Haslam Updates Pilot Reforms In Wake of Rebate Scandal

Sep 30, 2013

Pilot CEO Jimmy Haslam, in an April file photo.
Credit Christine Jessel, WUOT News

The trucking companies who say Pilot Flying J cheated them out of rebate money have been paid back. The rebate system under which the fraud took place is being dismantled. And the sales staff whose actions caught the attention of federal investigators is being rebuilt. Those are a few of things pilot CEO Jimmy Haslam said have changed in the five-and-a-half months since FBI and IRS investigators raided company headquarters.

In a briefing for reporters Monday, Haslam outlined the changes the company promised in the wake of the raid and subsequent fraud scandal. He said the truck stop chain has been following a five-point plan that was announced on April 22, a week after the raid.

Haslam said an audit team examined Pilot rebate records going back to 2004, and wrote checks to many of the commercial customers who were shorted, plus interest. The remainder of the audit, Haslam told reporters, will be finished soon.

He also said the manual rebate system that became the center of the federal probe is being phased out. All but 20 of Pliot's commercial customers have been transferred to a new automatic system for calculating and distributing rebates. The remaining customers will be on the new system by November 1.

The company has also assembled a "compliance team," a group tasked with making sure the rebate fraud doesn't happen again. The team will report to Pilot's general counsel, Haslam said.

Pilot's troubles began in April, when federal agents raided the company's West Knoxville headquarters. Within days, the investigators revealed why they were there: several Pilot staff members alleged the company was engaging in a long-running scheme to skim money from fuel rebates promised to trucking companies. Estimates surged into the millions of dollars as more of Pilot's customers checked their own ledgers and found rebate discrepancies.

Seven members of the sales staff, including some senior officials, have pleaded guilty in connection with the fraud scheme. Others have been placed on administrative leave or fired from the company. It's unclear how much Jimmy Haslam knew about the practice, or if he knew at all. Haslam declined to take questions from reporters at Monday's statement, citing the ongoing federal investigation.