Judge Grants Post-Trial Acquittal On FCPA Counts
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  • Judge Grants Post-Trial Acquittal On FCPA Counts
     
    03/03/2020
    On February 26, 2020, a federal judge in Connecticut granted, in part, defendant Lawrence Hoskins’s post-trial motion for acquittal on seven counts relating to violations of the Foreign Corrupt Practices Act.  United States v. Hoskins, No. 3:12cr238(JBA) (D. Conn.).  The acquittal is the latest development in the seven-year case of Mr. Hoskins, a closely watched FCPA prosecution that raises significant questions regarding the extraterritorial reach of FCPA enforcement.  Hoskins, a former vice president of French conglomerate Alstom SA, was convicted in November 2019 on charges that he helped to organize a scheme to bribe Indonesian officials in connection with a contract to build a power plant in Indonesia (the “Tarahan Project”).  Based on the evidence adduced at trial, District Court Judge Janet Bond Arterton found that a reasonable jury could not conclude beyond a reasonable doubt that Hoskins was an “agent” of Alstom’s Connecticut subsidiary, Alstom Power Inc. (“API”).  Accordingly, he could not be convicted of FCPA violations. 

    Jurisdictional questions predominated over Hoskins’s case from the beginning.  As a foreign person, Hoskins could have been charged under 15 U.S.C. § 78dd-3 if he had participated in an act in furtherance of foreign corruption while in the U.S.  In the absence of such evidence, the government was forced to try to establish liability under 15 U.S.C. § 78dd-2, proving either that he conspired with a U.S. domestic concern or that he acted as an agent of such a concern.  Judge Arterton initially dismissed part of Hoskins’s original indictment when she found that non-resident foreign nationals who work for non-U.S. companies abroad could not be held liable for conspiring with domestic concerns such as API to violate, or aiding and abetting a violation of, the FCPA.  On appeal, however, the Second Circuit concluded that Hoskins could still be charged with FCPA violations if there was proof that he acted as an employee, director, or agent of a domestic concern, in this case API.  API was heavily involved in Alstom’s bidding on the Tarahan Project.

    At his trial last year, the jury sided with prosecutors and found that Hoskins, although an employee of API’s parent corporation, was an agent of API when he contributed to the selection of agents and consultants to assist in the Tarahan Project and approved certain commercial terms of their engagement.  Hoskins thereafter moved for a judgment of acquittal.  Based on the Second Circuit’s decision, Judge Arterton evaluated whether the evidence presented at trial was sufficient to establish that Hoskins was an agent of API in carrying out his duties relating to the selection of consultants.  To qualify as an agent, Judge Arterton instructed the jury to consider the definition of “agent” to include:  (1) a manifestation by the principal that the agent will act for it; (2) acceptance by the agent of the undertaking; and (3) an understanding between the agent and principal that the principal will be in control of the undertaking.  The critical agency issue in this case was whether API had the right to “control” Hoskins’s actions.  On this issue, Judge Arterton found that the weight of the evidence cut against a determination that API controlled Hoskins’s actions.

    According to the Court’s opinion, control requires more than mere authorization.  Though it may be attenuated, and need not include control at every moment, control includes the right of the principal to prescribe what acts the agent can and cannot perform.  According to the defense, emails, corporate records, and the corporate structure of Alstom each established that Hoskins had no reporting relationship to anyone at API.  No one within API had the authority to fire, reassign, or demote Hoskins, or had the power to control his compensation.  The government countered that corporate reporting structures were of little import given the unique nature of the Tarahan Project.  According to the government, API was in control of the undertaking because the evidence proved that Hoskins was acceding to, and carrying out, API’s instructions in connection with the hiring and firing of Tarahan Project consultants.

    In finding the weight of the evidence insufficient to support a conviction, Judge Arterton noted that the essential element of agency is the principal’s right to control the agent’s actions, not its authority to direct the broader project on which the agent works.  Upon the evidence presented at trial, no rational jury could conclude that API had the authority to control Hoskins’s actions, nor did the evidence suggest that Hoskins agreed or understood that API would exercise that control.  Judge Arterton further noted that the traditional indicia of control typical of an agency relationship was lacking here, such as the “especially important” right of API to terminate Hoskins’s employment.  Ultimately, the evidence demonstrated “API’s authority to determine the terms upon which consultants would be hired and Mr. Hoskins’s assistance in efforts to retain those consultants,” but fell short of establishing control over what actions Hoskins’s took to provide that assistance.

    The acquittal is a noteworthy, though potentially temporary, setback to DOJ’s aggressive enforcement approach.  The decision did not change the fact that liability for FCPA violations, even for non-U.S. persons who operate entirely outside of the United States, can exist where there is an agency relationship.  Whether the DOJ decides to pursue such aggressive actions will continue to be highly fact-dependent.

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