On August 24, in United States v. Hoskins, the U.S. Court of Appeals for the Second Circuit, in an interlocutory appeal, affirmed in part and reversed in part the dismissal of part of one count in a multi-count indictment that charged a foreign national with Foreign Corrupt Practices Act (FCPA) offenses relating to alleged bribery of Indonesian officials.
Lawrence Hoskins, a former senior vice president for the Asia region for the French power and transportation company Alstom, was a defendant in multiple indictments in the District of Connecticut in the same FCPA case. Hoskins was charged with conspiracy to violate the FCPA and to launder money, as well as substantive FCPA and money laundering violations. During the relevant time period (2002-2009), according to the Second Circuit, Hoskins “was employed by Alstom’s UK subsidiary, but was assigned to work with another subsidiary called Alstom Resources Management, which is in France.” (P. 6)
The Department of Justice asserted that Hoskins, while working from France for Alstom Resources Management, was one of the people responsible for approving the selection of, and authorizing payments to, certain consultants, knowing that a portion of the payments to the consultants was intended for Indonesian officials in exchange for their influence and assistance in awarding a $118 million power contract for an Alstom subsidiary, Alstom Power Inc. and its associates. But the Department also conceded on appeal that while Hoskins repeatedly e-mailed and called U.S.-based coconspirators regarding the scheme while they were in the United States, he did not travel to the United States while the alleged bribery scheme was ongoing. (See pp. 6-7.)
Prior to trial, the U.S. District Court for the District of Connecticut concluded that Congress did not intend to impose accomplice liability on non-resident foreign nationals who were not subject to direct liability under one of the FCPA’s provisions. It therefore dismissed Count One of the indictment to the extent that that count (1) sought to charge Hoskins with conspiring to violate Section 78dd-2 of the FCPA without demonstrating that Hoskins fell into one of the FCPA’s enumerated categories, and (2) alleged that Hoskins conspired to violate Section 78dd-3, which prohibits acts “while in the territory of the United States,” because Hoskins had never entered the United States during the relevant period. The District Court also denied Hoskins’s motion in part, because the indictment charged him with conspiring to violate the FCPA, or aiding and abetting a violation, as an agent of an American company, which is a category covered by Section 78dd-2 of the FCPA.
The principal opinion, by Judge Rosemary Pooler, framed the central question of the appeal as follows:
whether Hoskins, a foreign national who never set foot in the United States or worked for an American company during the alleged scheme, may be held liable, under a conspiracy or complicity theory, for violating FCPA provisions targeting American persons and companies and their agents, officers, directors, employees, and shareholders, and persons physically present within the United States. In other words, can a person be guilty as an accomplice or a co-conspirator for an FCPA crime that he or she is incapable of committing as a principal? (P. 18)
The Court determined “that the FCPA defines precisely the categories of persons who may be charged for violating its provisions [and] . . . stated clearly the extent of its extraterritorial application.”(P. 2) It “agree[d] with the district court that the FCPA’s carefully-drawn limitations do not comport with the government’s use of the complicity or conspiracy statutes in this case,” and affirmed the District Court’s ruling “barring the government from bringing the charge in question.” (P. 5) It also reversed the District Court’s holding on the second object of the conspiracy, “because the government’s intention to prove that Hoskins was an agent of a domestic concern places him squarely within the terms of the statute and takes that provision outside our analysis on the other counts.” (Id.)
Note: Headlines in some recent legal commentaries on Hoskins have characterized the decision in absolute terms (e.g., as an outright rejection of the Department’ interpretation of the FCPA, or as a dismissal of the entire conspiracy count). Lawyers and compliance professionals, however, should read Hoskins with some care to discern what the Second Circuit panel said and did not say. Perusal of Hoskins will show that the Justice Department’s capacity to charge foreign-based individuals in FCPA cases is largely intact:
- Agent/Conspiracy Theory of Culpability: The panel opinion clearly stated that the question before the Court was “whether conspiracy and complicity charges can be used to extend liability beyond the categories delineated in the[FCPA],” and that the Court “assume[d] that Hoskins is not an agent of Alstom U.S. only for the sake of arguments advanced on appeal and express[es] no views on the scope of agency under the FCPA.” (P. 4, n.1) Its denial of the District Court’s holding on the second object of the conspiracy clearly allows the Department to pursue its agency theory at trial. Moreover, in his concurring opinion, Judge Gerard Lynch wrote:
[T]he FCPA explicitly contemplates the prosecution of at least some foreign nationals who operate entirely abroad, in that it penalizes foreign nationals who act as the agents of American companies in paying bribes abroad. Thus, for example, if Alstom U.S. had channeled its bribes to Indonesian officials through Indonesian citizens who were low‐level Alstom employees in Indonesia, the FCPA would appear to penalize those employees. Indeed, our decision today leaves intact the possibility that Hoskins himself may be convicted under this indictment for violating the FCPA, if the government establishes that he functioned as the agent of the American company, rather than as one who directed the actions of the American company in the interests of its French parent company. (Pp. 15-16)
Judge Lynch went on to state that that seemed to him “a perverse result, and one that is unlikely to have been specifically anticipated or intended by Congress” (p. 16). Nonetheless, his prior statement above concerning the scope of the FCPA indicates that, depending on the underlying facts in future FCPA cases, the Justice Department could plausibly pursue an agency theory of criminal culpability for FCPA conspiracy – as it can continue to do in the Hoskins trial — without running afoul of the main strands of Hoskins.
2. Causation Theory of Culpability: The panel opinion addressed Hoskins’s conduct in relation only to the principal general federal offenses for conspiracy and complicity, 18 U.S.C. §§371 and 2(a) (aiding and abetting) (see pp. 18-19). Neither the indictment nor the opinions in Hoskins addressed a third option for charging a foreign-based defendant: i.e., combining a substantive FCPA count with 18 U.S.C. §2(b). Subsection 2(b) provides that anyone “[w]hoever willfully causes an act to be done which if directly performed by him or another would be an offense against the United States, is punishable as a principal.” Though a form of accomplice liability rather than conspiratorial liability, subsection 2(b) can be used against criminal activity in which, as one analysis put it, the defendant “work[s] through either witting or unwitting intermediaries, through the guilty or the innocent.”