U.S. District Judge James M. Moody approved a $84.9 million settlement in the Pilot Flying J fuel rebate scandal in a Little Rock, Arkansas courtroom Monday.
While fuel spills and spilled milk on aisle three are the sort of spills that worry most convenience store operators, a bean spill has rocked local travel giant Pilot Flying J. Top Pilot sales executives, clandestinely recorded by one of their own working as an FBI informant, were caught on tape spilling the beans about bamboozling customers.
With Pilot's corporate flagship suffering this devastating loss of bean containment, the resulting public relations implosion has battered its reputation.
The leaked illegal business methods involved surreptitiously shorting customers on rebates, a practice termed in the recordings "jacking the discount," "manual rebates," "Manuel" and "(having sexual relations with) the customer."
Tape transcripts were released after a joint FBI-IRS raid on the company's Knoxville headquarters last week, even as Chief Executive Officer Jimmy Haslam III was insisting "Pilot Flying J is run the right way," leaving observers wondering, "If this is right, what's wrong?"
Company officials are scrambling to mitigate damage from the scheme's spilled beans, but public relations experts are calling this explosive dirty-tricks release the worst in convenience center history. Recovery efforts could take decades.
With the FBI withholding some conversation transcripts, Pilot appears to be struggling to assess the totality of shady business leaked on the tapes. However, after examining the record, one beans-spill expert observed, "Those managers spilled their guts into a big can of worms."
Another expert deemed it the worst crude spill she had witnessed. "It was incredibly crude," she said. "I haven't heard such cussing since my Navy days."
Just one example of the coarseness is a description, by Pilot's vice president of sales, John Freeman, of defrauding rebate customers. According to the transcript, Freeman says, "If (customers are) going to (have intimate posterior relations with) you, then we got to go (have intimate posterior relations with them) harder."
Regarding the alleged posterior relations with Pilot rebate customers, Freeman's lawyer, Knoxville attorney John E. Eldridge, said, "I can tell you that John Freeman is interested in getting to the bottom of this and facing this head-on."
PR disaster management authority Blair Ballyhoo, who advised the Tennessee Valley Authority on the Kingston coal ash spill, BP on the Deepwater Horizon oil spill and countless babies on catastrophic spinach puree spills, said that, as part of its image recovery work, Pilot might try to "re-contextualize" Freeman's words.
"They could say, although he used unsavory terms, Freeman was talking about providing exceptional customer service, doing unto others as he would expect them to do unto to him," she explained.
Even if the conversations are "re-contextualized" and legal charges avoided, the PR disaster aftereffects could linger for generations. Because the Haslam name is intertwined with the region, a polluted Pilot reputation could scar Knoxville's community environment, turn the local business climate toxic and even permanently transform the state's political landscape.
As backwash from Pilot's tarred corporate image rippled through the community, questions mounted about Jimmy Haslam III continuing as CEO. Haslam responded that he had no reason to resign because "candidly, I haven't done anything wrong." Grammar analysts pointed out, however, that this statement did not address potential less-than-candid wrongdoing.
Haslam announced a series of steps, including paying restitution to any bilked customers, placing some sales staff on indefinite leave, establishing a compliance office, conducting internal and external investigations and discontinuing the practice of metaphorically having sexual relations with customers.
Can these measures repair the company's reputation and limit the PR devastation from the disastrous beans spill? Ballyhoo wasn't sure, characterizing the actions as "more than a little, but a lot late."
She also suggested that, to guide reputation restoration efforts, prototypes of alternate explanations for the rebate fraud discussions might be tested on focus groups. One possible test pretext could be that Pilot officials were actually rehearsing a new David Mamet play, "Glengarry Glen Pilot." Or Pilot might launch a new customer loyalty program, with deep — guaranteed — discounts offered for exchanging understandable feelings of betrayal for new and improved feelings of loyalty.
It's also rumored a "Pilot Flying J Humility Award" will be established to honor companies with tarnished reputations that then work tirelessly to restore them.
Reputedly, all institutes, foundations, charities, buildings, programs, awards, scholarships and other entities bearing the Haslam name will hold a day of mourning this week for the fallen esteem of their founders.
Tennessee Gov. Bill Haslam, younger brother of the Pilot CEO and an owner of the company, was said to be still
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