DOJ seeks reconsideration of ruling limiting FCPA jurisdiction

31 January 2017 9:56am

1 September 2015. By Mark Bocchetti.

The US Department of Justice has asked a Connecticut judge to reconsider her decision limiting the jurisdiction of the Foreign Corrupt Practices Act by restricting prosecutors’ discretion to use conspiracy or accessory charges against foreign nationals.

In an Aug. 27 motion, prosecutors cited the legislative history of the FCPA and the 1998 amendments implementing the OECD Anti-Bribery Convention in arguing that Congress did not intend to allow foreign bribery charges against lower-level foreign employees controlled by US companies while excluding higher-level foreign executives who carry out bribery schemes through US affiliates.

“Indeed, such a reading of the FCPA would create an unwarranted anomaly in the law that would reward foreign national ringleaders of the US bribery scheme but punish the foreign national underlings,” the DOJ said in its motion asking US District Judge Janet Bond Arterton to reconsider her decision limiting the use of a conspiracy charge against British citizen Lawrence Hoskins.

Hoskins, who was secretly indicted in 2012 and later arrested in the US Virgin Islands, served as a senior vice president for Alstom SA, the French parent company of US affiliate Alstom Power, based in Paris. Several other executives of Alstom’s US subsidiary already have pleaded guilty to FCPA charges for arranging bribes to Indonesian politicians to secure the sale of a power plant.

Arterton ruled that count one, conspiracy to commit an FCPA violation, could not rely on conspiracy theory to extend the statute’s jurisdiction to a foreign national who had not committed any of the relevant acts on US soil. However, she didn’t dismiss the count, allowing prosecutors to seek a conviction by using agency theory and proving that Hoskins had acted as an agent of the US affiliate in lining up the bribes.

Arterton held that the Supreme Court’s Gebardi ruling precluded prosecutors from using the “aiding and abetting” elements of the conspiracy charge against a class of defendants whom Congress specifically had excluded.

But prosecutors argued that a closer review of the original FCPA legislative history from 1977 and the discussion around the 1998 amendments justifies reconsideration of Arterton’s Aug. 13 decision.

The DOJ argues that a 1977 conference report indicates that individuals “were intended to be covered as aiders, abettors and conspirators.” In addition, the final conference report on the FCPA statue states: “In addition, the conferees determined that foreign nationals or residents otherwise under the jurisdiction of the United States would be covered by the bill in circumstances where an issuer or domestic concern engaged in conduct proscribed by the bill.”

Taken together, these passages indicate that Congress intended to cover foreign nationals carrying out a bribery scheme authored by a domestic concern, such as Alstom’s US subsidiary, the DOJ’s brief asserts. Because conspiracy and accessory liability generally apply to any crime committed under US law, this legislative language belies Arterton’s finding that Congress did not intend to cover foreign nationals under the statute via conspiracy charges.

The DOJ also cited the 1998 amendments, which were enacted to bring the FCPA into conformance with the then-new Anti-Bribery Convention. The agency noted that Article 4 of the Convention requires that signatories establish jurisdiction “when the offense is committed in whole or in part in its territory,” thereby broadening coverage beyond the physical presence of complicit individuals in the territory of the signatory.

“Faced with a treaty obligation to interpret the territorial basis for jurisdiction broadly, the Government respectfully submits that Congress did not intend to abandon long-standing principles of criminal jurisdiction, which permit the prosecution of foreign nationals who never step foot in the United States but carry out part of the crime in the United States,” the government asserted.

Arterton and the DOJ took different views about a conference report issued with the 1998 amendments, which said: “Although this section limits jurisdiction over foreign nationals and companies to instances in which the foreign national or company takes some action while physically present within the territory of the United States, Congress does not thereby intend to place a similar limit on the exercise of US criminal jurisdiction over foreign nationals and companies under any other statute or regulation.”

While Arterton’s decision focused on the limitation of jurisdiction, the DOJ argued that one of the statutes that Congress did not intend to limit is precisely the statute that extends conspiracy liability to all who commit crimes under US law. Given Congress’ clear intent to extend liability to foreign nationals who violate the FCPA at the direction of the US parent company, excluding them from general-purpose conspiracy statutes is not warranted, the DOJ argued.

The agency said that specific language in the statute extends jurisdiction to corporate directors and officers regardless of nationality, and foreign nationals acting as agents of a US company carrying out bribery overseas would be equally culpable. The court’s interpretation would create an “anomalous” enforcement gap, the DOJ said.

“[N]othing in the text, structure or legislative history of the FCPA supports an outcome where a high-level foreign national can orchestrate a conspiracy carried out by lower-level US residents acting within the United States and evade prosecution, while lower-level foreign nationals can be punishable for carrying out the same scheme orchestrated by a high-level US resident,” the DOJ argued.

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