NYT Confirms Schweizer ‘Secret Empires’ Bombshell on Elaine Chao and Mitch McConnell’s China Ties

Chao “abruptly canceled” her trip to China “after the ethics question was referred to officials in the State and Transportation Departments,” the Times reports.

Chao’s father, James Chao, is the owner of Foremost Group, a shipping company that has done substantial business with the state-owned China State Shipbuilding Corporation (CSSC) and has received loan guarantees worth hundreds of millions of dollars from China’s state-owned bank.

The Times reports:

The company’s primary business — delivering China’s iron ore and coal — is intertwined with industries caught up in a trade war with the United States. That dispute stems in part from the White House’s complaints that China is flooding the world with subsidized steel, undermining American producers.

Foremost, though a relatively small company in its sector, is responsible 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 as well as global commodity companies that guarantee it steady revenues.

Chao and her husband have directly benefited from the Chao family business. As Schweizer recounts in Secret Empires, Chao’s father—and Mitch McConnell’s father-in-law—gave the Washington power couple a “gift” (that is the term used on McConnell’s financial disclosure forms to report this transaction) of between $5 to $25 million in 2008. According to the New York Post, the “gift” had a major impact on the couple’s net worth: “In 2004, current Senate Majority Leader Mitch McConnell and his wife, current U.S. Transportation Secretary Elaine Chao, had an average net worth of $3.1 million. Ten years later, that number had increased to somewhere between $9.2 million and $36.5 million.”

Schweizer’s research also details how the Chao family’s fortunes have risen in conjunction with Elaine Chao and Mitch McConnell’s political clout. Beginning in 2007, “just as the U.S. Senate was taking up sensitive legislation concerning China,” Schweizer reports that the Chinese government’s CSSC Holdings, Ltd.—the financial arm of the Chinese government’s military contractor CSSC—named James Chao to its board. CSSC Holdings also added Elaine Chao’s sister Angela Chao to its board as well. The Times notes that these board memberships are “a rarity for foreigners.”

“The fact that both the father-in-law and sister-in-law of Senator McConnell sat on the board of CSSC Holdings is highly unusual, to say the least,” writes Schweizer. “One could say it is unprecedented in American political history. In general, CSSC is a sensitive, critical asset of the Chinese government and operates under a veil of privacy and secrecy.”

Indeed, as the New York Post confirmed, “The main goal of the CSSC is to strengthen the Chinese military.”

Since Elaine Chao’s appointment as Trump’s Transportation secretary, the CSSC made a deal with the Chao family’s Foremost Group to purchase 10 ships, which effectively increased the family’s fleet by nearly 50 percent. Also, Angela Chao was appointed to the board of the state-owned Bank of China just 10 days after Trump was elected. As the Timesnotes, the Bank of China is “a top lender” to the Chao family’s shipping company. Angela Chao also sits on the board of the Council of China’s Foreign Trade, which is “a promotional group created by the Chinese government.”

The Times reports that “as [Chao’s] political stature has grown — she has served in the cabinet twice and has been married to Mr. McConnell for 26 years — Beijing has sought to flatter her family. A government-owned publisher recently printed authorized biographies of her parents, releasing them at ceremonies attended by high-ranking members of the Communist Party. On a visit last year to Beijing, Ms. Chao was presented with hand-drawn portraits of her parents from her counterpart in the transportation ministry.”

Indeed, Chao has come under criticism for allowing her family to use her office to telegraph their proximity to power. In April 2018, Politico reported that Chao appeared in at least a dozen Chinese media interviews with her father, which included foreign interviews that featured the Department of Transportation (DOT) symbol and her father’s book. The videos uncovered by Politico showed James Chao on camera with his Transportation Secretary daughter signaling “guanxi”—the Chinese concept of personal power attained by relationships.

According to Politico, “One interview with New China Press published on April 12, 2017, features the pair sitting in what appears to be the Department of Transportation, with DOT flags in view behind the interviewer. Long portions of the interview are in Chinese, with James Chao talking about his life story, with a copy of his biography on the screen, and Elaine Chao extolling her father’s success story as ‘lifting the status of Asian-Americans in America.’”

Experts say Chinese business is all about projecting hierarchical power relationships or “guanxi” to telegraph and leverage connections and status. Diane Wei Liang, bestselling author and expert on Chinese culture, business, and politics, told Politico: “Doing business in China requires a lot of connections. Political connections are normally considered as real advantages for business people. Any business that can demonstrate these kinds of connections sends a very positive message as to how successful the business is and how effective it would be to work with them.”

In the Chaos’ interview with New China Press, Elaine Chao’s shipping magnate father spoke about traveling aboard Air Force One, talking “business” with President Trump, and being “very, very lucky” to have a special pin (which he wore on his jacket) signifying that he was a guest of the president.

As New York magazine noted, “in many of the videos James Chao brags about his daughter’s government work and contacts. In one video he describes talking with Trump on Air Force One. ‘The president spent several minutes with me,’ he said. ‘We were talking about business.’”

According to the Times’ review of Chao’s official calendar, she had at least 21 interviews or meetings with Chinese-language news media during her first year as Trump’s transportation secretary. During one televised interview, a prominent Chinese reporter called Chao “a bridge” between the Trump administration and China.

Anti-corruption expert Kathleen Clark from Washington University in St. Louis told the Times that the Chao family’s financial ties to the government of a country designated a strategic rival “raises a question about whether those familial and financial ties affect Chao when she exercises judgment or gives advice on foreign and national security policy matters that involve China.”

Indeed, the Times also details Chao’s troubling neglect of the U.S. shipping industry as Trump’s transportation secretary, at a time when the U.S. domestic maritime industry is “in steep decline and overshadowed by its Chinese competitors,” which would include Chao’s own family shipping company.

The Times reports that even during her years out of government, spanning the time between her work in the Bush administration and her appointment as Trump’s transportation secretary, Chao “extended her connections in China.” In 2009, she was appointed to “an advisory group in Wuhan, where the steel maker with the Foremost charter is based. Such appointments are largely ceremonial, but they can be sought after for the access they sometimes provide to local leaders.”

Chao also received an honorary professorship from Fudan University in 2009, and an honorary doctorate from Jiao Tong University in 2010. The Times notes that Chao failed to mention her connections to China during her Senate confirmation hearing after Trump appointed her to his cabinet.

Chao “did not discuss her family’s extensive ties to the Chinese maritime industry,” the Times reports, nor did Chao “disclose the various Chinese accolades she had received” even though the “Senate’s written questionnaire requires nominees to list all honorary positions.”

A Transportation Department spokesman told the Times Chao’s omission “was an oversight.”

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All of this comes at a time when the Trump administration is confronting the growing threat posed by China and, in the words of the Times, hoping to reverse “decades of accommodation [that] has reinforced the country’s authoritarian rule and undermined the interests of the United States.”

The Times article acknowledges Schweizer’s contribution to the research on Chao, noting that Secret Empires “suggested the Chaos gave Beijing undue influence.”

Story cited here.

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