Does the Foreign Corrupt Practices Act of 1977 (“FCPA”) empower the U.S. to prosecute an individual for foreign bribery if the bribes benefit a U.S. firm but the person is a foreign national employed by a foreign entity who does nothing in the furtherance of the crime while in U.S. territory? That was the central question in U.S. v. Hoskins, an appeal recently decided by the Second Circuit (Hoskins II). Cases like this will often turn on whether the individual qualifies as an “agent” of the U.S. firm, which can be a difficult question. The objectives of anti-bribery law would be better served if the statute were amended to focus on other factors.
The Second Circuit’s decision arose from the prosecution of Lawrence Hoskins, a U.K. national employed by the U.K. subsidiary of Alstom S.A., a multinational company headquartered in France, between 2001 and 2004. Hoskins was assigned to work in Alstom’s French subsidiary in a department charged with supporting other units of the organization. His formal responsibilities included oversight of operational units’ selection of third party consultants and approval of key commercial terms of those consultants’ engagements In a 2013 indictment the U.S. government alleged that Hoskins helped employees of other Alstom subsidiaries, including a U.S. subsidiary we can refer to simply as API, engage local consultants to pay bribes to obtain a contract to build a power plant in Indonesia. The indictment included substantive FCPA and money laundering charges as well as related conspiracy charges. The central question was whether the FCPA covered Mr. Hoskins’s activities. The FCPA’s anti-bribery provisions apply to 1) issuers of securities registered in the U.S., 2) “domestic concerns” (basically, U.S. firms, nationals or residents) that are not issuers, 3) people other than issuers or domestic concerns who engage in prohibited activity while in U.S. territory, and 4) officers, directors, employees, agents and, in certain cases, shareholders of the first three types of actors. A foreign individual who does not commit any relevant act in U.S. territory is only covered under the fourth category. However, the U.S. Department of Justice has long taken the position that such individuals can also be prosecuted for conspiring to violate or aiding and abetting a violation of the FCPA. Continue reading →
