Wine as an investment – the wine merchant’s risk
Last week a US judge ruled that a prosecutor needs to show that a non-US resident foreign national qualifies as an “agent of a domestic concern” under the US Foreign Corrupt Practices Act (‘FCPA’) before being able to prosecute them for corruption.
This blog considers what it means for UK nationals involved in trans-Atlantic bribery and corruption investigations by the Department of Justice (‘DoJ’), and the important ramifications this case might have for extradition requests from the US to the UK for alleged corruption.
In this case, Lawrence Hoskins, a former Alstom senior vice-president for Asia was charged in July 2013 (District of Connecticut) with conspiring to violate the FCPA and to launder money, as well as substantive FCPA and money laundering violations.
The indictment alleges the conspiracy was “to make corrupt payments to a Member of Parliament in Indonesia, officials at PLN, and other foreign officials in order to obtain and retain business related to the Tarahan Project.” The Tarahan Project is an US$118 million power station construction contract. Perusahaan Listrik Negara (PLN) is the state-owned and state-controlled electricity company in Indonesia. The trial is scheduled for November 2015.
A pre-trial hearing took place on 13 August. Hoskins’ defence team mounted a challenge questioning whether Hoskins could be regarded as an ‘agent of a domestic concern’ under the FCPA. Hoskins is a UK citizen who resided outside the US. He was employed by a non-US company which was an Alstom subsidiary in Paris. The statute specifically excludes non-resident foreign nationals unless they can be regarded as agents of a US business or a US individual. If he cannot be regarded as such, his lawyers argued, he cannot be successfully prosecuted for breaching or conspiring to breach the FCPA.
The US Government submitted its own motion arguing that Hoskins should be precluded from presenting this argument to the jury. Its view was that even were the jury to find that the defendant was not an ‘agent of a domestic concern’, the court could still convict the defendant on one or more of the remaining accomplice theories.
The Government’s application was dismissed by the Court. Presiding US District Judge Janet Arterton assessed the text, structure and legislative history of the FCPA and concluded that “Congress did not intent to impose accomplice liability on non-resident foreign nationals who were not subject to direct liability.”
However the motion was only dismissed in part and this should not be seen as the conspiracy charges being thrown out in full. The Court confirmed the Government could proceed under the theory that Hoskins is an agent of a domestic concern and thus subject to direct liability under the FCPA but they would need to prove it before he could be convicted. They were not allowed to proceed on the basis “that the Defendant could be liable for conspiracy even if he is not proved to be an agent of a domestic concern.”
So this ruling means that the DoJ will not simply be able to add a non-US defendant to a case as an accessory, for having conspired to commit or aided and abetted the crime, unless that person was capable of committing the substantive offence. The Judge found that was consistent with Congress having chosen to exclude non-resident foreigners unless they were agents of a US business.
For years there have been complaints about the use to which the US/UK Extradition Treaty has been put by the Americans for the extradition of those accused of white collar offences. US prosecutors have enthusiastically sought the extradition of those alleged to have violated the FCPA. This ruling is important because if the non-US national or resident is not an “agent of a domestic concern” they will not be capable of committing corruption offences under the FCPA or conspiring to commit them.
Importantly, if this ruling is upheld this could signal a change in the ability of US prosecutors to exercise their so-called exorbitant jurisdiction and in doing so, stem the flow of extraditions into the US of non-US citizens for offences committed outwith the jurisdiction.
The case is USA v. Pierucci et al., case number 3:12-cr-00238, in the U.S. District Court for the District of Connecticut. It part of wider action taken against Alstom. Three other Alstom executives, who were charged with FCPA violations relating to the Tarahan project, have pleaded guilty: David Rothschild, William Pomponi and Frederic Pierucci. In December, Alstom also pleaded guilty to US foreign bribery violations and agreed to pay US$772 million.
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