August 31, 2018
A recent Second Circuit ruling has placed a significant limitation on the government’s ability to prosecute foreign nationals outside the United States under the Foreign Corrupt Practices Act. In United States v. Hoskins,i issued just a few days ago, the court held that the government cannot use conspiratorial or accomplice liability to extend the extraterritorial reach of the FCPA to foreign nationals acting outside the United States who are not acting on behalf of U.S. persons or companies.
Hoskins involved an alleged scheme by individuals associated with Alstom S.A., a French energy and transportation company, to bribe Indonesian officials to secure a power contract. The government alleged that Alstom’s U.S. subsidiary hired consultants to arrange these bribes, and that Alstom-associated individuals, including Hoskins, selected and authorized payments to the consultants. Hoskins was employed by Alstom’s UK subsidiary, assigned to work in a French subsidiary of Alstom, and did not travel to the United States during the alleged scheme. The government alleged that Hoskins “repeatedly e-mailed and called . . . U.S.-based coconspirators” regarding the scheme “while they were in the United States.”ii
The Hoskins court reasoned that Congress intended to exclude certain foreign nationals from the FCPA’s coverage because the FCPA “contains no provision assigning liability to persons in [Hoskins’s] position—nonresident foreign nationals, acting outside American territory, who lack an agency relationship with a U.S. person, and who are not officers, directors, employees, or stockholders of American companies.”iii The court held that the government could not bypass Congress’s express limitation on jurisdiction by using conspiratorial and aiding and abetting liability to impose FCPA liability on Hoskins.
Hoskins’s holding will limit the government’s ability to reach foreign nationals under the FCPA unless it can demonstrate either that they are acting on behalf of U.S. persons or companies or are themselves acting corruptly within the United States. It remains to be seen, however, how Hoskins will affect the government’s ability to pursue foreign companies under the FCPA. In the past, the government has attempted to use conspiratorial and aiding and abetting liability to hold foreign companies acting outside the United States liable for FCPA violations in the context of joint ventures with other U.S. companies.iv In some of these cases, the government has relied heavily on the use of emails, faxes, and bank transfers to and from the United States, conduct which the Hoskins court implicitly found insufficient to allege jurisdiction under the FCPA against a foreign national acting outside the United States. We will follow how DOJ responds to this ruling and examine its implications for FCPA enforcement in a subsequent review.
*Associate John Haigh assisted with the drafting of this article.
i United States v. Hoskins, No. 16-1010-cr (2nd Cir. Aug. 24, 2018).
iiHoskins, slip op. at 7
iiiId. at 37.
ivSee, e.g., Information at ¶ 22, United States v. JGC Corp., No. 11-cr-260 (S.D. Tex. Apr. 6, 2011).