem might be a concern in an administration more focused on ethical concerns. According to the watchdog group Citizens for Responsibility and Ethics in Washington, President Trump has engaged in over 1,400 conflicts of interest in his first two years in office, ranging from a dozen foreign governments making payments at Trump properties to the $5 million that PACs, campaigns, and party committees have spent at Trump businesses since the inauguration.