Agent Zero: Second Circuit (Again) Limits Criminal Liability In Long-Running Hoskins Case

• Published date: 05 September 2022
• Subject Matter: Corporate/Commercial Law, Government, Public Sector, Criminal Law, Corporate and Company Law, Money Laundering, White Collar Crime, Anti-Corruption & Fraud
• Law Firm: Arnold & Porter
• Author: Mr Daniel Bernstein, Marcus Asner and Sahrula Kubie

It's a rare day when the Feds lose a criminal trial. And it's a rarer day when the Feds lose an appeal. It's even rarer when the Feds lose their post-trial appeal'especially after having lost an earlier interlocutory appeal in the very same case.

That just happened. On August 12, 2022, the US Court of Appeals for the Second Circuit affirmed the acquittal of Lawrence Hoskins, a former Alstom executive in Europe, for violations of the US Foreign Corrupt Practices Act (FCPA).¹ After closely examining the facts, the court concluded, as a matter of law, that Hoskins was not an agent of Alstom's US subsidiary and therefore not subject to the FCPA. This marks the second time that the Circuit has sided against the government on an FCPA issue in what has become a nearly decade-long prosecution over conduct that dates back to 2002.

Although Hoskins ostensibly is a case about the FCPA, we think it actually carries a much broader significance. Hoskins focused on the common-law definition of agency and could have implications for corporate criminal liability under the doctrine of respondeat superior. As a practical matter, Hoskins has the potential to rein in the ability of prosecutors, and perhaps even civil plaintiffs, to hold corporations liable for the acts of purported agents in a variety of contexts. Corporations, defense lawyers, plaintiffs' lawyers and, of course, prosecutors themselves, all should take note.

Background

As detailed in the Second Circuit's opinion, Lawrence Hoskins, a UK citizen, worked in Paris for a UK subsidiary of Alstom S.A., a global power and transportation company. He supported various Alstom operations around the world, including the work of a US subsidiary called Alstom Power, Inc. (API). In 2013, US prosecutors charged Hoskins in the District of Connecticut with FCPA, money laundering, and conspiracy offenses for his alleged role in a scheme to bribe Indonesian officials to secure a $118 million power contract with the Indonesian government for Alstom and its partners.

The case presented a jurisdictional challenge for the prosecution team. As the Second Circuit observed, "[b]ecause Hoskins is not an American citizen, was not employed by the American subsidiary, and did not enter the United States while allegedly working on the scheme, he falls outside the category of persons directly covered by the FCPA."² Originally, the government contended that Hoskins was liable under the FCPA as a co-conspirator or accomplice. The District...