On March 16, the U.S. District Court for the District of Connecticut affirmed its earlier ruling that a non-resident foreign national cannot be charged with conspiracy to violate the Foreign Corrupt Practices Act or with aiding and abetting a violation of the FCPA, unless the government can show that he acted as an agent of a “domestic concern” or while physically present in the United States.
The ruling in U.S. v. Hoskins may have a significant impact on the scope of FCPA prosecutions, and alter the investigation dynamic by limiting the number of potential defendants and cooperators.
In light of these developments, it is not surprising that the DOJ has filed a notice of appeal seeking to overturn the court’s decision.
Lawrence Hoskins, a British national and former Alstom U.K. executive based in Paris, was indicted on FCPA and money-laundering charges in connection with a bribery scheme to secure a $118 million project to build power stations for Indonesia’s state-owned and state-controlled electricity company.
In his capacity as Senior Vice President for the Asia region in Alstom’s International Network, Hoskins is alleged to have approved selection of and authorized payments to “consultants” retained for the purpose of paying bribes to Indonesian officials.
In August 2015, Judge Arterton dismissed one count of the indictment against Hoskins, holding that Hoskins could not be held criminally liable for conspiring to violate or aiding and abetting a violation of the FCPA. In the March 16 ruling, Judge Arterton rejected the government’s request that the court reconsider its earlier decision.
Under the FCPA, the court held, there are only three jurisdictional bases:
(i) where a “domestic concern” or U.S. “issuer” of securities, or any officer, director, employee, or agent thereof makes use of U.S. interstate commerce in furtherance of a corrupt payment;
(ii) where a U.S. citizen, national, or resident acts outside the United States in furtherance of a corrupt payment; and
(iii) where any other person, while in the territory of the United States, acts in furtherance of a corrupt payment.
A domestic concern includes any individual who is a U.S. national and any organization with its principal place of business or jurisdiction of incorporation in the United States.
Since Hoskins was never a U.S. citizen, national or resident, and is not accused of having acted in furtherance of the bribery scheme while in the United States, the court concluded he could only be charged as an agent of a domestic concern.
The DOJ had argued that Hoskins could be charged with conspiring with, and aiding and abetting, a domestic concern — here, Alstom’s U.S. subsidiary — to violate the FCPA. DOJ asserted this was possible, even if Hoskins did not act as the subsidiary’s agent and therefore could not be charged with a substantive violation of the FCPA.
Theories of accomplice liability under the conspiracy statute and aiding and abetting statute generally apply across the United States Code to impose liability upon those who conspire with or aid and abet in the commission of any federal crime. This is true even if the defendant cannot be held liable for the underlying substantive offense. See United States v. LaSpina, 299 F.3d 165, 177-78 (2d Cir. 2002).
The government has on numerous occasions invoked accomplice theories of liability to prosecute foreign defendants that did not act within the United States. For instance, even though they took no action in the United States, Japanese and European companies (Marubeni, JGC, and Snamprogetti) were charged in 2012 with conspiring with and aiding and abetting a domestic concern’s FCPA violations.
The DOJ’s argument in Hoskins was also consistent with the Resource Guide to the Foreign Corrupt Practice Act (available here in pdf), which reflects the government’s view of the law. That guidance contended that a foreign national who had never acted in the United States “could still be subject to jurisdiction under a traditional application of conspiracy law . . . .”
In rejecting the government’s position, the court relied on the U.S. Supreme Court’s decision in Gebardi v. United States, 287 U.S. 112 (1932), which established that where Congress excludes a class of individuals from liability under a criminal statute, the government may not rely on accomplice theories of liability to prosecute those same individuals. Relying heavily on the FCPA’s legislative history, the court held that Congress had clearly set out the circumstances in which a foreign national could be convicted under the FCPA and the government could not circumvent those limitations by charging Hoskins as an accomplice or co-conspirator.
The Hoskins decision represents a potential set back in the government’s efforts to prosecute individuals under the FCPA following the issuance of the Yates memo in 2015. The government may still prosecute foreign nationals as agents of domestic concerns — and in fact the government did indict Hoskins on that basis in addition to the conspiracy and accomplice charges. But the option to charge individuals as co-conspirators or accomplices provides the government with a powerful tool, and the possible lack of that charging theory in FCPA and related cases should be carefully considered by those facing a federal investigation.
Further, the court appears to have expanded the scope of the principle announced in Gebardi, and potentially shields from prosecution any foreign executive who conspires with a U.S. company to bribe foreign officials, so long as that executive is not an agent of that company and does not engage in unlawful conduct within the United States. The fact that the DOJ asked the District Court to reconsider its earlier ruling, and has now appealed the decision to the Second Circuit, indicates the importance of this issue to the government’s broader enforcement efforts.
In addition, Hoskins still faces money laundering charges that remain unaffected by the Court’s ruling. The DOJ has increasingly used the Money Laundering Control Act (MLCA) to complement the FCPA in prosecuting international bribery cases.The MLCA allows the government to reach areas outside the strict confines of the FCPA, enabling the government to pursue multiple avenues for a conviction relying largely on the same set of facts. In light of the Hoskins ruling, it is likely that this trend will continue.
Ryan Rohlfsen, pictured above, is a partner in Ropes & Gray’s government enforcement practice and previously served as a Senior Trial Attorney at the U.S. Department of Justice’s Criminal Division, Fraud Section. He can be contacted here.
Joshua Asher is an associate in Ropes & Gray’s government enforcement practice. He can be contacted here.
Excellent posting, Ryan and Joshua. This is a very interesting development that will be watched very carefully by those of us working with companies outside the US, and I for one appreciate the effort you put into it.
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