Grainger Starts Meetings With Government Over Allegations

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April 14, 2008

Grainger Starts Meetings With Government Over Allegations

Chicago, IL-based facilities maintenance distributor Grainger has started meeting with the U.S. Department of Justice to discuss alleged contract and Trade Agreement non-compliance claims.

Grainger is accused of overcharging the U.S. government as well as illegally relabeling products manufactured in non-trade agreement countries so they could be sold to the U.S. government, a violation of the Trade Agreements Act.

In a press release, Grainger said "the timing and outcome of this matter are uncertain and could include a settlement or civil litigation, and while this matter is not expected to have a material adverse effect on Grainger's financial position, an unfavorable resolution could result in material payments by Grainger." Grainger said the contract with the General Services Administration represented less than 2% of Grainger's total sales in 2007.

Grainger says it believes it has complied with its GSA contract.

The complaint against Grainger was initially filed by Brian M. Holbrook, a former district sales manager of government sales at Grainger, in 2006. He worked for Grainger starting in December of 2004.

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