published Sunday, April 28th, 2013

The Pilot question looms for Bill Haslam


by Chris Carroll
Bill Haslam
Bill Haslam
Photo by Associated Press /Chattanooga Times Free Press.
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Does the Pilot inquiry hurt Gov. Haslam's re-election chances?

WASHINGTON — Gov. Bill Haslam thought he'd come to the nation's capital last week to promote Tennessee's private sector. Instead, he faced a distraction that may complicate what once seemed an easy path to re-election in 2014.

Seated under bright lights at a manufacturing summit hosted by the Washington Post, Haslam answered 12 minutes of easy questions, touting Tennessee's physical location, a qualified workforce and the state's ability to lure companies such as Nissan and Volkswagen.

But a relaxed governor stiffened when Post reporter and summit master of ceremonies Mary Jordan switched gears: "I would be remiss in a news organization to not ask you one thing that's come up in the news. The FBI is investigating fraud allegations against your family's chain of truck stops."

"You have a financial stake in it," the Pulitzer Prize winner continued, "so I just wanted to give you the chance if you want to say anything."

"Oh, well, thanks," Haslam murmured. "I guess."

When the laughter died down, the governor offered a full-throated defense of the family business, but Jordan's question prompted a pained hesitation that may redefine Haslam as political opponents search for chinks in his armor.

"I thought he would have had an immediate response ready for that question," Vanderbilt University political science professor Bruce Oppenheimer said.

The past four Tennessee governors ran for re-election and clinched second terms. But Haslam's victorious predecessors never dealt with the FBI digging into businesses they once ran.

Earlier this month, FBI and Internal Revenue Service agents raided the Knoxville headquarters of the Haslam family's Pilot Flying J, the nation's largest diesel retailer. An affidavit filed last week accuses the company of a top-to-bottom scheme to defraud customers, thicken company profits and inflate sales commissions.

FBI informants have alleged that Pilot CEO and Cleveland Browns owner Jimmy Haslam, the governor's older brother, had knowledge of the scheme.

Despite no arrests thus far, Democrats already are connecting the FBI investigation with an old fight with Haslam. Soon after taking office, the governor rolled back financial disclosure rules for himself and other top officials. That meant he didn't have to disclose his assets, many of which originated with Pilot.

"I thought it was a mistake before the FBI raid. I think it's a double mistake to continue down that path now," Tennessee Democratic Party Chairman Roy Herron said. "I don't think any of us know how severe the conflicts are or how much he's personally profited from what appear to be -- what apparently the FBI thinks -- were wrongful actions."

At this point, Herron's chatter hasn't worried the governor's closest associates.

"The governor really hasn't been active in the company [since he stepped down as president in 2002], so it's a pretty big stretch to tie this one to him too closely," Haslam campaign consultant Tom Ingram said. "Obviously someone can try to make an issue of it. We'll see how it goes and deal with the facts."

CONNECTIONS TO THE GOVERNOR?

Experts and insiders cautioned against drawing conclusions from an FBI investigation in its earliest stages. And when Democrats find a viable candidate to run against Haslam, several said, a statewide campaign would have to transcend a scandal involving the governor's brother.

"I'm sure it will enter into the campaign," Oppenheimer said, "but the Democrats have to have a candidate who knows how to take advantage of this."

Ask the man himself, and you'll encounter someone who appears unworried by way of distancing himself.

In an interview after the Washington Post event, Haslam emphasized the ongoing nature of the investigation, saying he has "no doubt that the top management of the company always intends to do the right thing."

"No night sweats," he said. "At the end of the day, I'm going to run a re-election campaign based on what I've done as governor."

Like Ingram, Haslam stressed that it's been more than a decade since he played a direct role in the company.

"It's been so long since I've worked there that a whole lot of the folks that are mentioned [in the affidavit] are people I don't even know," he said.

The governor made that statement six hours before The Tennessean newspaper published a story that implied otherwise. The newspaper identified 10 Pilot executives in the FBI affidavit who gave a total of $56,000 to Haslam in campaign contributions.

The group included John Freeman, a man authorities identified as one of the sales executives who allegedly ran a scheme to cheat trucking companies out of millions in rebates. Freeman and his wife have given $12,000 to Haslam since 2009, campaign finance records show.

In response to the Tennessean report, a Haslam spokesman stressed the governor's army of contributors and said, "It's natural that a Pilot employee would be one of those."

HOW WILL IT PLAY?

Some Haslam supporters are criticizing the nature of the FBI raid, which included agents entering Pilot headquarters with bulletproof vests, according to the Knoxville News Sentinel.

Chattanooga Tea Party President Mark West said he thought the government's aggressive approach means there's something sinister behind the scenes. Some have speculated pure politics; leading the investigation is Bill Killian, the U.S. attorney in East Tennessee appointed in 2010 by President Barack Obama.

"It's more than likely politically motivated," West said.

Haslam rejected that outright.

"I'm not typically a conspiracy-theorist type of guy," he said, "and I'm not in this either."

Throw away party labels, and everyone agrees on something 18 months from Election Day 2014: The governor's distraction isn't going away anytime soon.

"I'll talk about this more when I've done more homework," Herron said.

Herron must be a speedy student. Hours after he made that statement, the Tennessee Democratic Party posted these tweets to 4,500 followers:

"!! Nine Pilot executives mentioned in the FBI affidavit gave a combined $56k to @BillHaslam's campaign."

"Gov. @BillHaslam, political campaign directly benefited from Pilot Flying J's scheme to cheat truckers, small biz."

Haslam deflected the question when asked about potential political fallout.

"I have a full-time job," he said, "and I'm going to do my job."

Staff writer Andy Sher contributed reporting.

Contact staff writer Chris Carroll at ccarroll@times freepress.com or 423-280-2025.

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