Second Circuit Court of Appeals Allows Government to Pursue Conspiracy Claim Against Foreign National for Violating the Foreign Corrupt Practices Act.
In the growing global economy, there is an increased demand for legal translation services for litigation involving foreign corporations and their subsidiaries. In the case discussed below, the United States government filed suit against an employee of a global company (“company”) for allegedly violating the Foreign Corrupt Practices Act (“FCPA”) while working for one of its subsidiaries. The defendant allegedly bribed governmental officials in Indonesia in order to secure a lucrative governmental contract on behalf of his employer.
The defendant was employed by the company’s subsidiary located in the United Kingdom but was assigned to work for a subsidiary of the company located in France. In the lawsuit, the United States alleged that the company’s American subsidiary endeavored to bribe Indonesian officials in order to obtain a $118 million power contract. Although the defendant never worked for the U.S. subsidiary directly, the U.S. government claimed that the U.S. subsidiary retained the defendant as one of two “consultants” to assist in the bribery. Specifically, the U.S. government alleged that the defendant was one of the people “responsible for approving the selection of, and authorizing payments to the consultants, knowing that a portion of the payments…was intended for Indonesian officials in exchange for their influence and assistance” in awarding the contract. The government also alleged that the defendant “repeatedly emailed and called…U.S.-based conspirators” while they were in the United States.
Scheme Allegedly Based in U.S.
The government alleged that even though the defendant was based in France, several key components of the scheme took place in the United States, putting the matter under the purview of the FCPA. For example, the government alleged that some of the bribes to Indonesian officials were paid for from bank accounts within the United States, that one of the consultants had a bank account in Maryland, and that company executives conducted meetings about the bribery scheme within the United States. The government alleged that, even though the defendant never traveled to the United States, he was in fact an “agent” of an American company or person and that he also aided and abetted the company in violating the FCPA.
Indictment Alleged 2 Separate Grounds for Conspiring to Violate FCPA
In count I of the indictment, the government alleged that the defendant violate the FCPA because he was an agent of a U.S. company and violated the FCPA in that capacity. The government also alleged that the defendant conspired with the company, its employees, and foreign individuals to violate the FCPA independent of his agency relationship with an American company. The first count involves 2 “objects” of the conspiracy, which state that, under the FCPA: (1) American companies and individuals are prohibited from using interstate commerce in connection with the payment of bribes, and (2) foreign persons are prohibited from taking acts to further corruption schemes (such as bribes) while in the United States.
Defendant Moves District Court to Dismiss FCPA Count
In response to the lawsuit, the defendant filed a motion to dismiss before the district court seeking the dismissal of the first object of the conspiracy charge on the grounds that he could not, as a foreign citizen, be charged with violating the FCPA. The defendant argued that the FCPA only applied to American companies/citizens and their agents, employees, officers, and directors and that he did not belong to any of these groups.
The district courted granted in part and denied in part the defendant’s motion to dismiss. The district court ruled that “Congress did not intend to impose accomplice liability on non-resident foreign nationals who were not subject to direct liability” under the FCPA. Accordingly, the court dismissed the first object of the conspiracy to the extent that it alleged that the defendant conspired to violate the FCPA while in the United States because the defendant had never traveled to the United States during the time in which the scheme allegedly took place.
The district court also dismissed the first count to the extent it alleged he conspired to violate the FCPA on the grounds that the defendant had never entered the United States during the alleged conspiracy. The district court, however, denied the motion in part because he was charged with violating the FCPA as an agent of an American company.
2nd Circuit Court of Appeals Affirms in Part, Reverses in Part.
Following the district court’s ruling, the government filed an appeal to the United States District Court for the 2nd Circuit. Following an oral argument on the matter, the 2nd Circuit affirmed the district court’s ruling and reversed it in part.
As to the First Object of the Conspiracy, the 2nd Circuit affirmed the district court’s decision to bar the government from charging the defendant with violating the FCPA while in the United States. The court held that “the FCPA does not impose liability on a foreign national who is not an agent, employee, officer, director or shareholder of an American issuer of domestic concern unless that person commits a crime within the territory of the United States.” The court held that, in other words, the territorial limitations of the FCPA precluded liability and that in order to hold the defendant liable, the government had to demonstrate that he fell within one of those categories or “acted illegally on American soil.”
As to the Second Object of the Conspiracy, the court held that the district court erred in ruling that the defendant was incapable of conspiring to violate the FCPA because he was never within the United States. The court held that, while it agreed that the defendant could not be held directly liable under the FCPA, he could still be charged with conspiring with employees of a U.S. concern or conspiring with foreign nationals who committed illegal acts while they were in the United States. In other words, the court reasoned that the government should be allowed to argue that the defendant, as an agent, committed the first object by conspiring with employees and other agents of the company and should also be allowed to argue that the defendant committed the second object by conspiring with foreign nationals.
The case is United States of America v. Lawrence Hoskins, Docket No. 16-1010-cr, decided on August 24, 2018 in the United States Court of Appeals for the Second Circuit.
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