This November 2019 post concerning the jury verdict in the long-running Foreign Corrupt Practices Act enforcement action against Lawrence Hoskins (the FCPA conduct Hoskins was found guilty of allegedly occurred between 2002 and 2004 and the trial took place in 2019 nearly 15 years later) noted that the jury verdict was not the final chapter in the enforcement action, just merely a development.
Earlier today in a setback for the Department of Justice and its FCPA theory of prosecution, Judge Janet Bond Arterton (D. Conn) granted Hoskin’s motion for acquittal on the seven FCPA charges he was convicted of by the jury (See here for the decision. The judge denied Hoskin’s motion for acquittal on the five money laundering charges he was convicted of by the jury).
In terms of background, a defendant bears a heavy burden in seeking a motion for acquittal and such motions are rarely granted. In the words of Judge Arterton “a defendant’s motion for acquittal ‘shoulders a heavy burden in challenging the sufficiency of the evidence,’ and the Court ‘must uphold the jury’s verdict if … any rational trier of fact could have found the essential elements of the crime beyond a reasonable doubt.” (Emphasis in original).
Judge Arterton’s decision was highly factual and in setting forth the arguments of the Hoskins and the DOJ she wrote (internal citations omitted).
“Defendant argues that the Government failed to introduce evidence at trial which could support the necessary conclusions that Defendant agreed to act subject to API’s control and that API was in control of the undertaking. He also argues that evidence introduced at trial actually “demonstrates the opposite”: that API “had no right to control any of Mr. Hoskins’s actions, including any actions undertaken with respect to the Tarahan project.”
Specifically, Defendant suggests that “Alstom’s corporate records[,] . . . email correspondence and trial testimony” all demonstrate that API did not have the right to exercise control over him. He argues that the Alstom corporate records demonstrate that “Mr. Hoskins’s reporting hierarchy was  entirely distinct from API: no one from API reported to Mr. Hoskins, and Mr. Hoskins did not report to anyone from API.” Rather, his role regarding third-party consultants was “to approve certain key commercial terms of their engagement” after such terms had been negotiated by the business unit (here, API) and approved by the compliance teams. Defendant’s role included “contribut[ing] to the selection of Agents, and approv[ing] the key elements of the related agreements, applying Alstom policy.” Defendant argues that these corporate documents “make clear that [his] function in connection with the selection of agents was one of oversight and approval on behalf of Alstom International Network—not on behalf of or as an agent of API.”
Defendant also argues that email correspondence and trial testimony “confirmed what the corporate documents . . . make clear: Mr. Hoskins[ had] approval authority in connection with the hiring of outside consultants on the Tarahan project.” Bruno Kaelin, who also worked in Alstom’s International Network (“IN”), wrote to Mr. Pierucci that the retention of Pirooz Sharafi as a consultant on the Tarahan Project was “in the approval process in IN (Lawrence Hoskins and Etienne Dé).” Similarly, another employee of International Network informed Mr. Pomponi that the file for Azmin Aulia was “with L. Hoskins for approval.” Testimony by witness David Rothschild also confirmed that Defendant was responsible for the “final approval” of agreements with third party consultants and testimony by witness Larry Puckett confirmed that Defendant’s role included the “approval of an outside agent. Defendant argues that this evidence demonstrates that “Mr. Hoskins exercised approval authority over certain aspects of the retention of third-party consultants,” and that he “did this on behalf of Alstom’s International Network, and no one within API had a right to control or direct his actions.”
Defendant also argues that testimony regarding the corporate structure and oversight between API and International Network demonstrates that he could not have been an agent of API. Mr. Puckett testified hypothetically that “if it came down to a real disagreement” between API and IN regarding who to hire as a consultant, the “business [unit] would win out.” But Mr. Puckett also testified that such a disagreement would have to be resolved by elevating it to the place in the corporate hierarchy where API’s and IN’s reporting lines met in order to try to overrule each other. He explained that if Mr. Pierucci and Mr. Hoskins had disagreed regarding the hiring of a consultant, in order to override Mr. Hoskins, Mr. Pierucci would have had to go up his reporting line to try to find someone senior to Mr. Hoskins in Mr. Hoskins’s reporting line. Mr. Puckett also testified that although Mr. Pierucci “controlled strategy” and “negotiation tactics” regarding the Tarahan Project, Mr. Pierucci could not fire, reassign, nor demote Mr. Hoskins and could not affect his compensation.
