On February 26, 2020, the U.S. District Court for the District of Connecticut partially overturned the jury conviction of Lawrence Hoskins in United States v. Hoskins, acquitting the defendant of all Foreign Corrupt Practices Act (FCPA) counts. In doing so, the court found that the government had failed to demonstrate as a matter of law that Hoskins, a British citizen, had acted as an “agent” of Alstom Power Inc. (“API”), a US-based subsidiary of French multinational corporation Alstom S.A. (“Alstom”), and a “domestic concern” for purposes of FCPA jurisdiction. This ruling is the latest twist in a case that has dealt a series of blows to the DOJ’s expansive assertion of FCPA jurisdiction over foreign defendants. As described below, however, the DOJ still has a number of tools available to prosecute non-US defendants involved in foreign corruption.
Hoskins worked as an executive for the UK subsidiary of Alstom, and was charged in July 2013 with conspiracy, aiding and abetting, and substantive violations of the FCPA for his role in approving the retention of consultants to bribe Indonesian government officials to secure a contract to build a power plant in Indonesia. Significantly, Hoskins was not employed by API, the US subsidiary, nor did he travel to the United States during the relevant period. Several DOJ jurisdictional theories were successively discarded in a series of important rulings in this case:
- First, in 2015, the district court dismissed the FCPA anti-bribery charges against Hoskins that were premised on territorial jurisdiction, stating: “[I]t is undisputed that Mr. Hoskins never entered the territory of the United States and thus could not be prosecuted directly under [15 U.S.C. § 78dd-3].” While consistent with the statute’s plain text, the requirement for a defendant to take a corrupt act while physically present in US territory was a narrower interpretation of § 78dd-3 than the DOJ previously had adopted in various settled corporate FCPA enforcement actions that were based, for example, on causing an agent to take a corrupt act in US territory.
- Second, in 2018, the US Court of Appeals for the Second Circuit affirmed a 2016 decision by the district court holding that the government could not circumvent the FCPA’s jurisdictional provisions by relying on a conspiracy theory. The Second Circuit concluded that “foreign nationals may only violate the statute outside the United States if they are agents, employees, officers, directors, or shareholders of an American issuer or domestic concern.” The DOJ previously had relied on conspiracy and complicity theories to resolve FCPA charges against a number of foreign, non-issuer companies that had not themselves taken acts in furtherance of bribery in US territory. The DOJ was left to argue at trial, however, that Hoskins was directly liable under the FCPA as an agent of a domestic concern, a theory under which Hoskins was found guilty by a jury on November 8, 2019. For additional background concerning Hoskins’ conviction, including the district court’s jury instructions, please see our 2019 FCPA/Anti-Corruption Year in Review.
- Third, on February 26, 2020, the district court partially granted Hoskins’s post-trial Rule 29 motion, concluding that the evidence introduced at trial did not support the jury’s FCPA conviction of Hoskins as an agent of API.
The court’s rationale for dismissing Hoskins’ conviction as an “agent” of API is instructive. Although the government had introduced evidence showing that API “both 1) controlled the hiring of consultants for the Tarahan Project, and 2) gave Mr. Hoskins instructions, which he followed,” it concluded that this evidence was insufficient to prove “Mr. Hoskins acted subject to API’s control such that Mr. Hoskins was an agent of API”. The court emphasized the following two points in reaching this conclusion:
- First, the absence of evidence that API had a right of “interim control over Hoskins’s actions to procure consultants according to API’s specifications” (emphasis in original), and
- Second, that “none of the indicia of control which are typical of an agency relationship” were present in this case, including the “power [for API] to terminate Mr. Hoskins’s authority to participate in the hiring of consultants” or “to assess Mr. Hoskins’s performance.”
Despite this series of setbacks for the government in Hoskins, several factors limit the sweep of these developments on the DOJ’s overall pursuit of non-US defendants involved in foreign corruption matters:
- First, following the Second Circuit’s decision limiting the use of conspiracy in such cases, a district court in the Seventh Circuit expressly declined to follow Hoskins in denying foreign defendants’ motion to dismiss FCPA conspiracy charges in United States v. Firtash, 392 F.Supp.3d 872, 891-92 (N.D. Ill. 2019). Thus, depending on the venue, the DOJ’s conspiracy charges remain viable.
- Second, although the district court in Hoskins determined that the DOJ’s theory of agency could not support Hoskins’ conviction on the particular facts of that case, the DOJ can continue to charge defendants as “agents” of domestic concerns and issuers under the statute. Other courts could well adopt a broader interpretation of agency – a risk that will continue to be in the mix as corporate and individual defendants weigh whether and on what terms to settle FCPA charges.
- Third, despite the court’s decision to acquit Hoskins on the FCPA charges, the court declined to overturn the money laundering charges, finding that a rational jury could conclude based on the evidence that Hoskins knew that corrupt payments would pass through the United States. On March 6, 2020, Hoskins was sentenced to 15 months in prison and fined US$ 30,000 in relation to the money laundering conviction.
In sum, the FCPA still has a very long arm and, with the continuing viability of money laundering and/or conspiracy or complicity charges (at least in some courts), the DOJ still has a number of avenues available to pursue non-US defendants involved in foreign corruption.