Second Circuit rules that FCPA does not reach foreign individuals without their own ties to U.S.
On August 24, the Second Circuit rejected the government’s argument for a broad interpretation of personal jurisdiction in FCPA cases, ruling in United States v. Hoskins that a non-resident foreign national lacking sufficient ties to a U.S. entity cannot be charged with conspiracy to violate the FCPA or with aiding and abetting an FCPA violation. The three-judge panel upheld the lower court’s finding that Lawrence Hoskins, a British national and former Alstom SA executive, could not be charged with conspiring or aiding and abetting something he could not be directly charged with because he was “not an agent, employee, officer, director or shareholder of an American issuer or domestic concern” within the scope of the FCPA’s jurisdictional provision and had not himself taken actions insider the U.S.
Hoskins was an employee of Alstom’s UK subsidiary and working for a French subsidiary; the government alleged that he was “one of the people responsible for approving the selection of, and authorizing payments to,” consultants used by Alstom’s U.S. subsidiary to bribe Indonesian officials related to a power contract. The government alleged numerous US acts in furtherance of the bribery (including e-mails and calls by Hoskins to the U.S.), although Hoskins himself never traveled to the U.S. during the scheme. Hoskins was one of four executives charged in 2013 in connection with the bribes; the other three executives – all of whom worked for the US-based subsidiary, Alstom Power, Inc. (which entered into a deferred prosecution agreement) – entered guilty pleas. The company pleaded guilty in December 2014 and paid a fine of $772 million.
The charges against Hoskins included an FCPA conspiracy count as well as substantive FCPA bribery violations and related money laundering charges. The District Court granted Hoskins’ motion to dismiss part of the conspiracy count, ruling that if Hoskins was not alleged in that count to be a covered person under the FCPA, then the government could not impose accomplice liability either. Similarly, where the government had not alleged that Hoskins ever traveled to the U.S. during the bribery scheme, then he could not be accused of conspiring to violate the provision proscribing acts by foreign nationals taken within the U.S. The District Court allowed the count to move forward where it separately alleged that Hoskins was also an agent of the US subsidiary, which would bring him within the FCPA’s defined reach.
The Second Circuit agreed with the District Court that if Hoskins was not an agent of Alstom’s U.S. subsidiary (something the court assumed for the purpose of the appeal only), and therefore himself covered under the FCPA, then he could not be charged with conspiracy or complicity liability. The court relied primarily on the idea that Congress enacted an “affirmative legislative policy” in the FCPA that was intended to punish some categories of defendants, taking into account considerations of extraterritoriality, while intentionally omitting others. Secondarily, the court also held that there was no “’clearly expressed congressional intent to’ allow conspiracy and complicity liability to broaden the extraterritorial reach of the statute.” The court summed up its ruling as requiring that the government demonstrate that Hoskins “falls within [a category enumerated in the FCPA] or acted illegally on American soil.”
The court did reverse the District Court’s second ruling that unless Hoskins traveled to the U.S. during the bribery scheme, he could not be charged with conspiring to violate the FCPA provision covering acts by foreign nationals within the U.S. The government had indicated that it still intended, at trial on the other counts, to prove that Hoskins was an agent of the U.S. subsidiary, thereby bringing him back within the categories explicitly covered by the FCPA. (The substantive FCPA counts remaining did allege that Hoskins was acting as an agent).