After China investigation, Grainger wins DOJ declination
Monday, November 5, 2012 at 6:06AM
Richard L. Cassin in Accounting, China, Declinations, Gift Giving, WW Grainger Inc.

Industrial supplier W.W. Grainger, Inc. said last week the DOJ won't prosecute the company for giving pre-paid gift cards to some customers in China.

Grainger said its internal investigation didn't substantiate 'significant use of gift cards for improper purposes in China.'

'On August 14, 2012,' Grainger said, 'the DOJ closed its inquiry into this matter.'

No word whether the SEC will also decline to bring an enforcement action against Grainger.

Accounting lapses apparently first led to launch of the company's internal investigation. Grainger said it discovered the 'alleged falsification of expense reimbursement forms submitted by employees in certain sales offices of Grainger China LLC.'

The SEC enforces the FCPA's accounting provisions through administrative actions or civil lawsuits in federal court. The DOJ enforces the FCPA's criminal antibribery provisions.

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Here's the full FCPA disclosure from W.W. Grainger, Inc.'s Form 10-Q filed with the SEC on November 1:

As previously reported, the Company has been conducting an inquiry into alleged falsification of expense reimbursement forms submitted by employees in certain sales offices of Grainger China LLC, a subsidiary of the Company. In the course of the investigation the Company learned that sales employees may have provided prepaid gift cards to certain customers. The Company's investigation included determining whether there were any violations of laws, including the U.S. Foreign Corrupt Practices Act. The Company retained outside counsel to assist in its investigation of this matter. On January 24, 2012, the Company contacted the DOJ and the Securities and Exchange Commission to voluntarily disclose that the Company was conducting an internal investigation, and agreed to fully cooperate and update the DOJ and SEC periodically on further developments. The results of the investigation, which have been submitted to the DOJ and the SEC, did not substantiate initial information suggesting significant use of gift cards for improper purposes. On August 14, 2012, the DOJ closed its inquiry into this matter.

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