Down But Not Out: Second Circuit's Hoskins decision Narrows But Does Not Eliminate FCPA Liability For Non-Resident Foreign Nationals Acting Outside US

A recent Second Circuit Court of Appeals decision curtailed the broad theory of Foreign Corrupt Practices Act (FCPA) liability asserted by the US Department of Justice (DOJ). In United States v. Hoskins, the court ruled that the government could not use conspiracy or accomplice liability to charge non-resident foreign nationals acting outside the US with FCPA violations. The decision provides non-resident foreign entities and individuals with a new potential defense to FCPA charges. That said, non-resident foreign companies should be wary of the government using alternative legal theories and strategies, like a broad theory of agency liability, as a new basis to support an FCPA indictment.

In Hoskins,1 the court considered a challenge by defendant Lawrence Hoskins to his indictment. From 2002 to 2009, Hoskins worked as an executive for foreign subsidiaries of Alstom S.A., a French company offering global power and transportation services. The allegations in the indictment centered around the engagement of two consultants by Alstom S.A. and its American-based subsidiary, Alstom Power, Inc., to bribe Indonesian foreign officials in order to secure a US$118 million contract. Although Hoskins neither worked for the US subsidiary nor was physically in the US at the time, he was charged with authorizing payments to the consultants while knowing that some portion of the payments would be used to bribe Indonesian officials.2 The indictment alleged that Hoskins was liable as an agent of Alstom U.S., a US-based company. It further alleged that independent of his agency liability, Hoskins was also liable for conspiring with the company and its employees to violate the FCPA, as well as for aiding and abetting the violations.

Hoskins filed a motion to dismiss the third superseding indictment with the trial court, arguing that the DOJ could not rely on conspiracy or accomplice liability as a basis for FCPA violations because he was a non-resident foreign national that was not within the scope of the statute. The trial court agreed that Congress only intended to include a fixed set of entities and individuals, and "did not intend for the FCPA to encompass accomplice or conspiracy liability on non-resident foreign nationals who are not otherwise subject to direct liability" under the FCPA.3 Accordingly, the court dismissed the charges that relied on conspiracy or accomplice liability.

On interlocutory appeal, the Second Circuit affirmed. The court...