United States: The Implications Of The Second Circuit's Ruling In Hoskins

Last Updated: September 10 2018
Article by Jodi L. Avergun and Joseph V. Moreno

Most Read Contributor in United States, August 2018

The US Court of Appeals for the Second Circuit handed the Department of Justice a rare defeat on 24 August by holding that prosecutors could not assert conspiracy or aiding and abetting liability to effectively circumvent the jurisdictional language of the Foreign Corrupt Practices Act.

In United States v Hoskins, the Second Circuit grappled with whether a foreign national who could not be charged as a principal for violating the FCPA could be guilty as a co-conspirator or an accomplice – a strategy the DOJ has pursued in past cases and asserted in its published guidance. In reviewing the language of the FCPA as well as its legislative history, the Second Circuit affirmed the decision of the district court and found that the DOJ's overly broad jurisdictional argument was beyond what the US Congress intended for the statute.

While the Second Circuit nonetheless permitted the case to proceed on an agency theory of liability, the ruling may prompt defendants that are not clearly subject to the FCPA, such as unaffiliated third parties operating outside the United States, to push back against aggressive prosecutions that for decades have largely gone unlitigated and therefore unchecked by the courts.

The DOJ's case against Hoskins

Lawrence Hoskins, a British national, lived in France while working for a UK subsidiary of Alstom SA, a French multinational that provides power and transportation services.

According to the DOJ, between 2002 and 2009, individuals associated with Alstom and its US subsidiary, Alstom Power Inc (Alstom US) retained and paid two consultants to bribe government officials in Indonesia to help secure a $118 million energy contract.

In its indictment of Hoskins on bribery and money laundering charges, the DOJ asserted that he was one of several individuals within Alstom responsible for approving the selection of, and the payments to, the two consultants and knew that a portion were intended as bribes.

At least some of the funds used to make the bribe payments were from US bank accounts, and several executives of Alstom US held meetings within the United States to discuss the scheme. According to the DOJ, while Hoskins never travelled to the United States during the relevant period he did communicate with US-based colleagues regarding the scheme via telephone and email.

The DOJ charged Hoskins under two provisions of the FCPA. First, the DOJ charged Hoskins with conspiracy to violate the FCPA both as an agent of Alstom US, and independently as a foreign person who aided and abetted violations of the FCPA by Alstom US and its employees. This theory implicated both the provision of the FCPA applicable to US domestic concerns and that which applies to foreign persons who further a corrupt scheme while present in the United States. Second, the DOJ charged Hoskins with substantive violations of the FCPA as an agent of a US company, and by aiding and abetting that company.

The district court dismissed portions of the indictment to the extent they charged Hoskins with conspiring to violate the FCPA. The court found that prosecutors could not charge a party with conspiracy to violate a statute that it could not directly violate. Both parties appealed the decision.

To view the full article please click here.

First published on the Global Investigations Review website, August 2018

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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