Agency-Based FCPA Conviction Overturned

The Hoskins Backstory

Hoskins’ case attracted significant attention in recent years given that it involved DOJ’s expansive interpretations of the FCPA. Indeed, Hoskins, a British citizen who worked in France and never set foot in the United States during his tenure at Alstom, a French power and transportation company, was charged in 2013 related to conduct that occurred from 2002 to 2004.

Hoskins was charged in connection with DOJ’s prosecution of Alstom, which resulted in a $770 million corporate settlement in 2014. DOJ argued that Hoskins approved the selection of, and authorized payments to, consultants in connection with a project in Indonesia knowing that a portion of the money was intended to influence Indonesian officials. Because Hoskins’ actions did not occur in the United States and Hoskins never worked for Alstom’s American subsidiary, API, DOJ initially charged Hoskins with conspiring to violate the FCPA based on its longstanding theory that conspiracy and aiding and abetting allow it to prosecute foreign nationals for FCPA violations even if those individuals otherwise would not be subject to liability under the FCPA.

The U.S. Court of Appeals for the Second Circuit rejected that expansive view of the FCPA’s jurisdiction in August 2018, holding that an individual cannot be guilty as a co-conspirator or accomplice if he or she is incapable of committing the crime as a principal.¹  The Second Circuit went on, however, to state that if prosecutors are able to show that Hoskins acted as an agent of API (which, as a U.S. company, is a domestic concern under the FCPA), then there would not be improper extraterritorial application of the FCPA to his conduct. Following that ruling, DOJ relied on the theory, including at trial, that although Hoskins worked for Alstom, he also acted as an agent of API for purposes of jurisdiction under the FCPA.

Last fall, a federal jury convicted Hoskins of violating the FCPA and money laundering after DOJ succeeded in showing that Hoskins acted as an agent for API when he helped arrange bribes in Indonesia. According to the evidence presented at trial, Hoskins engaged in a conspiracy to pay bribes to officials in Indonesia, including a high-ranking member of the Indonesian Parliament and the president of the state-owned electricity company, in exchange for assistance in securing a $118 million contract to provide power-related services for the citizens of Indonesia. Hoskins and his co-conspirators were successful in securing the project and subsequently made payments to two consultants for the purpose of bribing the Indonesian officials.

Hoskins’ FCPA Acquittal

Following his convictions, Hoskins moved for acquittal or a new trial in December 2019. On Wednesday, a federal judge ruled on Hoskins’ motions and acquitted Hoskins of all seven FCPA convictions, reasoning that prosecutors had not demonstrated that API exercised control over Hoskins’ actions sufficient to demonstrate agency.

The court’s ruling is significant in light of the history of Hoskins’ case (as outlined above) and the rarity of successful motions for acquittal given the heavy burden that defendants bear in such motions. Indeed, a judge must uphold a conviction if any rational trier of fact could have found the essential elements of the crime beyond a reasonable doubt, viewing the evidence in the light most favorable to the government and drawing all reasonable inferences in the government’s favor.

The court’s highly factual 29-page opinion focused on the “essential element of agency [which] is the principal’s right to control the agent’s actions.” The court concluded that API, the purported principal, exercised control over the broader project in Indonesia, but that this was insufficient to prove agency because API did not have control over Hoskins himself. The court, therefore, concluded that “absent any evidence that API had a right of interim control over Mr. Hoskins’s actions to procure consultants according to API’s specifications, a rational jury could not determine beyond a reasonable doubt that Mr. Hoskins was an agent of API.” Critically, the court emphasized that API did not have the power to fire, reassign, demote or impact the compensation of Hoskins, noting that the “principal’s right of control presupposes that the principal retains the capacity throughout the relationship to assess the agent’s performance, provide instructions to the agent, and terminate the agency relationship by revoking the agent’s authority.”

The Hoskins acquittal is a major setback for prosecutors in a case involving the potential limitations of the FCPA extraterritorial application to non-U.S. persons, though it is unclear whether DOJ will appeal. Further, the acquittal will likely have no practical impact on Hoskins’ sentence given his money laundering convictions. Regardless, the decision will have an impact on how DOJ investigates and prosecutes cases with respect to agency in the future. It will also have an impact on defendants who now have an additional basis for pushing back on DOJ’s expansive jurisdictional theories.