VOL. 128 | NO. 132 | Tuesday, July 9, 2013
Gov. Haslam Struggles to Meet Pilot Recusal Pledge
ERIK SCHELZIG | Associated Press
NASHVILLE (AP) – Tennessee Gov. Bill Haslam has struggled almost from the start of his administration to fulfill a campaign pledge to avoid handling matters relating to Pilot Flying J, the family-owned truck stop chain run by his brother, Cleveland Browns owner Jimmy Haslam.
Now, an FBI investigation of alleged fraud by the sales staff at the nation's largest diesel retailer has brought increased scrutiny of the company and raised more questions about links between the governor and Pilot. They include:
– A top political adviser to the governor who also is orchestrating Pilot's public response to the Justice Department investigation.
– A current board member and part-owner of Pilot being appointed by the governor as the interim president of University of Memphis.
– Another board member running the parent company of a mining firm that wants to extract coal from public land in Tennessee.
Haslam's connections to Pilot were a central theme in the 2010 Republican primary and general election. Opponents attacked Haslam for refusing to disclose his personal ownership stake in the company, hammered the company for price gouging settlements after gas shortages caused by a hurricane, and derided the candidate as a billionaire oil man who would do the bidding of his father, Pilot founder Jim Haslam, and brother, Jimmy, the company's CEO, if elected.
The Haslam campaign rebutted those attacks largely by citing Pilot's "history of operating with integrity" and by criticizing "smears about a home-grown successful company." Those blanket dismissals will be harder to make in the future as the company grapples with fallout from the raid by federal agents and subsequent guilty pleas of five Pilot employees.
Haslam's chief campaign strategist was Tom Ingram, who has remained a paid adviser since the election while orchestrating Pilot's public response to the FBI raid.
Ingram, who also lobbies state government on behalf of other private clients such as the mining company seeking to extract coal from public lands, has said he doesn't lobby the governor directly. He shrugged off a reporter's question about whether he will stop his outside activities on behalf of Pilot once he's brought on to Haslam's re-election campaign payroll this summer.
"Of course not," he said. "Why would I?"
The governor also declared himself unconcerned about Ingram's other roles, including his position with Pilot.
"That's just how life works a lot of time," Haslam said recently. "Look, there's a whole lot of lobbyists who represent a whole lot of different people."
Dick Williams, who chairs Common Cause Tennessee, said the governor's deep connections to the business world – and his refusal to make full disclosures – raise questions about his impartiality.
"He just has so many relationships, business agreements and investments that it causes a serious potential for a conflict of interest," Williams said. "It's just hard to untangle that."
As he persevered in a tough GOP primary and trounced his Democratic opponent in the 2010 general election, Haslam promised that he wouldn't participate directly in government matters relating to Pilot. That pledge faced an early test in the governor's first year in office over a decision to request a federal waiver on gasoline standards after an explosion at the Valero refinery in Memphis, which was Pilot's largest fuel supplier in the area.
Haslam acknowledged that he had spoken to his brother about earlier problems at the refinery but said he had delegated that decision to his deputy, Claude Ramsey.
"Obviously as governor I can't just totally abdicate my responsibilities," he said at the time. "But because I knew that somebody like you someday would ask a question, I said, 'Find out the right answer, talk to the local folks as well as our (Department of Environment and Conservation) people and come up with the right answer.'"
The state ultimately requested and was later granted permission by the U.S. Environmental Protection Agency to relax fuel standards.
A month later, Haslam endorsed his brother's right to speak out in a letter to the governor and other state officials against privatizing state-run rest stops along interstate highways.
"He's the CEO of a major Tennessee business that has their interests to defend," Haslam said. "And that's nothing new: Pilot's been talking about that, as has everybody else that has an interstate business – from McDonald's to everybody – else for years."
Jimmy Haslam has been doing furious damage control since the April 15 raid on company headquarters and the subsequent release of an FBI affidavit with transcripts of secretly recorded conversations among the sales staff. Federal agents say the conversations outline a scheme to defraud trucking companies of fuel rebates. Five members of the sales staff have pleaded guilty to mail fraud and are cooperating with prosecutors, as are two further current and former Pilot staffers.
The governor has maintained that he has had no active role in Pilot since leaving the company to run for Knoxville mayor in 2003. But his family continues to own a majority share in the privately held company with annual revenues of $31 billion, and Haslam has kept his personal share outside of a blind trust established for his other investments.
Haslam earlier this year named businessman Brad Martin – who once hired him as an executive at Saks Inc. in New York – as interim president of the University of Memphis. While Pilot has refused to publicly disclose the makeup of its board, it identified Martin as a director when it announced he would supervise the internal investigation into the FBI allegations. Incorporation papers filed in Kentucky also indicate that Martin is a co-owner in the company.
The Kentucky filings also show that Mike Loya, president and CEO of the Vitol Group's North and South American operations, is another board member. Vitol owns the company seeking coal mining permits in the Catoosa Wildlife Management Area near Crossville. Haslam adviser Ingram is also a lobbyist for the coal company.
Haslam has said he doesn't know Loya personally, and that he has had no part in the negotiations.
State Democratic Party spokesman Brandon Puttbrese said the multiple Pilot connections should cause Haslam to reconsider his refusal to disclose his income.
"The governor should quit hiding his income and come clean with taxpayers about how much money he's personally making from his endless inside dealing and show how much money he's been paid by his company Pilot Oil, which padded its corporate profits by stealing from small business owners," he said.
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