Top Menu

Friday Roundup


Checking in on the Hoskins appeal, checking in up north, checking in across the pond, for the younger generation, if that would happen in a company, and another one dismissed. It’s all here in the Friday roundup.

But first, if you got your FCPA from FCPA Professor in 2016, please consider a donation to help defray the yearly costs of running this free public website.

Checking In on the Hoskins Appeal

This previous post highlighted how U.S. District Court Judge Janet Bond Arterton (D.Conn) significantly trimmed the DOJ’s criminal FCPA enforcement action against Lawrence Hoskins. Unhappy with the decision, the DOJ filed a motion for reconsideration which Judge Arterton denied (see here).

The DOJ appealed to the Second Circuit and this previous post highlighted the DOJ’s opening brief. Recently Hoskins filed this response which states in pertinent part.

“This Court does not have jurisdiction to hear this appeal. Title 18 U.S.C. § 3731, which sets forth the circumstances under which the government can appeal in a criminal case, authorizes, in relevant part, appeal of decisions that dismiss a count of an indictment, or any part thereof, or that suppress evidence. Here, the District Court’s order does not strike any count, parts of any count or any allegation from the indictment; it does not preclude consideration of any discrete acts or factual predicate which could give rise to criminal liability; nor does it suppress any evidence. Rather, the decision merely indicates how the District Court intends to instruct the jury on FCPA accessorial liability. In no way does the decision below deprive the government of the ability to pursue a conviction on the FCPA-related counts based on conspiracy or aiding-and-abetting liability; it simply establishes that the government must adhere to the FCPA and first prove that Mr. Hoskins was an agent of a domestic concern for any liability to attach. Though the government may dislike that it must satisfy that element to prevail at trial, this Court’s precedents make clear that such issues do not give rise to an interlocutory appeal. See, e.g., United States v. Margiotta, 662 F.2d 131 (2d Cir. 1981). Thus this appeal should be dismissed and the matter remanded to the District Court for further proceedings.

Nevertheless, even if this Court were to conclude that jurisdiction is proper, the District Court’s ruling should be upheld. In two carefully reasoned opinions, the District Court correctly applied the Gebardi principle to prevent the government from circumventing Congress’s deliberate decision to exclude from the scope of the FCPA foreign nationals, who, like Mr. Hoskins: (1) do not act within the territory of the U.S., and (2) are not officers, directors, employees or agents of a U.S. domestic concern or U.S. issuer. See App. 118–38; App. 139–50.

That the Gebardi principle applies to the FCPA is not controversial. If there was ever a statute reflecting very careful Congressional line drawing, it is the FCPA. Despite the general dearth of FCPA caselaw, beyond the District Court’s decisions below, two other courts have applied the Gebardi principle to the FCPA, finding that the FCPA reflects Congressional intent to exclude certain categories of individuals from its reach. See United States v. Castle, 925 F.2d 831 (5th Cir. 1991); United States v. Bodmer, 342 F. Supp. 2d 176 (S.D.N.Y. 2004). Indeed, in Bodmer, the government actually conceded that the Gebardi principle precluded pursuit of a conspiracy charge against an alleged agent whose conduct, under a prior version of the FCPA, Congress chose not to criminalize. 342 F. Supp. 2d at 181. Thus, the key question on this appeal is not whether the Gebardi principle applies to the FCPA—it clearly does—but whether it applies to Mr. Hoskins.

The government posits that the Gebardi principle is “extremely narrow” and does not apply to this case. Gov. Br. 23. Specifically, in a reformulation of the position it took below (and in a 180-degree turn from the position it took in Bodmer), the government now contends that the Gebardi principle only applies to statutes where either the defendant’s “consent or acquiescence is inherent” in the offense, or where the defendant’s participation in the crime is “frequently, if not normally” featured. Id. at 24. The government’s new and unimproved interpretation of the Gebardi principle, however, is contrary to relevant precedent (including this Court’s own), internally inconsistent, and unworkable.

The District Court’s far simpler articulation of the Gebardi principle is consistent with relevant precedent and is the correct one: “[W]here Congress chooses to exclude a class of individuals from liability under a statute, ‘the Executive [may not] . . . override the Congressional intent not to prosecute’ that party by charging it with conspiring to violate a statute that it could not directly violate.” App. 125 (citing Castle, 925 F2d at 833). As the District Court aptly articulated, the text and structure of the FCPA demonstrate Congress’s intent to limit its application to certain defined categories of individuals, as confirmed by the statute’s legislative history. See App. 137. In sum, properly understood, Gebardi applies to the FCPA, and requires the government to prove that Mr. Hoskins was an agent of a domestic concern in order to sustain a conviction for conspiring to violate the FCPA or for aiding and abetting substantive FCPA violations.

Finally, the District Court’s decision to dismiss the second object of the conspiracy should also be upheld. This object charges Mr. Hoskins with conspiring with others, “while in the territory of the United States,” to violate § 78dd-3 of the FCPA. App. 94, ¶ 26(b). Because § 78dd-3 has no extraterritorial application and only applies to individuals not covered by the FCPA’s other provisions, and, further, because it is undisputed that Mr. Hoskins never entered U.S. territory during his time at Alstom, Gebardi requires dismissal of this object of the conspiracy.”

