China is certainly not the only foreign government that has made American politicians wealthy, either directly or indirectly. Given the size of their economy and the wealth of commercial ties between U.S. business and China, however, they do it bigger and more broadly than anyone else. (Image source: iStock)
Mitch McConnell and his wife, Elaine Chao, have operated for decades at the highest levels of American government. As the Senate Republican leader, Sen. Mitch McConnell of Kentucky has long been a part of the power elite. His wife has been a member of the cabinets of two Republican presidents: secretary of labor in the George W. Bush administration and, most recently, as transportation secretary under President Donald Trump.
In the past dozen years, McConnell's and Chao's wealth has grown dramatically. In 2004, the couple was worth an average of $3.1 million, according to their required financial disclosures. Ten years later, they had a net worth of between $9.2 million and $36.5 million. The key to that growth was a 2008 gift from Chao's father, James, who immigrated from China to continue his education in 1958, then brought his wife and three young daughters, including Elaine, to join him in 1961.
The Chao family's fortune comes from their ownership of the Foremost Group, a shipping firm founded in 1964 and still run by her father and her youngest sister, Christine. "Shipping is our family tradition," Elaine Chao said in a speech at National Taiwan Ocean University in 2016.
The source of this money is China. The Foremost Group operates bulk shipping vessels built in China and which primarily operate under the watchful eye of the Chinese Communist Party (CCP), and through contracts with it. The Chaos operate through agreements with the CCP and their business depends on these agreements to thrive.
The book Secret Empires, published in 2018, devoted an entire chapter to the McConnell/Chao family and their personal wealth through these connections. Yet, most of the press attention the book received was focused on the Chinese business dealings of Hunter Biden that happened while his father Joe served as Vice President and as President Barack Obama's "point man" on foreign policy with China. In a recent television appearance, Maria Bartiromo of Fox News asked some of the first questions I have ever gotten about the McConnell-Chao financial connections with China.
Recently, the Inspector General of the transportation department released a report commissioned by Democrats on the House Transportation Committee that investigated aspects of Chao's leadership. The report found there was no evidence she had used her position unethically to advance her family's shipping interests in China, or to intervene on behalf of Kentucky interests as secretary of the department. But this approach looks at the problem backwards. It is not that Chao misused her position to benefit her family's interests, but that the Chinese government has such powerful control over the personal financial interests of a senior senator and a cabinet secretary.
Rep. Peter DeFazio, (D-OR) and chairman of the House transportation committee, reacted to the report by saying public officials "must know that they serve the public and not their family's private commercial interests." He is correct only when there is evidence of corruption by a public official. But in this case, the real corruption threat is posed by the communist government of China, not the actions of the public officials whose fortunes they have so much control over.
When Hunter Biden was making deals in China and Ukraine while his father was Vice President, he had nothing to offer besides selling influence. At least in the case of Elaine Chao, her family's business is real and legitimate, and was well established long before she got into public life.
Yet the question remains: What leverage does this give China over policy choices and decisions made in the U.S? None of the information about the Chinese government connections to the Foremost Group have been hidden away -- it is available to any reporter who peruses the required personal financial disclosure forms that Senators and cabinet officers must file every year. What is puzzling to me is why so few people were interested before.
China is certainly not the only foreign government that has made American politicians wealthy, either directly or indirectly. Given the size of their economy and the wealth of commercial ties between U.S. business and China, however, they do it bigger and more broadly than anyone else. This beneficence, I believe, poses potentially serious questions about China's influence, China's access to American policy makers, and China's activities in the halls of power. Further, it shows the toothlessness of American ethics watchdogs that these issues have not been more thoroughly reviewed and challenged previously.
The financial relationship between the McConnell-Chao family and the Chinese government has since only deepened. In 2017, as Elaine Chao joined the Trump administration, the Chinese government signed several new agreements with the Chao family. The Foremost Group signed contracts with a subsidiary of the state-owned China State Shipbuilding Corporation (CSSC) to build four bulk cargo ships in July and September 2017. In December 2017, Chao's company signed another contract with state-owned CSSC at Foremost's New York office for another two massive 210,000-ton ships. The signing ceremony included her father and two of Elaine's sisters, as well as the Consul General of China and representatives from the CSSC.
The terms of this deal were not disclosed, but similar CSSC deals with other companies have recently cost about $47 million per vessel, which would place the total value of the deals Foremost has with the Chinese at nearly half a billion dollars. Under current disclosure laws, which do not apply to adult relatives, neither then-Secretary Chao nor Senator McConnell was required to report her family's dealings with a major foreign military contractor.
James Chao also visited China in 2017 to promote his Chinese language memoir. The event was sponsored by Xinhua, a Chinese state-owned media outlet, and the Chinese People's Association for Friendship with Foreign Countries (CPAFFC), a branch of the CCP known to be active in foreign influence operations. Sponsors praised James Chao as a great promoter of China abroad, referring to him as "vanguard of China-US exchanges."
These closer Chinese financial ties benefitting one of America's most powerful political families happened during an aggressive push by Beijing for infrastructure deals around the globe. These deals are part of the strategic "One Belt, One Road" (OBOR) initiative, a massive plan to expand China's influence across Asia and Africa. US analysts view OBOR as both an economic and military challenge to the United States, using the pretext of commercial port facilities to extend the reach of the Chinese Navy. One detailed study called it a "state-sponsored effort to bolster Chinese political influence and extend its military reach from Indonesia to East Africa."
The Chao family, though, describes One Belt, One Road in much more benign terms. In a March 2017 statement, Angela Chao, Elaine's sister and chairman and CEO of Foremost Group, said:
"The 'One Belt, One Road' initiative is very important not only to China's development, but for the many surrounding and neighboring countries, and thus the world, and the impact is being felt already. I hope to also be able to contribute to this important initiative that has the potential to raise the standard of living for so many."
Clearly, the connections run much deeper with the McConnell/Chao family than the usual type of influence schemes we see by foreign actors on American politicians. They are built on family money that depends on good commercial relations between the U.S. and China. Yet this is precisely the reason we have disclosure laws in the first place -- to surface exactly the kinds of conflict-of-interest vulnerabilities that such an international family will have when they are in authority in U.S. politics.
America is finally recognizing the many threats posed by the Chinese government. Compromising our elected officials joins the stealing of intellectual property, commission of cyberwarfare against American companies and government systems, and the undermining of American institutions in their nefarious arsenal. All of these seek to weaken U.S. resolve in international affairs. They must not succeed.
Peter Schweizer, President of the Governmental Accountability Institute, is a Gatestone Institute Distinguished Senior Fellow and author of the best-selling books Profiles in Corruption, Secret Empires and Clinton Cash, among others.