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KNOXVILLE, Tenn. – Nearly six months since the federal raid on its local headquarters, Pilot Flying J has taken steps to emerge from the challenges as "an improved company," CEO Jimmy Haslam said today.
"I am incredibly proud of our 24,000-plus team members who absorbed the shock of the news of our current circumstances, immediately picked themselves up and went right back to work doing their jobs. Despite the accusations swirling around in the weeks after April 15, our team members came to work every day with their heads held high and, through their actions, showed that Pilot Flying J is a company that they believe in," Haslam said during a media update this morning.
Since April 15, the company has done its best to investigate the allegations made against some members of its diesel fuel sales team “to identify any wrongdoing, and to assure our customers that we will not tolerate that kind of behavior anywhere in our company and we will make right 100 percent any errors we discover," he continued.
One week after the raid, Haslam detailed the steps Pilot Flying J would take to address the issues raised in the federal investigation into allegations of fraud in the company's fuel rebate program. To date, the company has checked off several of those steps, he reported today.
Pilot Flying J's field audit team completed a review of all manual rebate accounts on June 30, notified almost every customer in whose account the company found a discrepancy, and sent those customers checks for the amount of the discrepancy plus interest, Haslam explained.
In addition, the company is now finalizing an audit of all of its other diesel fuel accounts with any type of direct discount agreement from 2005 to date. Pilot Flying J expects to complete this process by the end of the year.
"I cannot be specific, but can generalize that we are finding discrepancies in a relatively small number of our almost 7,000 diesel fuel sales customer accounts audited, and that the amount we've paid to correct those discrepancies represents a very small percentage of our overall diesel fuel sales," Haslam said.
Lawyers for Pilot Flying J have also worked with lawyers for some customers to reach a class-action settlement in July. A judge is expected to rule on final approval in November.
"We will not be satisfied until we have identified every single discrepancy, made every affected customer whole, and regained the confidence of all of our customers," Haslam remarked.
The chief executive also explained that seven members of the company's sales team have pleaded guilty in connection with the fraud allegations and other employees have been placed on administrative leave pending the results of the ongoing investigation.
Pilot Flying J has also taken steps to rebuild its team. For example, David Hughes, Steve Vanderink and Mike Hill have been moved to diesel fuel sales "and are doing outstanding jobs working with existing members of our diesel sales team to set the sales department's new course," he said.
In addition, Pilot Flying J has placed almost every customer contract in writing and will continue to do so going forward. The company almost completed converting all diesel fuel customers to electronic calculation and payment.
Pilot Flying J also created an internal/external compliance advisory committee including four experts: Stan Brand, Bill Morelli, Chris Nicastro and Ron Harris. Brand, a partner of the Brand Law Group of Washington, D.C., served as general counsel to the U.S. House of Representatives under Speaker Thomas P. "Tip" O'Neal Jr. and was the House's chief legal officer during that time. Morelli serves as executive vice president and general counsel for Ingram Industries. Nicastro serves as vice president, general counsel, chief compliance officer and secretary of Bridgestone Americas Inc. Harris is a partner at Neal & Harwell plc.
"The committee, working with our team, is reviewing all of our company policies, procedures and processes and will make recommendations in an effort to improve the procedures and make our company even stronger regarding 'doing the right thing,'" Haslam said.
Finally, Pilot Flying J's special counsel, Reid Weingarten and his team are conducting a full investigation and will compile an independent report upon completion.
"We are taking this negative and turning it into a strength that will stand us in good stead for years to come. We are committed to ensuring this does not ever happen again," Haslam concluded.