Alerts and Updates
Relying on a recent United States Supreme Court decision in RJR Nabisco v. The European Community, the Second Circuit noted that there was a presumption against extraterritorial application in the Racketeer Influenced and Corrupt Organizations Act.
On August 24, 2018, in U.S. v. Hoskins, the United States Court of Appeals for the Second Circuit affirmed a district court’s dismissal of conspiracy charges for a Foreign Corrupt Practices Act (FCPA) violation against a foreign national who was not an agent, employee, officer, or a director or shareholder of an American securities issuer, and was hence found not to have committed a crime on American territory. The Second Circuit’s holding narrowly construes the FCPA’s extraterritorial application to bribery crimes.
The issue in this case was whether the government can successfully employ conspiracy or complicity theories to charge a defendant with violating the FCPA even if the defendant is not in one of the categories of actors directly covered by the statute. Alstom is a French multinational company that has a U.S. subsidiary in Windsor, Connecticut. Lawrence Hoskins is a UK citizen who worked for a subsidiary branch of Alstom in France and Asia. The government alleged that Alstom conceived and entered into a bribery scheme whereby its executives bribed Indonesian government officials in order to obtain a $118 million contract. Hoskins neither worked for Alstom’s U.S. subsidiary nor did he travel to the United States in the time period during which the alleged bribery took place.
The DOJ filed a FCPA enforcement action against Hoskins for conspiracy to violate the FCPA. The government argued, in part, that Hoskins could be criminally liable for conspiracy without acting as a principal because he was an “agent” of a “domestic concern.” The government attempted to impose liability on Hoskins due to his alleged involvement in obtaining consultants and authorizing payments through U.S. bank accounts to effectuate the bribery on behalf of the U.S. subsidiary.
Hoskins argued he was not liable because the FCPA is limited to three categories of persons: (1) issuers of registered securities or those required to file reports under Section 78o(d), or any officer, director, employee or agent of such issuer, or any stockholder acting on behalf of the issuer, using interstate commerce in connection with the payment of bribes; (2) American companies and American persons using interstate commerce in connection with the payment of bribes; and (3) foreign persons or businesses taking acts to further certain corrupt schemes, including ones causing the payment of bribes, while present in the United States. Hoskins argued the government could not use conspiracy or aiding-and-abetting charges to circumvent these limitations.
The Second Circuit agreed and determined that adopting the government’s position would expand the FCPA’s scope beyond Congress’ intent. Reviewing the legislative history of the FCPA, the court determined that Congress had consciously chosen not to impose liability upon persons not falling within one of the three categories. The court further held that conspiracy and complicity rules could not be used to avoid the statute’s clear restrictions.
Relying on a recent United States Supreme Court decision in RJR Nabisco v. The European Community, 136 S. Ct. 2090 (2016), the Second Circuit noted that there was a presumption against extraterritorial application in the Racketeer Influenced and Corrupt Organizations Act (RICO). In RJR Nabisco, the Supreme Court held that RICO liability could not be imposed for injuries suffered entirely outside the United States. Following this guidance, the Hoskins court held FCPA prosecutions should not extend extraterritorially to bribery crimes by foreign nationals.
The Hoskins decision does leave open the question of how to best address international bribery schemes. In his concurrence, Judge Gerard E. Lynch opined that the creation of an international anti-bribery statute may be best-suited for imposing liability upon foreign parent companies engaging in fraudulent transactions with only limited links to the United States.