Grainger Settles Government Case for $6M

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July 28, 2008

Grainger Settles Government Case for $6M

Chicago, IL-based Grainger has agreed to a settlement of $6 million with the U.S. Department of Justice to resolve a Trade Agreements Act and Sourcing complaint, which alleged that Grainger overcharged the government and illegally relabeled products manufactured in non-trade agreement countries so they could be sold to the U.S. government.

The whistleblower case was unsealed in January 2008 in a federal court in Wisconsin. Grainger said it resolved the complaint "to avoid further costly legal fees." The complaint 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.

"We value our reputation with our customers and are committed to operating with the highest level of integrity," said Grainger President and CEO James Ryan. "When the Justice Department indicated its willingness to discuss these matters, we responded quickly."

"The government is an important customer to Grainger, and we have always taken compliance seriously, which is why Grainger has continuously improved its compliance program from the beginning of the contract."

Discussions with the Department of Justice relating to its previously disclosed review of the company's compliance with disclosure obligations under the GSA contract and the contract's pricing provisions are ongoing, according to Grainger.

Grainger said that it believes it has complied with the GSA contract "in all material respects and will provide updates as warranted in its public filings."

W.W. Grainger, Inc., with 2007 sales of $6.4 billion, is a broad line supplier of facilities maintenance products serving businesses and institutions in the U.S., Canada, Mexico and China. It has more than 600 branches, 18 distribution centers and multiple Web sites.

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