The Daily Pulse:

Jimmy Haslam Is Embarrassed, Can't Sleep, and Is Placing His Misbehaving Employees on Leave

Another day, another press conference at Pilot Flying J headquarters. CEO Jimmy Haslam is still standing by his man--I mean, his company--and he still claims he had absolutely no idea anything bad was happening, even as it was making his company a lot of money. 

He may be telling the truth--the affidavit doesn't implicate him as directly as some other Pilot employees--but we can't help but think that a man who has followed in his father's footsteps creating a giant empire of truck stops, a man who is in charge of thousands of employees who cater to the wants and needs of truckers, is honestly surprised that his sales employees say "f--k" a lot. Which is what Haslam said, in his ad-libbed additions to the prepared statement he read (posted below in full*). "We don't talk in that kind of language," Haslam said. 

Before announcing a number of measures to make it look like Pilot's handling the situation--measures that one would think would be very reassuring to customers--Haslam said last week had been the worst in his 36 years in business. He said that when he held the press conference on Friday he had only skimmed the affidavit; after sitting down to read it in depth Friday night, he was horrified and couldn't sleep at all. He said there was "absolutely no excuse for that kind of behavior." Then he announced internal audits, an external investigation, and the placing on administrative leave of "several members" of the sales staff likely involved in the rebate fraud. Which members? How many members? Pilot isn't saying. But if we find out more, we'll let you know.

*Like Friday, Halsam used this statement as kind of a jumping off-point for what he wanted to say, so if you want exact quotes, you'll need to seek out the video here's a link to watch.

Statement from Pilot Flying J CEO Jimmy Haslam

Thanks again for coming out today. 

I want to continue to keep you informed of current events here at Pilot Flying J.

As was the case last week, as much as I would like to, I will not be able to take questions because of the ongoing federal investigation.  I hope I will answer most of your questions in my remarks.

It still appears to us, based on all we know at this time, that this federal investigation is focused on a narrow slice of our business in which rebates on diesel fuel purchases are manually calculated and paid to a relatively small number of our 3,300 trucking company customers.

We are continuing to cooperate appropriately with investigators, but we are determined to understand on our own the questions they are asking and to do everything we can to make sure we are never in this position again.

To that end, I'm announcing today five steps that we taking to address the issues raised by the investigation.  I'm going to take them one by one.

Immediately, we are bringing our field audit team to Knoxville to review all 3,300 contracts with our trucking company customers, not just the relative few implied in the federal affidavit, and to proactively address any miscalculations that we may find.

Our goal is to understand the entirety of that part of our business, not just the manually processed contracts.  If we find an underpayment, we will encourage the affected customer to review our finding, test with their own audit if they like, and if we owe them money, we will write them a check immediately.

We will be communicating this plan directly to our trucking company customers and moving through this process as quickly as possible.  I hope this process won't take more than four to eight weeks, but the important thing is that we get it right.

I've already spoken personally to several of our customers, including Curt Morehouse with Morehouse Trucking and Tommy Hodges with Titan.  We are working with Curt to reconcile his account, and I will be going to Tommy on Wednesday.

Yesterday, we placed on administrative leave several members of our diesel fuel sales team and, on an interim basis, we are restructuring that team pending further investigation to get control of that operation and restore confidence to our customers.

Placing members of our team on leave is very painful.  For years, we have been a trusting, proud family here at Pilot Flying J focused on providing honest, forthright services to our customers.  We have had relatively few personnel issues, but we cannot ignore the content of the federal affidavit released last Thursday evening.

We are not judging the guilt or innocence of the team members placed on administrative leave.  We are addressing actions and words that fail to show proper respect to our customers and that violate the character, values and principles that have been core to this company since it was founded 54 years ago.

As a private company, we have dealt with these members privately and will not release their names publicly. 

I have directed that all of our diesel fuel customers be converted to electronic calculation and payment eliminating future risks of any abuse that might be enabled by manual calculation and payment.

This process will fully eliminate manual processing at Pilot Flying J and place all of our customers on electronic direct bill.  I expect this process to be completed by June 30.

I have asked our outside counsel to help us create and staff a position of Chief Compliance Officer to report to the company's general counsel to deal with any similar questions or issues that might come up in the future.

The establishment of a position of Chief Compliance Officer is important, because had we had one before, perhaps some team member would have raised a question about manual rebates internally before anyone would ever have gone to federal investigators.

If we had discovered any irregularities on our own, we would have fixed them on our own.  That would have been good business, and it would have been the Pilot Flying J way - always do what is right first.

I expect this person to be on the job within 30 days.

Lastly but very important, our board, in a special meeting yesterday, voted to hire an Independent Special Investigator to oversee and validate all of our internal inquiries related to the federal investigation.

Because there is a federal investigation now, we have to take extraordinary steps to do whatever is necessary to repair any damage done to this company's reputation and restore the full integrity on which this company was built.

We will find the best person in America to come into this situation and oversee and make certain that any and all of our own investigations into these matters are thorough and correct and help us ensure that what happened to this company last week never happens again.

I expect this person to be on the job within 30 days.

We know this process is going to be difficult and probably will last for a while, but we are not going to sit by idly in the meantime.  We are going to diligently and aggressively figure out for ourselves what's going on, and if we find anything amiss, we are going to make it straight right away.

In closing, we have received tons of expressions of support from our friends here in Knoxville and Cleveland, our customers, our suppliers and vendors, and I cannot tell you how much that means to our family and our team members at Pilot Flying J.

Last week was very tough, and it's not over, but we are back to business as usual, we are dealing aggressively with this situation, and we all believe we will come out of this adversity stronger than ever as individuals and as a company.

Thank you very much. 

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