The recent decision by a federal district court judge in Connecticut to acquit former Alstom employee Lawrence Hoskins, a British citizen accused of violating the Foreign Corruption Practices Act (FCPA), adds a bit of illumination to the relatively slim catalog of FCPA caselaw.
Although a jury had found back in November that Hoskins was guilty of the FCPA charges as well as money laundering and conspiracy charges, how exactly FCPA jurisdiction extended to him—given that Hoskins, of the United Kingdom, worked for French power and transportation company Alstom and was allegedly involved in inappropriate behavior concerning a power plant in Indonesia—was a matter of some disagreement. The federal district court’s decision overturning the FCPA convictions may, at least for a moment, have emboldened critics of alleged federal government overreach.
The determination by Judge Janet Bond Arterton of the District of Connecticut to acquit Hoskins “is certainly a setback for the government,” observed Derek Cohen, a partner in the law firm Goodwin’s white-collar defense group. Nevertheless, the decision, which largely turned on whether Hoskins was an agent of his employer’s American subsidiary, “may not be the end of the story,” he cautioned.
The acquittal comes on the heels of a 2018 decision in a Second Circuit Court of Appeals case that determined “the FCPA clearly dictates that foreign nationals may only violate the statute outside the United States if they are agents, employees, officers, directors, or shareholders of an American issuer [of securities] or domestic concern.” Hoskins, the appeals court acknowledged, never worked for Alstom’s U.S. subsidiary in a direct capacity and did not travel to the United States while the alleged bribery scheme was ongoing.
Who’s an agent now?
The U.S. government has maintained that Hoskins was liable under the FCPA because he was an agent of his company’s American subsidiary. Hoskins, however, argued the federal government failed to prove he was a so-called “agent.”
“The government is likely to appeal and argue that the district court improperly substituted its judgment for that of the jury’s.”
Derek Cohen, Partner, Goodwin
Granting Hoskins’ motion for acquittal on the FCPA charges, Judge Arterton sided with him on the agency issue. The district court “harbors significant doubt” Hoskins “acted as an agent” of his company’s American subsidiary, she wrote. Indeed, a “rational” jury could not determine “beyond a reasonable doubt” Hoskins was an agent for the subsidiary, Arterton explained in her ruling.
Although the American subsidiary gave Hoskins instructions, which he followed, and Hoskins helped in efforts to retain consultants, these acts did not constitute “sufficient evidence” of the subsidiary’s “authority to control Hoskins’s actions,” noted Brendan Quigley, a partner at the law firm Baker Botts.
The district court’s decision “makes clear the difficulties of basing an FCPA prosecution on the idea that a non-U.S. person was an ‘agent’ of a domestic concern or issuer,” Quigley said. Ultimately, it may lead to “fewer prosecutions or investigations centered on non-U.S. persons, at least where very little of the conduct took place in the United States,” he predicted.
Indeed, the federal government is “on notice” that FCPA jurisdiction “is not limitless,” Cohen said. To succeed, the U.S. government “is going to have to prove a connection to the United States—either directly or through an agency—in order to prosecute individuals for FCPA violations,” he explained.
The long-running federal pursuit of Hoskins may not be over. “The government is likely to appeal and argue that the district court improperly substituted its judgment for that of the jury’s,” Cohen predicted. It is worth noting, he maintained, “the jury was instructed on the law of agency and nevertheless found the defendant guilty of FCPA violations based on that theory.” In the meantime, on March 2, the Justice Department filed a sentencing memorandum seeking a sentence of seven to nine years for the money laundering conviction still standing against Hoskins.
The DOJ initially announced charges against Hoskins in 2013, and he was arrested in the U.S. Virgin Islands the following year.
Meanwhile, the federal government continues to pursue individuals associated with Alstom on FCPA and other charges. In February, the DOJ announced the unsealing of FCPA and other charges against two former executives of Alstom and one former executive of Japanese trading company Marubeni Corp. for their alleged involvement in the bribery scheme in Indonesia. Also in February, the case was transferred to Judge Arterton.
Lori Tripoli is a writer based in the greater New York City area who focuses on legal and regulatory issues.