Similarly, Mr. Thiessen testified that if there was a disagreement between the business unit and IN regarding the proposed terms of payment for a consultant, the two groups would “[w]ork it out somehow, renegotiate or come up with something new or convince – somebody would convince the other party to go along with it.” He confirmed that the business unit was not able to implement an agreement without approval from International Network. Defendant argues that this testimony demonstrates that API did not have the authority to control Mr. Hoskins in the manner necessary for an agency relationship.
In response to Defendant’s reliance on corporate hierarchy and policy, the Government asserts that the “jury was certainly entitled to give little (if any) weight to a function limited to making sure the boilerplate in the consultancy agreement matched the boilerplate in other Alstom consultancy agreements, particularly when the defendant and his co-conspirators understood they would be ignored.” The Government cites Mr. Rothschild’s testimony that the charts reflecting the corporate hierarchical structure did not capture all relationships that API had with other Alstom employees and that it did not reflect how the Tarahan Project was actually run, and Mr. Puckett’s testimony that the Tarahan Project was “unique.”
The Government also argues that it introduced “overwhelming documentary evidence that proved that the defendant was acceding to, and carrying out, API’s instructions in connection with the hiring of consultants on the Tarahan Project, and that API controlled the undertaking.” It characterizes Defendant’s “approval function” as “subservient to that of API” because he “actually exercised no meaningful oversight.” The Government also argues that any approval authority exercised by Defendant “does not undermine API’s well-documented control over the defendant in other aspects of retaining the Tarahan consultants.”
Mr. Rothschild testified that API had ultimate decision-making authority over hiring a consultant, including who to hire, how much to pay, and the terms of the agreement. Mr. Puckett testified that “Mr. Hoskins didn’t call the shots or the strategy on Tarahan,” but rather Mr. Pierucci was “in control.” “So, in that sense,” Mr. Puckett explained, “Mr. Hoskins would have been reporting to [Mr. Pierucci] on the Tarahan Project.”
The Government argues that emails introduced at trial also demonstrate API’s control over Defendant’s work on the Tarahan Project. For example, the Government relies upon an email from Reza Moenaf, Alstom Country President for Indonesia, to Mr. Pierucci and Mr. Rothschild, and copying Mr. Hoskins, requesting “[y]our position” and “your decision” regarding the hiring of a consultant. The Government also cites an email from Mr. Moenaf to Mr. Pierucci and Mr. Rothschild, copying Mr. Hoskins and Eko Sulianto, indicating that “[a]ccording to Lawrence [Hoskins], Fred [Pierucci] has already given his ‘goahead’ to proceed with the proposed consultant.” The Government also relies upon an email from Mr. Pierucci to Mr. Pomponi, on which Mr. Hoskins was copied, explaining that Marubeni wanted “Alstom Windsor,” meaning API, and “particularly Fred Pierucci, to agree to” terminate the agreement with Pirooz Sharafi in favor of a new consultant. The Government concludes that “[t]hus it was reasonable for the jury to infer from the evidence that, when the defendant told Sharafi his role was being reduced and then hired Aulia, he did so at the behest of API.”
The Government points to other instances where Mr. Pierucci and Mr. Pomponi, representatives of API, “gave the defendant instructions, which he carried out,” in support of their position that Mr. Hoskins was an agent of API. These include emails to Mr. Hoskins asking him to “[p]lease reissue asap the revised consultancy agreement based on the following” terms and to “pls go ahead, using today’s date, and issue the fax official to Azmin [Aulia],” and an email from Mr. Hoskins indicating that “Fred P[ierucci] asked me to check with Resa [Moenaf] on latest position on Tarahan” and that Mr. Hoskins would “brief” Mr. Pierucci during his upcoming trip to Paris.
