Transportation Sec. Elaine Chao is under fire for retaining shares in a construction materials company after a Tuesday story in The Wall Street Journal with a headline declaring she had “pledged to divest.”
Chao agreed to take a “cash payout” in April 2018 for her shares in road materials giant Vulcan Materials Co. per a January 2017 ethics agreement prior to her confirmation. She was paid in shares now worth roughly $400,000 as deferred compensation for serving on Vulcan’s board prior to her confirmation, reported The WSJ. The DOT’s head ethics official said her ownership of the shares is not a conflict of interest, a DOT spokesperson said.
Chao’s 2017 ethics agreement did not require she divest from Vulcan. A Department of Transportation (DOT) said the agreement is flawed because it did not take into account how Vulcan policy dictates directors receive deferred share units, according to The WSJ.
“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,” a DOT spokesperson told The Daily Caller News Foundation in an email.
“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,” the DOT spokesperson wrote.
Chao’s critics point out that her connection to Vulcan is a contrast from how other top officials have handled their affairs. The WSJ reported:
For instance, former Transportation Secretary Ray LaHood, who served under President Barack Obama, sold stakes in Caterpillar Inc. and Ford Motor Co. upon being confirmed to lead the department.(Article Continues Below Advertisement)Sponsored Content
“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.
Vulcan is the biggest seller of road-paving and building materials including crushed stone, sand and gravel in the U.S. About 50 percent of Vulcan’s shipments are for government-funded projects, although the sales are usually made to contractors, reported The WSJ. Shares have risen more than 10 percent since April 2018, which translated to a gain of roughly $40,000 for Chao, according to corporate and government filings cited by The WSJ.
A Vulcan spokesman told The WSJ that company lawyers cited unfavorable tax laws when they recommended against accelerating distribution of shares to Chao so she could sell them off once confirmed as secretary.
Chao is worth nearly $30 million, according to Business Insider in January. The WSJ’s story comes as President Donald Trump turns his attention to infrastructure after touting it on the campaign trail.
Vulcan did respond to The Daily Caller News Foundation’s request for comment at the time of publication.
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