Haslam ‘Absolutely Not Aware’ of Fleet Fuel Rebate Scheme

This story appears in the May 20 print edition of Transport Topics.

INDIANAPOLIS — Pilot Flying J CEO Jimmy Haslam said he was “absolutely not aware” of any alleged scheme by employees to underpay customers of a fuel rebate program that is now the subject of a federal criminal investigation.

Haslam said he had no knowledge of the situation until FBI agents raided the company’s headquarters in Knoxville, Tenn., on April 15.

“It looks like — and we’re approximately three weeks into our investigation — approximately 250 of those manual rebate companies had some type of adjustment,” Haslam, head of the nation’s largest travel-center operator, said here May 16 at a legal conference that included more than 375 trucking executives.

This marked the first time Haslam has addressed the industry directly about the investigation, though he has contacted individual clients about reimbursements.

He said the company currently has contracts with roughly 5,000 customers. Of that total, about 400 received manual rebates.

The company is ending the manual rebate program and is fully investigating any wrongdoing, said Haslam, adding that not all of the adjustments were necessarily fraudulent.

Haslam said he was in “a state of shock” after hearing of the investigation.

“I would say that was absolutely the lowest moment by far of my personal business career,” he said at the annual meeting of Scopelitis, Garvin, Light, Hanson & Feary PC, a law firm serving the transportation industry,

“Clearly, if you read the affidavit it looked like we never did the right thing,” he said. “It was humbling. It was embarrassing. We don’t talk that way. We don’t act that way. We don’t treat anybody that way and particularly customers.”

The affidavit claims some Pilot employees considered some customers “too unsophisticated to catch that their agreed-upon discount deal with Pilot was being changed to benefit Pilot without the knowledge of those customers.”

Haslam said Pilot is working with the companies owed money and will pay back any shortchanges, with interest.

“Our first goal is to find out what we owe certain trucking companies, get them paid back, and get them paid back quickly,” Haslam said, adding that the process could take up to four months.

Haslam answered 19 questions submitted in advance by those attending the conference. The questions, read by American Trucking Associations President Bill Graves, were vetted by Haslam and company attorneys before the meeting, said Scopelitis President Gregory Feary.

“We realize that rebuilding our reputation is going to take time,” Haslam said. “We realize we’re going to have to do that one customer at a time over a period of time. We’re going to do everything we can to right any wrongs to regain the reputation the company had prior to April 15.”

Haslam said that Pilot, which has 500 truck stops in the United States and Canada, every week extends $500 million in credit to trucking companies, and the company’s liquidity was never in jeopardy.

Since the investigation became public, the company’s business is off about 1.5%, and some oil companies have also shortened their payment timelines, he said.

“So far — knock on wood — the banks and oil companies have been great to work with,” he said.

Graves said after the meeting that he believes Haslam scored “positive points” for facing trucking executives and answering questions.

“But I think, as you can tell, there is a general opinion that a lot of information still hasn’t come out,” Graves said.

“There’s a long road ahead of us. There’s obviously also a criminal element to this story that we won’t know about for quite some time. But there’s still anger, there’s disappointment — a whole range of emotions that people have with Pilot Flying J and Jimmy,” Graves added.

David Henry, chief financial officer of PGT Trucking Inc., which is based in Pittsburgh, also gave Haslam credit for making the appearance. PGT, which operates 900 trucks, is a Pilot customer.

“They’ve always done right by us,” Henry said. “We have no issues. It’s certainly an unfortunate situation.”

Haslam was invited to the conference by the law firm, which has so far advised its clients not to file civil actions against Pilot.

However, a half-dozen companies have filed lawsuits against Pilot, and former FBI Director Louis Freeh’s firm has been hired to represent the plaintiffs.

Feary said his firm has received as many as 60 calls from trucking companies that are considering filing lawsuits.

In an interview after the meeting, Feary noted Haslam’s candor.

“So far, what we’ve seen is a signal that Pilot Flying J is going to do the right thing,” Feary said.