The ruling stands as a blow to the government’s long-held view that non-resident foreign nationals are subject to the FCPA if they conspire with or aid and abet a person or entity otherwise subject to the FCPA.
Businesses and individuals are often surprised that foreign acts committed by foreign actors in foreign lands come within the purview of U.S. anti-bribery law. Not surprisingly, the government has long taken an expansive view of the jurisdictional reach of the Foreign Corrupt Practices Act (FCPA). That expansive view, however, was dealt a blow by a district court judge’s recent opinion in the District of Connecticut.
On August 13, District Judge Janet Arterton held in United States v. Hoskins, No. 3:12-CR-238 (D. Conn. Aug. 13, 2015), that the FCPA does not impose accomplice liability on non-resident foreign nationals who are not subject to direct liability. The opinion stands as a bulwark against the spreading tentacles of the FCPA’s jurisdiction. It also serves as a reminder that, when issues of foreign bribery emerge, one of the key questions should be: “Is there FCPA jurisdiction?”
FCPA Jurisdiction
The FCPA prohibits bribery of foreign governmental officials. Its jurisdiction extends to (1) U.S. citizens and U.S. companies (domestic concerns); (2) companies listed on a domestic securities exchange and their officers, employees and agents (issuers); and (3) any person who while in U.S. territory commits an act in furtherance of an FCPA violation (territorial basis). See 15 U.S.C. § 78dd-1, 78dd-2, 78dd-3.
The U.S. government’s view is that the FCPA’s jurisdiction reaches beyond these three categories under a conspiracy or aiding and abetting theory. In the Resource Guide to the FCPA published in November 2012, the U.S. Department of Justice (DOJ) and the Securities and Exchange Commission (SEC) stated that “[a] foreign national or company may also be liable under the FCPA if it aids and abets [or] conspires with . . . an issuer or domestic concern, regardless of whether the foreign national or company itself takes any action in the United States.” In support of this accomplice theory of criminal liability, the government’s Resource Guide does not cite to any statutory source or judicial holding, but rather to two Criminal Informations that it filed in United States v. JGC Corp., No. 11-CR-260 (S.D. Tex. Apr. 6, 2011) and United States v. Snamprogetti Netherlands B.V., No. 10-CR-460 (S.D. Tex. Jul. 7, 2010).
Thus, under the government’s view, the FCPA extends even to foreign actors who are not domestic concerns or issuers or who have never set foot in the United States, provided that they aid, abet or conspire with someone subject to the FCPA. As explained below, Judge Arterton’s decision directly rejects the government’s view of accomplice liability and limits the jurisdictional reach of the FCPA to its three statutory bases.
United States v. Hoskins
Lawrence Hoskins is a former executive of a France-based manufacturing company. The government alleged that Hoskins approved and authorized payments to consultants who paid bribes to Indonesian government officials to secure a contract to build state-owned power stations. Initially, Hoskins was alleged to have been an agent of the company’s U.S. subsidiary and, therefore, a domestic concern for FCPA purposes. Later, the government amended the first count of the indictment against Hoskins and alleged that he conspired by acting “together with” a domestic concern.
Hoskins promptly moved to dismiss the indictment, arguing that the FCPA only provides three bases of jurisdiction and that the statute does not allow the government to use accomplice theories to bring actors within the FCPA who otherwise would not be. The government countered that it did not need to prove that Hoskins was directly liable under the law because, “as a general rule,” the conspiracy and accomplice liability statutes apply to persons who lack the capacity to commit a violation of the underlying substantive offense.
Judge Arterton examined the FCPA’s text and its legislative history to determine whether to apply the so-called Gebardi principle. The Supreme Court’s early opinion in Gebardi v. United States, 287 U.S. 112 (1932), held that, where Congress passes a substantive criminal statute that excludes a certain class of individuals from liability, the government cannot evade congressional intent by charging those individuals with conspiring to violate (or aiding and abetting the violation of) the same statute. Applying that principle to the FCPA, Judge Arterton determined that Congress did not intend to extend accomplice liability to non-resident foreign nationals who are not otherwise subject to direct liability. Accordingly, the government will not be permitted to argue to the jury that Hoskins can be liable for conspiracy even if he is not proved to be an agent of a domestic concern.
Unfortunately for Hoskins, however, the court did not completely dismiss the conspiracy count against him. Instead, the court found that the government can still proceed under a theory that Hoskins is an agent of a domestic concern and thus subject to direct FCPA liability.
Conclusion
Judge Arterton’s ruling stands as a blow to the DOJ’s and the SEC’s long-held view that non-resident foreign nationals are subject to the FCPA if they conspire with or aid and abet a person or entity otherwise subject to the FCPA. Thus, in the course of internal investigations involving conduct of non-resident foreign actors, it will become even more critical to fully understand the capacity in which the non-resident foreign national is acting to determine if the conduct falls within the jurisdictional purview of the FCPA.
