The District Court in Connecticut ruled on Friday that a non-resident foreign national, who is not an agent of a domestic concern or issuer and who does not commit acts while physically present in the U.S., cannot be subject to criminal liability under the Foreign Corrupt Practices Act (FCPA) under a theory of conspiracy or aiding and abetting a violation of the FCPA by a person who is within the statute’s jurisdictional reach. The Court rejected the government’s theory that the defendant, a foreign national, could be convicted as an “accomplice,” even if he was not acting as an agent. This decision contradicts specific “guidance” given by the government in its Resource Guide and therefore represents a significant blow to the government’s quest to extend the FCPA’s reach far beyond the wording of the statute. United States v. Hoskins, Crim. No. 3:12cr238 (JBA) (D. Conn. Aug. 13, 2015).

This case stems from the $772 million FCPA settlement by Alstom S.A., the French power company, in December 2014. Lawrence Hoskins worked for Alstom UK and was assigned to Alstom Resources Management S.A. in France. The government alleges that he performed functions and services for other Alstom subsidiaries, including Alstom Power, Inc., located in the U.S. In that role, the government alleges that Hoskins authorized payments to consultants that were used as bribes to obtain a contract in Indonesia to build power stations for Indonesia’s state-owned and controlled electricity company.

The government charged him with conspiracy to violate the FCPA, along with substantive FCPA violations and money laundering violations. Under the conspiracy count, the government alleged that Hoskins was an agent of the U.S. company, but also asserted that he could be found guilty of the conspiracy even if he was not acting as an agent of the U.S. company. Hoskins moved to dismiss that count, arguing that, as a non-resident foreign national, he could not be charged with conspiring to violate the FCPA because he was not subject to the statute.

The Court analyzed the FCPA and noted that it applied to (i) U.S. domestic concerns and issuers and their agents, (ii) U.S. persons acting outside of the U.S. in furtherance of a violation, and (iii) any person, while in the territory of the U.S., acting in furtherance of a violation. It then applied the principle 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.” (Citing United States v. Castle, 925 F.2d 831, 833 (5th Cir. 1991).

Applying that principle, the Court reviewed the text and structure of the FCPA and agreed with the Castle Court that in the FCPA there is “an affirmative legislative policy to leave unpunished a well-defined group of persons who were necessary parties to the acts constituting a violation of the substantive law” (quoting Castle). In addition, the Court reviewed the legislative history of the original Act as well as the substantive amendments and concluded that “Congress did not intend to impose accomplice liability on non-resident foreign nationals who were not subject to direct liability.” Therefore, the Court ruled that the government must prove that Hoskins was acting as an agent of a U.S. company to convict him of conspiracy to violate the FCPA.

This holding directly contradicts the “guidance” provided by the U.S. in its Resource Guide, published jointly by the Department of Justice and the Securities and Exchange Commission. That guidance states unequivocally:

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.

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A foreign company or individual may be held liable for aiding and abetting an FCPA violation or for conspiring to violate the FCPA, even if the foreign company or individual did not take any act in furtherance of the corrupt payment while in the territory of the United States.

A Resource Guide to the Foreign Corrupt Practices Act, at 34 (available online at http://www.justice.gov/sites/default/files/criminal-fraud/legacy/2015/01/16/guide.pdf).

This Order reminds companies and individuals that some of the legal principles surrounding the FCPA recently have been developed out of settlements with the government instead of through the courts. On issues as important as these, it can be worthwhile to test some of the government’s theories in the only place they can be adjudicated.