W.W. Grainger Inc. (GWW) has agreed to pay a substantial amount to settle a lawsuit that accused the Fortune 500 industrial supply company of improperly over-billing the U.S. government on its supply contracts. The lawsuit was filed in federal court in Milwaukee in 2006 by former Grainger executive Brian Holbrook, a district sales manager of government sales. The suit alleged that Grainger routinely cheated the Federal General Services Administration by charging more than double the specified 26% above cost markup rate agreed upon under the government’s supply contract. In addition, the whistle blower suit claimed that Grainger obtained and re-labeled products made in non-Trade Agreement countries, such as China and Taiwan, and supplied the products to the government. After the federal government joined in the action, the Justice Department announced that Grainger had not fulfilled the disclosure obligations and pricing provisions of the General Services Administration contract. Following discussions with the Justice Department, Grainger reached the settlement agreement.

Holbrook, the former Grainger employee, filed the “whistle blower” suit under the “qui tam” provision of the U.S. False Claims Act, allowing a private citizen to institute a claim for fraud on the government’s behalf and to share in any money received. It is estimated that Holbrook could receive 15%-25% of the settlement proceeds.

For the full story, go to http://www.chicagotribune.com/business/chi-grainger-settles-whistleblower-suit-jul25,0,5572142.story.