When Bill Haslam was elected governor of Tennessee, he quickly signed an executive order eliminating a requirement for the governor and his top aides to disclose how much money they earn. Haslam had been roundly criticized during his campaign for refusing to say how much he made from Pilot Corporation, the parent company of Pilot Flying J, a national truck stop chain with annual revenues of around $29 billion.
Now that the FBI has filed an 120-page affidavit accusing Pilot of defrauding its customers for years, to the tune of millions of dollars, by deliberately under-calculating earned rebates on sales of diesel fuel, a natural questions will be: “What did Tennessee Gov. Bill Haslam know and did he participate in the alleged enormous scam?”
Bill Haslam was the president of Pilot from 1995 to 2002. One would have to believe or strongly suspect that as the president of a multi-billion-dollar company, he would have known about major billing and rebate/discount policies that affected company profitability and its relationships with major clients. During Haslam’s 2010 gubernatorial campaign, his fellow Republicans frequently brought up price-gouging allegations leveled against Pilot in the wake of hurricanes Katrina and Ike. With these new allegations of unethical behavior on the part of Pilot, Tennessee voters may begin to ask if there may be real fires where there is so much smoke.
Federal investigators have not yet disclosed how high into Pilot’s management ranks they believe the purported fraud reached. But the FBI affidavit names senior sales managers, including John Freeman, vice president of sales, and Brian Mosher, director of national sales. The affidavit also says that Mark Hazelwood, the company’s president, was aware of the alleged rebate scam.
Especially eye-opening is the account of how Freeman ended up buying a plane from Western Express (a company based here in Nashville). When Western told Pilot that it had discovered a huge shortfall, Freeman offered to cut Western a check. Instead, according to the FBI affidavit, Western asked Pilot to buy a plane for a million dollars.
“So I bought the (expletive) airplane,” Freeman said, according to the affidavit.
Freeman then implicated Pilot’s highest management, according to page 81 of the affidavit. (CHS stands for “confidential human source.” “Jimmy” is Jimmy Haslam. “Mark” is Mark Hazelwood.)
CHS-2: What does Mark and Jimmy say about (expletive) like that? Do they even catch it or do they know?
FREEMAN: (Expletive). I mean, I called Jimmy and told him I got busted at Western Express.
CHS-2: What’d he say?
FREEMAN: Oh he knew it.
CHS-2: Oh did he?
FREEMAN: Absolutely. I mean, he knew all along that I was cost-plussin’ this guy. He knew it all along. Loved it. We were makin’ $450,000 a month on him.
CHS-2: Holy (expletive)!
FREEMAN: — why wouldn’t he love it?
FREEMAN: Did it for five years, cost us a million bucks. I mean, we made $6 million on the guy, cost us a million bucks.
So it seems likely that Pilot’s high-ranking management not only knew about the scam, but may have endorsed it. With so much money at stake, we can expect Pilot’s clients to review their own records and file lawsuits in attempts to recoup their losses. So we may soon know whether any of the alleged fraud occurred during Bill Haslam’s presidency of the company.