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Pilot Flying J 'Puts on More Steam' in Wake of Scandal

"It was the second worst day of my life," says founder and chairman Jim Haslam

KNOXVILLE, Tenn.-- Founder and chairman James A. Haslam II has provided some insights into Pilot Flying J's trials and its efforts to come back from the diesel fuel rebate scandal that has rocked the company and drawn the attention of the industry.

The Knoxville, Tenn.-based company has been under investigation and more than two-dozen lawsuits have been filed since April 15, when agents of the FBI and the IRS raided its headquarters and seized documents, emails and computer files related to the alleged scheme to cheat trucking-company customers out of rebates due to them for purchasing diesel fuel at the chain's more than 650 truckstops.

In a Q&A posted on the company's recently launched Rebate Education website, the senior Haslam talked about the history of the business, the family's reaction to the scandal and the company's strategy to come back from it:

Q: Why did you decide to start a business, rather than take a position with someone else?

A: When I first got out of the army, I worked for two years for a man named Sam Claiborne in LaFollette, Tenn., who had a chain of gas stations. I soon figured out that being in business for myself would be the best use of my talents, and I was fortunate enough to find a filling station in Gate City, Va., that we were able to purchase for $6,000.

Plus--I've always wanted to be the boss.

Q: How does it feel to have built a business like this with your two sons and then see one of your sons running it and the other as governor of Tennessee?

A: Very blessed. Very humble. We're very proud of everyone in our family. Jimmy has done a remarkable job in the time he has been the CEO of Pilot Flying J. Since 1995, he has built our company into the largest travel center operation in the country. He's done a great job. And of course, we are very proud of Bill, as he was mayor of Knoxville and now governor of Tennessee. I'm prejudiced, but I think he's doing a great job.

Q: Where were you on April 15, and how did you find out that the FBI searched Pilot Flying J headquarters?

A: I was riding a bike in Hilton Head, S.C., and I got a phone call from my assistant, who wasn't in the office at the time either. We heard something was going on, but couldn't get details. I called Jimmy and he didn't answer his phone, so I called Mitch Steenrod. Mitch was in Washington and knew very little but told me what was happening. I talked to Jimmy later that night and learned the details of the day.

Q: What was your first thought?

A: My thoughts were: what happened, why did it happen and how do we get the company back together? It was the second worst day of my life. When Jimmy, Bill and Ann's mother died that was obviously the worst day of my life, but this was a very difficult day for me as well.

The more I learned about the events that took place on April 15, my first concern was about the company. I wondered if anybody was going to show up for work the next day. The proudest I have ever been of Pilot Flying J is how our team members reacted on April 16 and every day thereafter. It would have been easy for us to put our heads down, but none of us did that. The company is doing better than it's ever done.

I also immediately started going out to the stores and meeting with all the Pilot Flying J team members. People were concerned, but the morale was very high and everybody was dedicated to doing his or her job. And that's what everyone has done since April 15. So that's the proudest I've ever been of this company.

Q: This is very much a family business. How has it impacted you and your family?

A: It's obviously been a terrible event for our company and our family. There's no sense in trying to deny it in any way. It's been tough, very tough. It's an elephant that's always in the room. But I think everybody in our family, and certainly Jimmy as the CEO is dedicated to making this right.

I've spent my life building this company with a pristine reputation of people doing the right thing, supporting our community, being a good corporate citizen, taking care of our customers and our team members, and I'm going to spend the rest of my life rebuilding that reputation.

Q: How do you plan to rebuild the business' reputation?

A: We will continue to do the right thing and treat our customers and team members in the right way. Obviously this was a case where a few people weren't doing the right thing. I think the steps we have taken are dramatic in making sure we do the right thing. We are in the process of paying everybody back and putting all contracts in writing. We have strengthened the sales team, and we're going to make certain the Pilot Flying J Value System is practiced throughout the company.

We are going to make sure that every customer is treated in the right way. We will not dodge the fact that there was an issue. Some of our team members did not perform in the manner in which we have expected them to perform. We are putting processes and procedures in place to help prevent this from happening again. We have a very strong code of conduct, programs, and procedures in this company that, when followed, ensure the right kind of ethics and compliance exists throughout the company.

If a team member sees something happening that shouldn't be happening, he or she should not only feel free to tell his or her supervisor, our compliance committee, our legal team or our anonymous reporting hotline, but feel an obligation to bring it to light.

Q: How are you handling it today?

A: It's been tough. It's something you really can't believe. You wonder if this is a bad dream. Why is this happening to Pilot Flying J? Why is this happening to Jim Haslam? But it happened. It's a fact. And now we are all dedicated to rebuilding the reputation of this company. It's a challenge. But our company and our family have never backed down from a challenge, and this is the greatest challenge we have ever faced. I'm confident that we will respond to this challenge, and I'm very, very confident that 1, 2, 3, 5 years from now or 10 years from now this will be a much better company for having to go through something like this.

Tough times bring out the best in people and these are certainly tough times and I am confident that our people and the leadership of the company and the leadership of our family will respond.

Q: You were somewhat retired when all of this happened. How has this changed your life?

A: I immediately went back to work. We met in small groups of 15 to 20 of everyone here at the corporate office. I took 10 days and visited stores in 10 different states, visiting a total of 50 stores. I will start doing this again in the fall and will exert all my energy towards restoring our customers' and team members' faith in this wonderful company.

Q: Before all of this happened, you, your family, and Pilot Flying J were known as much, if not more, for your contributions to the community as you were for the business. How will all of this impact that?

A: I know the people in the Knoxville community are concerned about this, but they have no reason to be concerned. We will be more active rather than less active in the community as a company, as individuals. We will encourage all Pilot Flying J team members to be more active in the community. We will continue to give our time, talents and resources to this community. We will continue to sponsor the many events that we have in the past, and we will continue as a company, as individual family members, and as the Haslam Family Foundation to respond to the many worthwhile causes in this area.

Q: What words of advice do you have for Pilot Flying J team members?

A: Do your best every day. If you are taking care of the customer, make sure your service exceeds the customers' expectations in every respect. If you are at the corporate office, make sure whatever your job is, you are doing it in an exceptional manner.

Q: At the end of the day, what should be learned from all of this and how should it be applied?

A: We like to use sports analogies here at Pilot Flying J. At the University of Tennessee, I was fortunate enough to be coached in football by the Hall of Fame Football Coach General Robert R. Neyland. General Neyland had seven game maxims, which he put on the blackboard before each game. The third one said, "If the game or a break goes against you, don't slow down or get rattled … put on more steam." This is exactly what we should do and what we are doing at Pilot Flying J.

Pilot Flying J is the largest operator of travel centers and travel plazas in North America. Its network provides customers with access to more than 60,000 parking spaces for trucks, more than 4,400 showers and more than 4,000 diesel lanes. Pilot Logistics Services is one of the largest independent energy logistics companies in North America, selling and distributing more than 1.3 billion gallons of refined petroleum products and serving more than 15,000 customers. Together, Pilot Flying J and Pilot Logistics Services generate sales of approximately nine billion gallons of petroleum annually.

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