Attorneys counseling companies on white collar matters are likely to have discovered crimes such as theft, bribery, and embezzlement committed by current and former employees, as well as by competitors. Such bad acts (and bad actors) are not regularly reported to law enforcement.

In fact, what prevents more widespread reporting is the understandable fear that

One of the many challenges companies face when assessing their Foreign Corrupt Practices Act (“FCPA”) liability is determining whether a potential business partner constitutes a “foreign government official” under the FCPA.  From a definitional perspective, the FCPA is far from a model of clarity on this point.  See 15 U.S.C. § 78dd-2(h)(2)(A).

By way of example, consider the compliance sandbars companies must circumnavigate to determine whether (and when) providing something of value to “traditional authorities” (including First Nations, Métis and Inuit peoples) could impose FCPA liability.  This question often arises when U.S.-based companies are asked to make donations to American Indian tribes with whom they interact, or to do favors for individual members of a tribe.  For instance, a tribal elder may ask that a company doing business with the tribe employ a certain tribal member, or provide an internship to the chief’s son, etc.  Under such circumstances, companies might find themselves evaluating the contemplated transaction through the amorphic lens of the FCPA.

Understanding the Definitional Challenge

Going back to basics, the FCPA’s anti-bribery provisions define a “foreign official” as:

[A]ny officer or employee of a foreign government or any department, agency, or instrumentality thereof, or of a public international organization, or any person acting in an official capacity for or on behalf of any such government or department, agency, or instrumentality, or for or on behalf of any such public international organization. 15 U.S.C. § 78dd-2(h)(2)(A).

Do American Indian tribes fit under this definition?  While there is little guidance on this analysis outside the United States (see this helpful article by my colleagues on that issue), there is even less in the context of  American Indian tribes, even though they possess much-discussed “sovereign status” in the United States.  This is both surprising and concerning.
Continue Reading American Indian Tribes and “Foreign Officials” Under the FCPA

The U.K. Modern Slavery Act of 2015 requires companies falling under its jurisdictional hook to honestly and completely disclose their efforts to eradicate trafficked, slave, indentured, coerced and child (collectively “forced”) labor from their supply chains. This, like many things in the compliance world, is easier said than done.  As discussed in this Client Update,

In United States v. Hoskins, 902 F.3d 69 (2d Cir. 2018) the Second Circuit held that a non-resident foreign national cannot be criminally liable for aiding and abetting or conspiring to violate the FCPA unless the government can establish that such an individual acted as an agent of one of the categories of persons subject to liability as a principal.

Background

The DOJ charged Lawrence Hoskins, a British national and former Alstom UK executive based in Paris, with FCPA and money-laundering violations.  The government alleged that Hoskins had approved payments to consultants that were funneled to Indonesian officials to secure a $118 million infrastructure contract with a state-owned power company.  Hoskins was never physically present in the U.S., but he called and emailed alleged conspirators who themselves were present in the U.S., and Hoskins authorized payments from Alstom S.A. to the consultants, one of whom had a Maryland bank account.

Hoskins moved to dismiss charges alleging indirect FCPA violations—i.e., that he aided and abetted or conspired to violate the FCPA—arguing that he did not fall within the narrowly-circumscribed group of people for whom the FCPA prescribes liability: American companies, citizens, and their employees and agents, as well as foreign persons acting on American soil.  The lower court agreed with Hoskins and dismissed Count I of the indictment.  On appeal, the question for the Second Circuit was whether Hoskins could be charged as either a conspirator or an accomplice to the asserted FCPA violations, despite not falling within the categories of persons subject to liability as a principal.  The Second Circuit concluded that the statute’s text, combined with its legislative history and the presumption against extraterritoriality, compelled the conclusion that foreign nationals who act abroad and lack a direct connection to one of the categories of persons subject to principal FCPA liability cannot be liable as accomplices or conspirators.

Agency Liability Post-Hoskins

Hoskins creates some uncertainty regarding FCPA prosecutions of individuals or entities who could not be charged as principals. The decision creates a stronger jurisdictional defense for companies that are subject to DOJ or SEC actions solely based on their business association with a U.S. concern.  Under the Second Circuit opinion, it will take more than mere conspiracy or assistance to bring such entities within the scope of liability.

It is also likely that investigators will put more emphasis on developing evidence of agency relationships between principal violators and entities otherwise unreachable under Hoskins.  Indeed, the court in Hoskins held that the government could present agency evidence and pursue Hoskins as an agent of, for example, Alstom S.A.’s U.S.-based subsidiary.  Prosecutors may also attempt to broaden the traditional definitions of agency under the FCPA, particularly as agency theory becomes a critical link to reach now unreachable defendants.
Continue Reading Revisiting Agency Liability Under the FCPA Post-Hoskins