District Court Issues Key Ruling on FCPA Definition of “Agent” for Purposes of Foreign Nationals
March 02, 2020
By Brett W. Johnson and Derek C. Flint
On February 26, a federal district court in Connecticut acquitted the defendant in United States v. Hoskins1 on all counts related to the Foreign Corrupt Practices Act (“FCPA”). A jury had previously found the defendant guilty of conspiracy to violate the FCPA, six violations of the FCPA, conspiracy to commit money laundering, and money laundering. The court granted the defendant’s motion for a judgment of acquittal on the FCPA-related counts, but denied the motion with respect to the money laundering counts.
By way of background, the defendant in Hoskins was a British citizen who worked for the British and French subsidiaries of Alstom. He was accused of violating the FCPA by facilitating the use of consultants in Indonesia to bribe Indonesian officials to secure a power plant contract for Alstom. According to the Government’s indictment, Alstom’s U.S. subsidiary, API, was responsible for hiring the Indonesian consultants.
In acquitting the defendant on the FCPA-related counts, the court found that the Government had failed to prove the defendant was an “agent” for purposes of the FCPA. Under a previous Second Circuit ruling in this matter, foreign nationals “may only violate the [FCPA] if they are agents, employees, officers, directors, or shareholders of an American issuer or domestic concern.”2 Because the defendant did not travel to the U.S. while the “bribery scheme” was ongoing, the Government had to prove he was “an agent of domestic concern”—i.e., an agent of API—to establish an FCPA violation.3
Applying traditional principles of agency law, the district court found that the defendant was not an “agent” of API. The court reasoned that although API was responsible for hiring the consultants and gave the defendant instructions related to the consultants, the defendant was not API’s agent because API did not have a right of control over his actions. Of particular importance to the court was evidence showing that API did not have the right to fire, reassign or assess the performance of the defendant. Because the defendant was not API’s agent, the court acquitted him on all FCPA-related claims.
The court’s ruling arguably expands the scope of the agency defense for foreign nationals in FCPA actions. Without a sufficient connection to the U.S. or an agency relationship with a U.S. company, foreign nationals may be able to escape liability under the FCPA. However, the court’s denial of the defendant’s motion for a judgment of acquittal with respect to the money laundering counts shows that federal money laundering statutes may have a broader reach than the FCPA.
With the advent of this ruling, companies should review their third-party agreements with independent contractors, consultants, procurement brokers and other vendors to ensure that clear agency principles are applicable (or not applicable depending on the scope of engagement). In addition to updating such agreements, companies should continuously be reviewing and updating policies and procedures related to the utilization of foreign nationals to represent company interests. Furthermore, key stakeholders should receive necessary training as to the company’s policies and ensure a common approach to the retention of foreign agents.
- Case No. 3:12-CR-00238.
- United States v. Hoskins, 902 F.3d 69, 97 (2d Cir. 2018).
- See id. at 72.
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