On April 22, 2013, Pilot Flying J set forth a plan to address the issues raised in the federal investigation. To date, the plan has progressed as follows:
1. Audits of Customer Accounts
Our field audit team completed its initial review of current manual rebate accounts on June 30, notified almost every customer whose account had a discrepancy, and sent those customers checks for the amount of the discrepancy plus interest. We continue to review and update these accounts.
We are now finalizing our audit of all other diesel fuel accounts with any type of direct discount agreement with Pilot Flying J from 2005 to date and expect to complete this process by the end of the year. This also includes a review of Pilot Flying J’s audit process by an independent accounting firm.
Additionally, our customers have the option to have a third-party independent auditor review their records, at no cost to the customer, in addition to our internal auditors’ review.
2. Restoring Customer Confidence
Currently, seven members of our sales team have plead guilty and have either resigned or been terminated. Others have been placed on administrative leave pending the results of the investigation.
We have made tremendous strides rebuilding our team. David Hughes, Steve Vanderink and Mike Hill, all senior members of our team, have been moved to diesel fuel sales and are working with existing members of our diesel sales team to lead our sales department.
In addition, we have kept in contact with our customers regarding our investigation progress and plans of action. We have also now placed almost every customer contract in writing and will continue to do so going forward. These contracts not only include the customer’s negotiated price with Pilot Flying J, but also include detailed definitions regarding the components of our pricing structure. Our goal is to make certain every customer is intricately involved with what their contract says so each party’s expectations of the contract are clearly understood.
3. Elimination of Manual Rebates
We have completed the conversion of all manual rebate customers to electronic calculations. Any customer who has requested to remain as a rebate customer has had their contract confirmed in writing and been placed in an electronic program. This electronic program contains additional policies and procedures to ensure accuracy.
4. Compliance Advisory Committee
We have created an external Compliance Advisory Committee including four seasoned experts: Stan Brand, Bill Morelli, Chris Nicastro and Ron Harris.
Brand, a partner of the Brand Law Group of Washington, DC, served as general counsel to the U. S. House of Representatives under Speaker Thomas P. “Tip” O’Neal Jr. and was the House’s Chief Legal Officer during that time. Morelli, Nicastro and Harris are also very experienced in the compliance field. Morelli serves as Executive Vice President and General Counsel for Ingram Industries, while Nicastro serves as Vice President, General Counsel, Chief Compliance Officer and Secretary of Bridgestone Americas, Inc. Harris is a Partner at Neal & Harwell, PLC.
The committee has met with many of our managers and employees, and is reviewing all of our company policies, procedures and processes, and will make recommendations in an effort to make our company even stronger.
5. Independent Special Investigator
Our board announced on May 1, it had hired Reid Weingarten, one of the nation’s 100 most influential lawyers according to the National Law Journal to complete an independent special investigation.
Mr. Weingarten and his team have a full investigation underway and will make their report directly to the board upon its completion.