A U.S. District Judge for the District of Connecticut reversed a jury verdict that found a former energy executive guilty of seven counts of violating the anti-bribery provisions of the Foreign Corrupt Practices Act ("FCPA").
As previously covered, the defendant, Lawrence Hoskins, was a British national working for a French subsidiary of the multinational energy firm Alstom S.A. Federal prosecutors charged Mr. Hoskins with multiple counts of bribery and money laundering for his role in funneling payments to the Indonesian government in exchange for a contract to build a power plant. The payments, which were allegedly paid through third-party "consultants" whom Mr. Hoskins hired and directed, resulted in Alstom pleading guilty to FCPA violations, and paying over $772,000 in fines to resolve the matter.
Prosecutors argued at trial that while Mr. Hoskins never traveled to the United States during the relevant period, he did discuss the payments with U.S.-based Alstom colleagues over email and telephone. But in the Order to the defendant's request for relief under Rule 29(a) of the Federal Rules of Criminal Procedure, Judge Janet Bond Arterton found that the prosecution had failed to establish that Alstom's U.S. subsidiary exercised sufficient control over Mr. Hoskins' activities such that an agency relationship was formed.
Judge Arterton let stand the four money-laundering counts against Mr. Hoskins, who will be sentenced later this month. The Department of Justice will decide whether to appeal Judge Arterton's ruling or to pursue a new trial against Mr. Hoskins on the FCPA charges.
Commentary Joseph Moreno
The Hoskins case made headlines in August 2018 when the Second Circuit affirmed Judge Arterton's ruling that the FCPA does not reach non-resident foreign nationals who are not employees, officers or agents of a U.S. company, unless that foreign national commits criminal acts while in the United States. But the appellate court allowed the case against Mr. Hoskins to move forward on the theory that he was an agent for the U.S. subsidiary that is liable as a principal. This second-round setback for the Justice Department is further evidence that when decades of prosecutorial treatment of the FCPA face the rare scrutiny of the judiciary, there are limits in how far the statute can be stretched. And while this ruling may be very fact-specific, it is a big shot in the arm for defendants willing to push back on the government's overly aggressive assertion of agency liability when it is questionable how much control a U.S. company or subsidiary truly has over a foreign national.