U.S. Federal Appeals Court Upholds Agency-Based FCPA Acquittal

Background

The Hoskins matter has been closely watched for nearly a decade, since Hoskins was first charged in 2013 for conduct dating back to 2002. DOJ initially charged Hoskins, a British citizen who worked in France, in connection with DOJ’s investigation regarding the prosecution of Alstom, a French power and transportation company that entered into a $770 million corporate settlement in 2004 to resolve foreign bribery charges. DOJ alleged, among other things, that Hoskins approved the selecting and authorizing of payments to various consultants in connection with projects in Indonesia, with the knowledge that the payments were intended to influence Indonesian officials. Because Hoskin’s conduct did not take place in the United States, DOJ initially charged Hoskins with conspiracy to violate the FCPA based on its longstanding position that conspiracy and aiding and abetting allowed it to charge foreign nationals under the FCPA even if these individuals would not otherwise be subject to liability under the FCPA.

In August 2018, the Second Circuit rejected DOJ’s overly broad view of FCPA jurisdiction, holding that an individual could not be guilty as a co-conspirator or accomplice if he or she was incapable of committing the crime as a principal. The appellate court further observed, however, that if DOJ could show that Hoskins acted as an agent of Alstom Power Inc. (API), a U.S. company, then his conduct would fall within the purview of the FCPA.

Following that ruling, DOJ brought charges against Hoskins under such an agency theory — alleging that while he worked for API’s French parent Alstom, Hoskins also acted as an agent of API in helping to arrange for bribes in Indonesia. In 2019, a federal jury agreed and convicted Hoskins of FCPA violations. However, the Connecticut federal district court thereafter granted Hoskins’ motion for acquittal on the FCPA charges, concluding that even when viewing all evidence and drawing all reasonable inferences in the light most favorable to DOJ, the government had not established that API had sufficient control over Hoskins to make him its agent. (See our most recent previous update on the Hoskins case here.) DOJ subsequently appealed to the Second Circuit.

Second Circuit’s Recent Decision

The main issue recently before the Second Circuit was whether there existed an agency relationship between Hoskins and API. The Second Circuit determined in a 2-1 decision that API did not have sufficient authority over Hoskins or his activities to establish an explicit or implicit agency relationship. In making this ruling, the court drew a clear line between collaboration, on one hand, and control, on the other — concluding that Hoskins’ collaboration with and support of API was insufficient, standing alone, to establish the latter. Factually, Hoskins was employed by a different Alstom subsidiary; API could not fire, pay, or control Hoskins; and Hoskins did not have the authority to act on API’s behalf. According to the court, Hoskins supported API’s efforts because of his role at Alstom, not because he was acting as API’s agent.

The Hoskins decision represents another hurdle for DOJ in its endeavor to establish a broad jurisdictional reach in FCPA cases against non-U.S. persons. In order to assert an FCPA claim against a non-U.S. person premised on an agency theory, prosecutors will have to prove more than simple support of or collaboration with a domestic concern engaged in a bribery scheme. The inquiry as to whether sufficient control exists is highly fact intensive; courts will look not only at reporting lines as set forth in official documents but also at how the various individuals and entities operate in reality.

Practically, the acquittal will likely have limited, if any, impact on Hoskins’ sentence as he was also convicted of money laundering, and those convictions were previously upheld. Regardless, the decision will have an effect on how DOJ approaches cases with respect to agency in the future. It will also have an effect on defendants who now have an additional basis for pushing back on DOJ’s expansive jurisdictional theories.