On Thursday, August 13, Judge Janet Arterton of the United States District Court for the District of Connecticut ruled that a non-resident foreign national cannot be held criminally liable for conspiracy to violate the Foreign Corrupt Practices Act ("FCPA") unless that non-resident foreign national is an agent of a domestic concern.1 The ruling was issued in the ongoing criminal proceedings against Lawrence Hoskins, a former executive of Alstom S.A., a French holding company, in response to Mr. Hoskins's Motion to Dismiss Count One of the Third Superseding Indictment, as well as to the government's motion in limine to preclude Mr. Hoskins from arguing to the jury that the government must prove Mr. Hoskins was the agent of a domestic concern.2 In this indictment, the government charged Mr. Hoskins with conspiracy to violate the FCPA, directly violating the FCPA as an agent of a domestic concern, conspiracy to commit money laundering, and direct money laundering violations.3
Judge Arterton granted in part Mr. Hoskins' motion to dismiss and denied the government's motion in limine, holding that "[t]he Government may not argue . . . that Defendant could be liable for conspiracy even if he is not proved to [be] an agent of a domestic concern."4 Judge Arterton based her ruling on the long-standing Gebardi principle, which provides that where Congress excludes a class of people from liability under a statute, those individuals may not be made liable for violations of that statute through use of a conspiracy or aiding and abetting theory of liability.5 The three separate anti-bribery provisions of the FCPA prohibit three categories of individuals and entities from engaging in corrupt conduct.6 These categories are:
- "any issuer . . . or for any officer , director, employee, or agent of such issuer or any stockholder thereof acting on behalf of such issuer;"7
- "any domestic concern . . . or for any officer , director, employee, or agent of such domestic concern or any stockholder thereof acting on behalf of such domestic concern;"8
- "any person other than an issuer . . . or a domestic concern . . . , or for any officer, director employee, or agent of such person or any stockholder thereof acting on behalf of such person, while in the territory of the United States."9
A domestic concern includes any individual who is a U.S. national and any organization with its principle place of business or jurisdiction of incorporation in the US.10
Judge Arterton agreed with Mr. Hoskins that, in light of the FCPA's language, Congress had not intended to reach non-resident foreign nationals who did not otherwise meet the above-listed criteria.11 In making this determination, the judge rejected the government's argument that the 1998 amendments—which were made to bring the United States into compliance with its treaty obligations under the OECD Convention on Combatting Bribery of Foreign Public Officials in International Business Transactions— "expanded the jurisdictional reach of the FCPA to cover any person over whom U.S. courts have jurisdiction."12
Instead, the court found that the United States' obligations under that treaty were limited to outlawing bribery "committed in whole or in part in its territory" or "by its own nationals while abroad," and thus declined to find that Congress intended accomplice and conspiracy liability to expand the jurisdictional scope of the FCPA.13
The Hoskins decision is another milestone in what has been a series of recent court rulings limiting the breadth of the FCPA's application. Aside from clarifying the FCPA's jurisdictional parameters, Hoskins is significant because it rejects the DOJ's and the SEC's expansive interpretation of conspiracy and aiding and abetting liability under the FCPA (as set forth in the Resource Guide to the FCPA of 2012),14 and limits the permissible reach of their enforcement actions.
- Although as yet there has been no clear indication that the government plans to appeal Judge Arterton's decision within the 30 day period provided by the procedural rules,15 the government may still choose to do so. For now, however, the Hoksins ruling may force the DOJ and the SEC to rely even more heavily on collaboration with their counterparts abroad to pursue suspected corruption inquiries with respect to non-resident foreign nationals. In addition to curbing the government's ability to prosecute nonresident foreign nationals, the decision is also likely to diminish the authority with which the DOJ and the SEC can continue to rely on conspiracy and accomplice liability theories to encourage such individuals to cooperate with U.S. government investigations.
- Judge Arterton's discussion of the OECD Convention suggests that the FCPA, as amended in 1998, is part of what was intended to be an internationally collaborative approach to combat bribery rather than a mandate for the United States to unilaterally prosecute bribery however and wherever it occurs. Over the last several years, there has been a marked increase in international cooperation and collaboration in the anti-corruption sphere. The recent FIFA case is but one example, and it should be anticipated that these multinational efforts will continue to evolve and even accelerate in the near future.
- In light of these developments, companies must be prepared to face concurrent investigations and prosecutions of their entities and employees in multiple jurisdictions in the event suspicions of wrongdoing arise. Moreover, they should expect that an investigation and, possibly, prosecution of them, and/or one or more of their affiliates, agents, or employees in foreign jurisdictions could well be used by U.S. authorities to build a case against them in the United States.
- Because anti-corruption enforcement increasingly transcends national boundaries, companies should educate themselves about anti-bribery regulations and enforcement regimes of the various jurisdictions where they do business. To that end, companies should seek the expertise of counsel in those jurisdictions not only in the context of conducting investigations, but also for the purposes of developing a compliance program that is cognizant of and responsive to all relevant local anti-corruption laws.
- Corporate compliance and internal audit programs must ensure that all employees, agents and representatives throughout the organization receive thorough and effective anti-corruption training that emphasizes not only the FCPA and U.S. authorities' focus on enforcement, but also stresses the active role of local authorities in anti-bribery and related prosecutions and investigations.
1 Ruling on Defendant's Second Motion to Dismiss the Indictment, United States v. Lawrence Hoskins, No. 3:12cr238 (Aug. 13, 2015).
2 Id. at 1-2.
3 Third Superseding Indictment, United States v. Lawrence Hoskins, No. 3:12cr238 (Apr. 15, 2015).
4 Ruling on Defendant's Second Motion to Dismiss the Indictmentat 20.
5 Id. at 8; see also Gebardi v. United States, 287 U.S. 112 (1932).
6 15 U.S.C. § 78dd-1 through 78dd-3.
7 15 U.S.C. § 78dd-1.
8 15 U.S.C. § 78dd-2.
9 15 U.S.C. § 78dd-3.
10 15 U.S.C. § 78dd-2 (h)(1).
11 Ruling on Defendant's Second Motion to Dismiss the Indictment.
12 Id. at 19.
13 Id. at 19-20.
14 See Dept. of Justice and Sec. & Exch. Comm'n, A Resource Guide to the Foreign Corrupt Practices Act at 34 (November 2012), available at http://www.justice.gov/sites/default/files/criminal-fraud/legacy/2015/01/16/guide.pdf ("Individuals and companies, including foreign nationals and companies, may also be liable for conspiring to violate the FCPA—i.e., for agreeing to commit an FCPA violation—even if they are not, or could not be, independently
charged with a substantive FCPA violation.").
15 F.R.App.P. 4(b).
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