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By Richard Montes de Oca*
In a decision last month, the U.S. Second Circuit Court of Appeals refused to expand the extraterritorial reach of the Foreign Corrupt Practices Act (“FCPA”) to a foreign national without sufficient connection to the United States under the conspiracy or aiding or abetting liability theories alleged by the U.S. Department of Justice (“DOJ”).
The DOJ attempted to expand the extraterritorial reach of the FCPA by charging Lawrence Hoskins, a British citizen and a former executive officer at the French multinational Alstom SA (“Alstom”), for conspiracy to violate or aiding or abetting violations of the FCPA. The Second Circuit affirmed the lower court’s decision to dismiss and strictly apply the FCPA’s scope by finding 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 or domestic concern – unless that person commits a crime within the territory of the United States.”
Mr. Hoskins allegedly directed the payment of bribes to help Alstom win a $118 million power plant contract in Indonesia between 2002 and 2009. Alstom had already pled guilty and paid a $772 million fine for violations of the FCPA after being prosecuted by the DOJ. Other executives who worked for Alston’s U.S. subsidiary based in Connecticut also plead guilty. However, Mr. Hoskins worked for Alstom U.K. and never traveled to the United States during the period when the alleged bribery happened. Mr. Hoskins argued that he had no ties with the U.S. under the definition of the FCPA.
The Second Circuit acknowledged the accomplice liability theory under federal criminal statutes, but held that conspiracy or complicity theories simply cannot expand the provisions limiting the extraterritorial reach of the FCPA. However, the Second Circuit reversed the district court’s dismissal of allegations that Mr. Hoskins was liable as an agent of a domestic concern. Therefore, the DOJ will still be permitted to prosecute Mr. Hoskins for violating the FCPA as an agent of Alstom.
With record-setting fines being levied in the billions of dollars, coupled with the DOJ and SEC’s aggressive enforcement, it is more critical than ever for companies to evaluate their risk of FCPA violations and establish or improve their Anti-Corruption Compliance Programs to mitigate such risks. The attorneys and advisors at MDO Partners have extensive experience advising clients on the FCPA and effective Anti-Corruption Compliance Programs in over 30 countries.
*Richard Montes De Oca is the Managing Partner at MDO Partners, a boutique law firm that focuses on Corporate, International, and Real Estate Law, as well as Global Compliance and Business Ethics.
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