Pilot Flying J CEO Reiterates 'Integrity' of Company

KNOXVILLE, Tenn. -- In several statements this week, Pilot Flying J CEO Jimmy Haslam stressed the company's integrity as he explained it is continuing to cooperate with federal authorities in the probe of the company's rebate program.

In the latest update, Haslam held a press conference this afternoon after what he admitted had been a tough week for the company.

"Pilot Flying J is very proud to be part of this community and places a very high value on our friendships, activities and role in this community and don't expect that to ever change. All of you are well aware of what happened here on Monday afternoon, and most of you have read all or part of the two affidavits released Thursday night as part of a federal investigation of Pilot Flying J," he said.

One of those affidavits, a 120-page document, alleges that members of the company's sales force preyed on smaller trucking companies by reducing the amount of rebates they were owed by Pilot Flying J for buying certain amounts of fuel, according to The Associated Press.

"The timing of the release of the affidavits was sooner than we would have expected but otherwise not terribly surprising," Haslam continued. "The affidavits didn't present a very flattering picture of our company, and were not representative of what our company is all about, but taken on the whole, they were consistent with our previous impression of the federal government's investigation."

The chief executive said it still appears the investigation is focused on a very narrow band of a very large company -- questions about how rebates were handled to a very small percentage of its trucking company customers.

"On a personal note, this obviously has been a tough week for the Pilot Flying J family, the toughest in our history," Haslam added. "First of all, I want to say how sorry I am that our team members, our customers, our suppliers, vendors and our friends have to go through this with us. It's been traumatic for some, but it's important to remember that probably 99 percent of our people aren't even in the scope of this inquiry."

In a call with his management team this morning, Haslam said he told them to do three things:

• One, keep morale up and be positive.
• Two, keep everybody focused.
• Three, do their job.

"I want to say again, that from its beginning in 1958, Dad built this company on its integrity, and nothing's changed on my watch. Our first value every day around here is to do the right thing," said Haslam. "It doesn't occur to us to do things any other way, and any conduct otherwise is intolerable. We'll continue to cooperate as appropriate with the federal investigation and continue our own investigation."

In the meantime, it will be business as usual at Pilot Flying J. The company's 23,000-plus employees in its 650-plus locations nationwide will stay focused on doing their jobs -- providing the best products at the best prices with the best services to the best customers in the world, America's drivers, according to Haslam.

"Our relationships with our customers, our suppliers and vendors, our team members and our friends in the communities in which we live and work are very important to us, and I trust and believe their faith in this company and its principles has never been displaced," he concluded.

FBI Affidavit
Haslam's statement came today after officials unsealed a 120-page affidavit explaining the details that led up to Monday afternoon's raid of Pilot Flying J's Knoxville, Tenn., headquarters. The raid was conducted by the FBI and the Internal Revenue Service, as CSNews Online previously reported.

According to the affidavit, the FBI began an investigation into the truck stop operator after receiving a tip from a confidential informant in May 2011 about "fraudulent activity by certain Pilot employees against certain Pilot customers."

FBI Special Agent Robert H. Root explained in the document that the fraud was not executed against all Pilot Flying J employees, but against customers "that certain Pilot employees deemed to be too unsophisticated to catch that their agreed-upon discount deal with Pilot was being changed to benefit Pilot without the knowledge of those customers."

The affidavit also stated that several Pilot Flying J executives knew about the fraud -- including Haslam and Pilot President Mark Hazelwood. Specifically, the confidential informant told the FBI that the rebate scheme was discussed during sales meetings attended by Haslam and Hazelwood, the news agency reported.

In addition, the practice was referred to by several names, including "manual rebates" and "screwing."

Family Business
Pilot Flying J is a family-owned business that was started by Haslam's father in 1958. The company operates more than 650 retail locations and is the largest operator of travel centers and travel plazas in North America.

Haslam is also majority owner of the National Football League's Cleveland Browns franchise. His brother is Tennessee Gov. Bill Haslam, who does not hold a position with Pilot Flying J, but still has an unspecified holding in the company.

Haslam stepped down as CEO of Pilot Flying J in September after purchasing the football team. At the time, his father Jim took the title of founder and chairman emeritus, and the company brought in John Compton, former PepsiCo president, to take the reins as CEO. However, Jimmy Haslam once again took the lead at Pilot Flying J in February and Compton became a strategic advisor to Pilot Flying J, the Browns and the Haslam family.

Compton told the Wall Street Journal on Thursday before the affidavit was unsealed that he did not see anything of concern during his brief stint at Pilot Flying J.

"It's a great company, great people, high integrity," Compton said. "They always try to make the right decisions. I didn't see any red flags."