The tale of Lawrence Hoskins's FCPA woes has finally concluded. On August 12, 2022, the Second Circuit held that his rendering of support services (even if significant) did not constitute an agency relationship absent a showing of control under the common law definition of the word "agent" under the FCPA ("Hoskins II"). Earlier this month, DOJ allowed the deadline to file for en banc review of the Second Circuit's recent decision to pass, ending this litigation that began almost a decade ago. With the passing of this deadline, DOJ has waived its opportunity to challenge, at least in the Second Circuit, a narrow interpretation of agency that may limit the government's ability to charge foreign nationals in the future.
As we have noted many times before, the U.S. government's expansive FCPA theories are tested only rarely in court. The pair of appellate decisions from the Hoskins litigation therefore constitute much needed jurisprudence regarding DOJ's ability to pursue foreign participants in a bribery scheme. Although DOJ's decision not to appeal does not end the debate about the anti-bribery provisions' application to foreign nationals, the Hoskins decisions provide an authoritative interpretation on those provisions' scope. The decisions therefore will need to be considered by both DOJ and those it investigates going forward. Notably, FCPA Unit Chief David Last recently stated publicly that, while he disagreed with the Second Circuit's holding, and DOJ always takes such decisions into account, the FCPA Unit will continue to charge cases where it believes it can prove beyond a reasonable doubt each and every element of a crime.1
With the final chapter in Hoskins's U.S. judicial odyssey completed, we consider below the possible practical effect of the decisions and present key considerations for companies and their counsel, both in responding to FCPA investigations and in designing their FCPA compliance programs going forward.
Looking Back at Hoskins
Hoskins is a UK citizen who worked for the UK subsidiary of Alstom S.A., a French multinational, in the UK subsidiary's Paris office. From 2002 to 2009, Alstom's U.S. subsidiary, Alstom Power, Inc. ("API") and several other individuals, including Hoskins and two local consultants, allegedly took part in a scheme to bribe Indonesian officials who in turn would help API land a $118 million contract to build a power plant in Indonesia.2 According to DOJ, Hoskins was responsible for selecting the two consultants and authorizing payments to those consultants, who then passed the funds along to the Indonesian officials.3
DOJ originally charged Hoskins with both conspiring with API and others to violate the FCPA, and with violating the FCPA directly as an agent of API, a domestic concern. In 2015, the trial court dismissed the conspiracy charge to the extent the government relied upon it to establish FCPA jurisdiction independent of the agency theory. The Second Circuit affirmed in 2018 ("Hoskins I") on the grounds that DOJ could not bring FCPA charges against a foreign national on a theory of complicity or conspirator liability if that foreign national was outside the statutory definition of persons who could be charged with a substantive offense (i.e., issuers, domestic concerns, persons present in the territory of the United States, and "any officer, director, employee, or agent of [the same] or any stockholder thereof acting on behalf [of the same]").4
Unable to proceed under a theory of complicity or conspiracy liability, DOJ relied on the assertion that Hoskins fell within the statute as an "agent" of a domestic concern5 (i.e., API). Although DOJ alleged that Hoskins was very much involved directly in the bribery scheme originating at API, a divided Second Circuit panel applied the common law definition of agency and found that rendering support services (even if significant) did not constitute agency under the FCPA, absent the common law requirement of control. Hoskins was, however, convicted of money laundering, a conviction not disturbed on appeal.
"In the future, absent conspiracy and subject to the common law definition of agency, DOJ may find it challenging to convict foreign non-issuer business partners or employees thereof outside the United States on FCPA charges, even, as was the case with Hoskins, where the partner is a member of the same corporate family."
The Potential Effects of Hoskins on FCPA Investigations
Taken together, Hoskins I and Hoskins II suggest limitations on DOJ's ability to bring charges against certain foreign individuals and non-issuer entities involved in foreign bribery, at least in the Second Circuit (one of DOJ's most used jurisdictions for FCPA cases).6 We address below further considerations arising from the Hoskins decisions for entities, such as issuers and domestic concerns, that would normally cooperate with DOJ investigations.
1. David Last, Chief, FCPA Unit of U.S. DOJ, Morning Keynote Address at International White Collar Crime Symposium 2022 hosted by N.Y. City Bar Association and International Bar Association (Nov. 29, 2022), https://www.nycbar.org/cle-offerings/36497-2.
2. DOJ settled with Alstom and several of its subsidiaries in 2014. In addition to these entities, DOJ brought charges against several individuals allegedly involved in the scheme, all of whom, with the exception of Hoskins, settled. See Plea Agreement, United States v. Frederic Pierucci, Case No. 3:12-cr-238-JBA (filed July 29, 2013), https://www.justice.gov/criminal-fraud/case/united-states-v-frederic-pierucci-court-docket-number-12-cr-238-jba; Plea Agreement, United States v. William Pomponi, Case No. 3:12-cr-238-JBA (filed July 17, 2013), https://www.justice.gov/sites/default/files/criminal-fraud/legacy/2014/07/23/pomponi-plea-agreement.pdf; Plea Agreement, United States v. David Rothschild, Case No. 3:12-cr-00223 (WWE) (filed Nov. 2, 2012), https://www.justice.gov/sites/default/files/criminal-fraud/legacy/2013/04/22/rothschild-guilty-plea.pdf.
3. Third Superseding Indictment ¶ 8, United States v. Hoskins, No. 3:12-cr-238-JBA (D. Conn. Apr. 15, 2015).
4. United States v. Hoskins, 902 F.3d 69 (2d Cir. 2018). See also Kara Brockmeyer, Colby A. Smith, Bruce E. Yannett, et al., "Second Circuit FCPA Application to Some Foreign Participants in Bribery," FCPA Update, Vol. 10, No. 1 (Aug. 2018), https://www.debevoise.com/insights/publications/2018/08/20180830-fcpa-update-august-2018.
5. 15 U.S.C. §78dd-2.
6. See Andrew M. Levine, Winston M. Paes, Philip Rohlik et al., "Revisiting Hoskins: Second Circuit Holds Foreign Non-Issuers not Present in the United States are not Subject to the FCPA Absent Common Law Agency Relationship," FCPA Update, Vol. 14, No. 1 (Aug. 2022) https://www.debevoise.com/insights/publications/2022/08/fcpa-update-august-2022.
For additional insight into the Hoskins case at its various stages, see Kara Brockmeyer, Andrew M. Levine, Andreas A. Glimenakis, and Katherine R. Seifert, "District Courts Address Significant Aspects of Criminal Liability under the FCPA," FCPA Update, Vol. 11, No. 8 (Mar. 2020), https://www.debevoise.com/insights/publications/2020/03/fcpa-update-march-2020; see also Kara Brockmeyer, Andrew J. Ceresney, Andrew M. Levine, et al., "The Year 2019 in Review: A Record-Breaking Year of Anti-Corruption Enforcement," FCPA Update, Vol. 11, No. 6 (Jan. 2020), https://www.debevoise.com/insights/publications/2020/01/fcpa-update-january-2020, at 22.
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