Why it matters: On August 13, 2015, in a blow to the government, a Connecticut district court judge in the case of U.S. v. Hoskins limited the government’s theory of “accomplice liability” under the Foreign Corrupt Practices Act, ruling that if the government can’t prove a non-resident foreign national to be principally liable under the statute, no theory of accomplice or conspiracy liability can be used to bring the defendant within the statute’s reach.
Detailed discussion: On August 13, 2015, District of Connecticut Judge Janet Bond Arterton issued a ruling on two pretrial motions filed by the defendant Lawrence Hoskins (Hoskins) and the government, respectively, in U.S. v. Hoskins. Judge Arterton held that unless the government can prove direct liability for a defendant under the FCPA, it cannot use an accomplice theory to establish FCPA liability. More specifically, the Court ruled that since the defendant was a non-resident foreign national, the government had to first prove that the defendant was principally liable under the statute as an “agent of a domestic concern” or that some act in furtherance of the violation took place within the U.S.
Defendant Hoskins, a U.K. citizen, was charged in 2013 with participating in an alleged bribery scheme involving Indonesian government officials for Connecticut-based Alstom Power Inc. (Alstom Power US), a subsidiary of French company Alstom Resources Management S.A. (Alstom). The alleged purpose of the bribery scheme was to secure a $118 million project to build power stations for Indonesia’s state-owned and -controlled electricity company (Taharan Project). The government alleged that, from October 2001 through August 2004, Hoskins was employed by Alstom’s U.K. subsidiary as a Senior Vice President for the Asia Region and was assigned to Alstom in France, where his responsibilities included “oversight of the hiring of consultants in connection with Alstom’s and Alstom’s subsidiaries’ efforts to obtain contracts with new customers and to retain contracts with existing customers in Asia, including the Taharan Project.”
Much legal wrangling ensued between the government and Hoskins’ defense team. Of relevance to the ruling discussed here, on July 31, 2014, Hoskins filed a motion to dismiss the Second Superseding Indictment against him in its entirety because, among other things, it “failed to allege that Mr. Hoskins, as an employee of a non-U.S. Alstom subsidiary, could have been an ‘agent of a domestic concern’ subject to liability under the FCPA.” (There were no allegations that he had engaged in any conduct within the U.S.) The Court denied that motion, holding that the Second Superseding Indictment alleged that Hoskins worked as an “agent” for Alstom Power US and that the existence of an agency relationship is a “highly factual” one for the jury to determine. The government soon thereafter filed a Third Superseding Indictment against Hoskins that amended Count One—the FCPA conspiracy count (Revised FCPA Conspiracy Count)—to replace the existing language charging Hoskins with “being a domestic concern and an employee and agent of” Alstom Power US with “accomplice liability” language charging that Hoskins “conspired by acting ‘together with’ a domestic concern” so as to violate the relevant provisions of the FCPA.
The subjects of Judge Arterton’s August 13 ruling were both (1) the motion filed by Hoskins asking the Court to dismiss the Revised FCPA Conspiracy Count on the basis that “it charges a legally invalid theory that he could be criminally liable for conspiracy to violate the [FCPA], even if the evidence does not establish that he was subject to criminal liability as a principal, by being an ‘agent’ of a ‘domestic concern’” and (2) the motion in limine filed by the government asking the Court to prevent Hoskins from arguing to the jury that the government must prove Hoskins was acting as the “agent of a domestic concern” because, the government argued, Hoskins could also be convicted under theories of accomplice liability even if direct FCPA liability was not proven. In her ruling on the motions, Judge Arterton granted “in part” Hoskins’ motion so as to “preclude Defendant’s FCPA conspiracy prosecution from being de-linked from proof that he was an agent of a domestic concern,” and she outright denied the government’s in limine motion.
The judge began her analysis by framing the issue as presenting “the question of whether a non-resident foreign national could be subject to criminal liability under the FCPA, even where he is not an agent of a domestic concern and does not commit acts while physically present in the territory of the United States, under a theory of conspiracy or aiding and abetting a violation of the FCPA by a person who is within the statute’s reach.” Judge Arterton concluded that the answer to this question was a flat “no,” ruling that “accomplice liability cannot extend to this Defendant under such circumstances.”
Judge Arterton then reviewed the “three jurisdictional bases” of the FCPA, as well as the potential statutory sources of accomplice liability, the conspiracy statute 18 U.S.C. Section 371 and the aiding and abetting statute, 18 U.S.C. Section 2, all in the context of the U.S. Supreme Court’s 1932 decision in Gebardi v. United States, and concluded that “where Congress chooses to exclude a class of individuals from liability under a statute, ‘the Executive [may not]…override the congressional intent not to prosecute’ that party by charging it with conspiring to violate a statute that it could not directly violate.” Applying the Gebardi principle to the FCPA, the judge found that “[t]he clearest indication of legislative intent is the text and structure of the FCPA, which carefully delineates the classes of people subject to liability and excludes non-resident foreign nationals where they are not agents of a domestic concern or did not take actions in furtherance of a corrupt payment within the territory of the United States.” Although she found the text of the statute to be clear, Judge Arterton also noted that the legislative history only served to confirm her conclusion that “Congress did not intend to impose accomplice liability on non-resident foreign nationals who were not subject to direct liability.”
The judge acknowledged that the Seventh Circuit had come to a “contrary result regarding the same statute” in the 1989 case of United States v. Pino-Perez, which criticized the Second Circuit’s interpretation of theGebardi principle in its approach to reviewing legislative intent because “it ‘could be interpreted to mean that unless a specific intent to punish aiders and abettors appears in the legislative history of a criminal statute, section 2(a) does not apply to that statute; aiding and abetting violations of the statute is not a crime.’” The Seventh Circuit in Pino-Perez instead “applied a ‘more modest version of the approach’ which still looked to legislative intent but resolved ‘[d]oubt about Congress’s intentions…in favor of aider and abettor liability’ and required ‘an affirmative legislative policy to create an exemption from the ordinary rules of accessorial liability.’” Judge Arterton distinguished Pino-Perez, however, stating that “even under the Seventh Circuit’s approach, this Court would reach the same result because its conclusion does not depend on the absence of an explicit discussion in the FCPA’s legislative history of an intent to impose accomplice liability but rather multiple indicators of an affirmative legislative intent to exclude a specific group of non-resident foreign nationals from liability under the FCPA as principals or otherwise.”
The judge did not dismiss the Revised FCPA Conspiracy Count in its entirety, however, because she found that if the government is able to prove at trial that Hoskins was acting as an agent of a domestic concern and thus subject to direct liability under the FCPA, “the Gebardi principle would not preclude his criminal liability for conspiracy to violate the FCPA.” The judge went on to make clear that “[t]he Government may not argue, however, that Defendant could be liable for conspiracy even if he is not proved to [be] an agent of a domestic concern.”
On August 27, 2015, the government filed a motion to reconsider the Court’s order granting, in part, the defendant’s motion to dismiss.