Checking In Up North

From Blakes regarding a recent enforcement action in Canada under its “FCPA” law – the Corruption of Foreign Public Officials Act (CFPOA).

“The Royal Canadian Mounted Police (RCMP) have recently laid charges against the president of a Canadian commercial aircraft company under the federal CFPOA, for allegedly conspiring to bribe Thai public officials. It is alleged that this individual conspired to bribe Thai military officials in relation to a proposed deal involving a commercial aircraft from Thailand’s national airline.

Charges were laid as a result of a lengthy investigation by the RCMP’s Federal Serious and Organized Crime Unit, initiated after a tip from the U.S. Federal Bureau of Investigation in 2013. This is the fourth investigation resulting in charges under the CFPOA in Alberta.

The RCMP have indicated their investigation did not reveal evidence that Thai officials were in fact bribed or were involved in the alleged conspiracy. Rather, it is alleged that the accused conspired to offer a bribe to foreign public officials. These charges are consistent with the decision of the Ontario Superior Court of Justice in R. v. Karigar, where the court confirmed that in order to establish a violation of section 3 of the CFPOA, it was not necessary to establish that a bribe was actually paid to a foreign official; rather, a conspiracy or agreement to bribe is sufficient.

The accused is expected to next appear in court on December 12, 2016. If ultimately convicted, he could face up to 14 years in prison.

This case reflects the continuing trend of increased CFPOA enforcement by Canadian authorities, and underscores the need for Canadian companies and individuals conducting business internationally to ensure implementation of robust anti-corruption compliance programs to deter and detect improper conduct. It also highlights that Canadian and foreign authorities, including those across the border, work together to investigate corruption offences.”

Checking In Across the Pond

The U.K. Serious Fraud Office recently announced that it “closed [its] investigation into Soma Oil & Gas Holdings Ltd, Soma Oil & Gas Exploration Limited, Soma Management Limited and others, in relation to allegations of corruption in Somalia.” According to the DOJ’s release:

“The SFO has concluded, based on the information and material we have obtained, that there is insufficient evidence to provide a realistic prospect of conviction. Whilst there were reasonable grounds to suspect the commission of offences involving corruption, a detailed review of the available evidence led us to the conclusion that the alleged conduct, even if proven and taken at its highest, would not meet the evidential test required to mount a prosecution for an offence.”

When this happens in the U.S., many are apt to call this a “declination.” The reality is when there is insufficient evidence to provide a realistic prospect of conviction, this is what the rule of law demands.

Sticking with the SFO, it (along with the DOJ) recently announced:

“The Criminal Division of the US DoJ is to second a lawyer to the UK for two years to work at the Financial Conduct Authority and the Serious Fraud Office, to further cooperation between the jurisdictions and share best practice. The secondee will spend one year at the FCA, one at the SFO, and one in Washington with the Fraud Section of the Criminal Division, investigating and prosecuting transnational economic crimes and training colleagues in the light of their experience in the UK.”

For the Younger Generation

In connection with International Anti-Corruption Day, Trace International recently released this series of videos and comic books to “raise awareness and education of anti-bribery around the world by teaching children about corruption and the impact that it can have on society.”

The City of London Police also released this video aimed at the next generation of professionals.

For other similar videos, see here.

If That Would Happen In A Company

According to this Law360 article, Assistant Attorney General Leslie Caldwell recently stated at a public event that a lack of experience and oversight at some U.S. attorney’s offices drives questionable criminal prosecutions. According to the article, Caldwell stated: “I acknowledge there are cases that get filed that shouldn’t be filed. There are districts where the oversight is not what it should be. The experience level is not what it should be.”

Funny isn’t it how the government nevertheless takes the position that a business organizations (many of which are significantly larger than the DOJ in terms of personnel) violates the law if an isolated transaction should not have been engaged in and/or oversight was not what it should be, and/or experience level was not what it should be.

After those comments were publicly reported, Caldwell issued this letter to “friends and colleagues.” It states in pertinent part:

“I write to apologize to each of you for the remarks I made during a recent panel at a Federalist Society event. My remarks followed statements by my co-panelists in which they expressed their strong views about specific cases which they believed were mishandled by the Department. I did not have prepared remarks for the event, and I certainly should have. Instead, I overreacted to the criticisms—which I strongly believe were not an accurate reflection of the Department’s work—by defending the Department in a way that inappropriately suggested that the care taken by U.S. Attorney’s Offices and others in making prosecutorial decisions was less than that taken by attorneys in the Criminal Division. And by making unscripted references to isolated issues in my recent experience, I realize that, rather than defending the reputation of the entire Department, I appeared to be criticizing U.S. Attorney’s Offices, Assistant U.S. Attorneys and other components. I deeply regret my remarks and the genuine hurt that they have caused.”

Another One Dismissed

It’s possible that there are other legal claims that are as frequently dismissed at the motion to dismiss stage as shareholder securities fraud and/or derivative actions connected to FCPA enforcement actions or disclosures.

Possible, but not likely. Even so, opportunistic plaintiffs’ counsel keep firing away.

The latest shareholder complaint to be dismissed was filed against Platform Specialty Products and various executives alleging securities fraud in connection with alleged false or misleading statements related to the FCPA in connection with an acquisition.


A good weekend to all.

Powered by WordPress. Designed by WooThemes