Airline Executive tells of life in Pensacola FL Prison Camp
Keith Packer, the former commercial general manager for British Airways World Cargo, speaks during an interview in London. Photographer: Chris Ratcliffe/Bloomberg
By Erik Larson - Oct 22, 2010 BusinessWeek
When Keith H. Packer returned to the U.K. last year after eight months in prison in Pensacola, Florida, the ex-British Airways Plc cargo manager found work telling executives how antitrust violations landed him in a concrete cell with a one-eyed drug offender.
Anheuser-Busch InBev NV, Deutsche Post AG’s DHL unit and Randstad Holding NV re among the companies that have asked Packer to describe the circumstances around his 2008 guilty plea to U.S. charges that he colluded with rivals to inflate fuel surcharges paid by thousands of air-freight customers.
“Regulators go after people to make examples of them,” Packer, 48, said in a phone interview from his home in Marlow, England, about 35 miles west of London. “Maybe there’s something useful I can do with my unfortunate experience, to help other executives avoid what happened to me.”
Keith Packer, the former commercial general manager for British Airways World Cargo, poses for a photograph in London. Chris Ratcliffe/Bloomberg
Companies are refining compliance training following global probes that led to prison terms for executives and fines at airlines and makers of vitamins and marine-hoses. The U.K. in 2002 introduced criminal antitrust sentences, while the U.S. has raised the maximum penalty for such crimes to 10 years in jail.
“Packer’s contribution raises awareness in the sense that it gives employees an idea of the potential consequences not only for the company, but also on a personal level,” Marianne Amssoms, a spokeswoman for Leuven, Belgium-based AB Inbev, said in a statement.
Price-Fixing Cartel
Randstad, the world’s second-largest staffing company, used Packer in its training after the company’s subsidiaries were involved in a price-fixing cartel over recruiting for the construction industry. Diemen, Netherlands-based Randstad was a whistleblower in the case and escaped fines from the U.K. Office of Fair Trading.
Marianne Honkoop, a spokeswoman for Randstad, declined to comment, as did Deutsche Post spokeswoman Silje Skogstad. Deutsche Post in February said it had received European Union immunity in a price-fixing probe.
Packer attended competition law training in October 2004 at a British Airways’ auditorium, where he viewed Power-Point presentations and various case studies. He said he had other business-related matters on his mind that day, and the fuel surcharge had already been in place since 2002.
Anthony Cane, a spokesman for London-based British Airways, said the airline “has always had a well established compliance program which included face-to-face training for managers.”
“Mr. Packer attended these sessions, which highlighted the personal risks for individuals who failed to comply with the law,” Cane said in an interview. Packer said he left the company as part of a “compromise agreement.”
‘Boring Subject’
“It’s a very dry, boring subject for commercial people who have much higher priorities,” he said. “Looking back, I’m sure that if someone like me had stood up and brought it to life with a real-life experience, then people like myself and others would have understood it better.”
Four years after the training session, the ex-British Airways manager pleaded guilty to conspiring to “suppress and eliminate competition” by fixing fees on shipments to and from the U.S. between 2002 and 2006, court records show.
Packer’s case was overshadowed by a wider investigation of dozens of air-cargo carriers since 2006, when U.S. and European Union officials started their probe. The investigation expanded to South Korea, Canada and Australia, leading to settlements, fines and plea deals by airlines and other executives.
Pleaded Guilty
Air France-KLM Group, Europe’s biggest airline, in 2008 agreed to plead guilty in the U.S. case and pay a $350-million fine. Last year, a former Martinair executive, Franciscus Johannes de Jong, also pleaded guilty and agreed to serve eight months in prison.
There was never a parallel court case in the U.K., and Packer said he was advised that agreements between the country and the U.S. would make extradition difficult to fight. He also risked facing 10 years behind bars and a $1 million fine if he fought the case and lost.
“Faced with those options, I felt that cooperation was the only realistic option,” Packer said.
The threat of prison “has helped focus the minds of executives on what competition law means for them and why they need to take it seriously,” said Suzanne Rab, a lawyer with Hogan Lovells in London, which features Packer in video-training sessions for clients.
Packer’s talks at companies include details about how he felt after he arrived in Pensacola, hailed a taxi to the prison and turned himself in. He left the U.K. with only the clothes he was wearing, a diary and few books, he said.
‘Away From Home’
“I was pretty angry to be in an American prison, so far away from home,” Packer said. “I remember standing by my bed thinking ‘how did this happen?’ It took me three weeks to adjust to not being in control of my day.”
From January to September 2009, Packer shared a cell with a tattooed inmate with nine years remaining on a 14-year drug sentence. Packer cut grass at a Navy hospital for 84 cents a day as part of a prison-work program and used his free time to read and watch episodes of “24” and “American Idol”.
The minimum-security prison, with its warm weather and jobs for inmates that require time outside, is considered to be one of the ten best prisons in which to do time in the U.S., Packer said. He described the cells as “dormitory style” and said the other inmates were mostly friendly and helpful. His family also took advantage of the facility’s location by frequenting the Walt Disney World Resort during trips to visit him in prison.
Potential Violations
Packer declined to go into detail about the specific events that led to his guilty plea or the questions that are asked of him by executives during training sessions. The discussions often bring to light potential violations such as seemingly innocent phone calls with competitors, he said.
Packer decided to approach companies that had recently been raided or fined by the U.K. Office of Fair Trading, including companies in the construction, recruitment and tobacco industries, he said.
Since then, he has spoken at companies in the U.K., U.S., Belgium and the Netherlands. He has also participated in law- firm training at Hogan Lovells, Eversheds and one of Britain’s biggest law firms, which he wouldn’t name.
British Airways in August 2007 was fined $300 million by a U.S. court after pleading guilty to two criminal counts of conspiracy. The Brussels-based EU, which can fine companies 10 percent of annual sales for antitrust violations, hasn’t yet issued penalties against any carriers in the case.
Four current and former British Airways executives fared better in a separate criminal case against them over alleged price-fixing of fuel-surcharges for passengers. The case by the U.K.’s OFT collapsed only after mistakes by the regulator involving e-mail evidence came to light.
“I was envious that they had a chance to defend themselves,” Packer said. “Under U.K. law, there wouldn’t have been a case against me.”