Alert: "Former Alstom Exec's FCPA Conviction Demonstrates Reach of U.S. Bribery Laws"
On November 8, 2019 former Alstom S.A. senior executive Lawrence Hoskins was convicted on six counts of violating the Foreign Corrupt Practices Act (“FCPA”), three counts of money laundering, and two counts of conspiracy for his role in a multi-million dollar bribery scheme. Hoskins is a U.K. citizen who never set foot in the United States and never worked for an American company.
Hoskins was indicted in 2013 by the Department of Justice (“DOJ”) but did not stand trial until 2019 because he challenged the scope of the government’s enforcement authority. Specifically, Hoskins challenged the DOJ’s charges for conspiracy to violate the FCPA and aiding and abetting, arguing that he could not be subject to accomplice liability if he is not subject to direct liability under the FCPA. He argued that he is not subject to direct liability because the text of the FCPA only imposes liability on (i) issuers of securities listed on US stock exchanges, (ii) “domestic concerns” (American persons and companies), and (iii) foreign persons or entities acting while present in the U.S., none of which apply to Hoskins.
The District Court agreed with Hoskins and ruled that Hoskins could not conspire to violate the FCPA if he did not fall within one of the FCPA’s enumerated categories as an issuer, domestic concern or foreign person acting while present in the U.S. The District Court also held that Hoskins could not conspire to violate Section 78dd-3 of the FCPA, which prohibits foreign persons from furthering corruption schemes while present in the U.S. because Hoskins was never physically present in the U.S.
On appeal, the Second Circuit held that Hoskins could not be held criminally liable for conspiring to violate the FCPA as a nonresident foreign national unless he is an agent, employee, officer, director, or shareholder of an American issuer or domestic concern or acted illegally on American soil. However, the Second Circuit held that if the government could demonstrate that Hoskins was acting as an agent of Alstom’s U.S. subsidiary while conspiring with others who conducted prohibited acts while in the U.S., he could be held liable for conspiracy to violate Section 78dd-3 of the FCPA.
The DOJ proceeded to trial in Connecticut on the theory that Hoskins was acting as an agent of Alstom’s Connecticut subsidiary when he arranged bribes of certain Indonesian officials. The jury took one day to find Hoskins guilty. He is set for sentencing in January 2020.
According to DOJ Criminal Division Assistant Attorney General Brian Benczkowski in a speech he gave on December 4, 2019, the DOJ does not view Hoskins’ conviction as a “blank check to the department” to “stretch the bounds of agency principals beyond recognition, or even push the FCPA statute towards its outer edges.” However, the Hoskins case demonstrates an increase in the breadth of the FCPA’s reach. It will be important for issuers and domestic concerns, as well as any foreign agents acting on their behalf, to be aware of this when conducting business.