Haslam faces trucking execs; denies knowledge of fraud

12:02 AM, May 17, 2013   |    comments
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Video: Web extra: Jimmy Haslam addresses trust issues at trucking seminar

Video: Noon update: Pilot Flying J CEO answers trucker questions

Jimmy Haslam answers question about the federal investigation into Pilot rebate fraud to moderator Bill Graves at a seminar in Indianapolis.

(WBIR-Indianapolis, 6 PM) Jimmy Haslam came face-to-face with hundreds of trucking executives from across the country at a trucking seminar in Indiana on Thursday.

The Pilot Flying J C.E.O. took on some tough questions about the federal investigation into rebate fraud at his company, that accuses some of the company's sales people of ripping off trucking companies.

Hundreds of trucking executives from across the country rolled into the Hoosier state for a legal seminar hosted every couple of years by a law firm in Indianapolis. The seminar got rolling early Thursday morning with a couple of rooms loaded to hear directly from Haslam.

Moderator Bill Graves, president and CEO of American Trucking Associations and former governor of Kansas, kicked things off by directly asking about Haslam's knowledge of the rebate scheme.

"Alright Jimmy, I think the first question is the toughest one. There are several suggestions in the federal affidavit that you personally were aware of the scheme to underpay rebates. Were you aware and did you participate in any way?"

"Yeah, absolutely not. Let me say that again. Absolutely not," answered Haslam.

Haslam spent about 45 minutes answering questions submitted ahead of time from customers across the country.

The president of the Scopelitis Law firm that hosted the event and represents about 5,000 trucking companies says it has no plans to file a lawsuit if can be paid money they are owed out-of-court.

"We don't feel it's necessary to get in the middle of a circumstance that may resolve itself. We're not reluctant to file a lawsuit if that's required, but at this point we're in a wait-and-see mode," said Greg Feary.

Haslam said Pilot wants to pay customers what they are owed with interest.  As of now the company believes the rebate scheme potentially short-changed around 250 companies.

While Haslam says he did not know about any of this alleged scheme until after the FBI raid, he still had to answer how this could happen on his watch.

"I take responsibility as the guy at the top of the shop," he said.

"There was a strong feeling in the industry that Pilot Flying J had great integrity and was a company that could be trusted.  And so that's all been shattered," said Graves during an interview after the moderated question and answer session.

A lot of the questions Haslam answered on Thursday came from trucking companies that do not think they were ripped off by Pilot and have no plans to sue.   However, they do worry that the situation can impact their businesses and the entire trucking industry.  Specifically, those companies asked questions regarding Pilot's ability to remain in good financial standing with banks so that the fuel company can continue to offer substantial lines of credit to truckers.  Furthermore, the truckers want to make sure Pilot can afford to maintain large reserves of diesel in storage for emergencies that impact access to fuel such as hurricanes.

"To have this company have its legs taken out from under it has some serious repercussions all across the country. So we care about it being right but we're certainly not people that want to take the company down," said Graves.

Haslam said some sales people have been placed on leave.  He asked companies to work directly with Pilot instead of suing because Pilot will pay them back with interest.  Dealing directly with Pilot rather than pursuing litigation also means the trucking companies can be reimbursed without providing a portion to lawyers.

"Cutting a check with interest is the easy part. Coming to see you face-to-face, apologizing, and then over a period of time working with you to regain your trust, that's the more difficult part," said Haslam.

Haslam said Pilot is still in good financial shape, and plans to move ahead with expansion plans that will refurbish a lot of its facilities across the country.

 

Previous story (Noon)

(WBIR-Indianapolis, 12 PM) Thursday morning Pilot CEO Jimmy Haslam addressed a large group of trucking executives at a seminar in Indianapolis.

At the beginning of the approximately 47 minute session, Haslam hit on a five point plan to address the problems discovered in the investigation into rebates. This is the same five point plan he hadpresented at an press conference earlier this year.

The CEO said that through an internal investigation, the company discovered that around 250 customers, approximately 5% of total trucking companies served by Pilot Flying J, had received a manual adjustment that was to the benefit of Pilot and to the detriment of the trucking company.

Haslam said in three to four weeks, Pilot will know how much those companies are owed. The plan is to pay them back with interest.

"This is exactly what we owe you," said Haslam. "We are going to write you a check with interest. When that is complete, we are going back and looking at every single one. Even if you are on direct bill or electronic transaction we are going to look at that to make 100% sure there was no opportunity to bill anything wrong."

There were several other things the company was planning in order to gain back the respect of their customers. One is the hiring of a chief compliance officer.

As had been revealed before, Pilot Flying J has put several members of the sales team on administrative leave.

Haslam said through the process of regaining the trust of the trucking industry, he had reconnected with a number of customers.

He also said he was spearheading an effort to create a change of culture at Pilot Flying J.

10News has a crew in Indianapolis. Stay with 10News and wbir.com for more on this story throughout the day.

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