The Government also argues that evidence that Defendant “assisted API in determining the best terms of payment it could obtain” with a consultant demonstrates that Defendant was an agent of API. Specifically, the Government cites emails in which Defendant offered “[his] advice,” or “recommended that” Alstom adopt certain proposed terms. Christopher Varney, who worked in finance at API, indicated that the business units made ultimate decisions and were “in charge” of projects, while IN “provide[d] the link to the people on the ground, the local teams.” The Government also cites an email from Reza Moenaf to Mr. Hoskins indicating that he felt that he had “responsibility without authority” because the business unit “has the final call.”
In sum, the Government argues that the evidence demonstrates that Mr. Hoskins was an agent of API for two primary reasons: 1) API “controlled this undertaking, . . . [m]eaning the hiring of agents,” including “who they hired, how they hired them, when they hired them, how much they paid them and what those terms of payment would be,” and 2) “all of the back and forth where [API] is giving the defendant instructions and he is following them, . . . coming back to try to meet those instructions . . . [and] asking for feedback on how to basically carry out his function.”
Defendant describes the Government’s arguments as a “red herring,” because the “right to control the overall objectives or direction of a project does not equate to the right to control a putative agent’s work in connection with that project.” Additionally, Defendant argues, an agency relationship cannot be established through evidence indicating that API representatives “asked Mr. Hoskins to assist in various tasks” and that he did so, because “mere agreement to do something at another’s request is insufficient to create an agency agreement.”
In pertinent part, Judge Arterton concluded:
“[T]the Court concludes that the Government introduced evidence which would permit a rational jury to conclude that API both 1) controlled the hiring of consultants for the Tarahan Project, and 2) gave Mr. Hoskins instructions, which he followed. Thus, the question becomes whether, in “draw[ing] justifiable inferences of fact” from that evidence, “a reasonable mind might fairly conclude . . . beyond a reasonable doubt” that Mr. Hoskins agreed to and did act subject to API’s control. For the reasons that follow, the Court concludes that even when drawing all reasonable inferences in the Government’s favor, the evidence adduced at trial cannot support the conclusion that Mr. Hoskins acted subject to API’s control such that Mr. Hoskins was an agent of API.”
[N]one of the indicia of control which are typical of an agency relationship are present here. The Government argues that “the right to hire or fire” and the “right to reassign” are not necessary in an agency relationship but rather are indicia of “an employee/employer relationship.” But contrary to the Government’s suggestion, the “principal’s right of control presupposes that the principal retains the capacity throughout the relationship to assess the agent’s performance, provide instructions to the agent, and terminate the agency relationship by revoking the agent’s authority.” Third Restatement § 1.01 cmt. f; see Hollingsworth, 570 U.S. at 713 (agency relationship not present where purported agents “answer to no one” and “decide for themselves, with no review, what arguments to make and how to make them” and where “[n]o provision provides for their removal,” among other factors). The principal’s authority to terminate the agency relationship is especially important. See Third Restatement § 1.01 cmt. c (“The requirement that an agent be subject to the principal’s control assumes that the principal is capable of . . . terminating the agent’s authority. . . . The chief justifications for the principal’s accountability for the agent’s acts [include] the principal’s ability to . . . terminate the agency relationship.”). Here, Mr. Puckett testified that Mr. Pierucci could not fire, reassign, demote, or impact the compensation of Mr. Hoskins. Moreover, the Government introduced no evidence that would support the conclusion that anyone at API had the power to terminate Mr. Hoskins’s authority to participate in the hiring of consultants for the Tarahan Project, to assess Mr. Hoskins’s performance, or to otherwise exert control over his actions.
Thus, the Court sees no evidence upon which a rational jury could conclude that Mr. Hoskins agreed or understood that API would control his actions on the Tarahan Project, as would be required to create an agency relationship. Nor does the Court see any evidence upon which a rational jury could conclude that API actually had the authority or ability to control Mr. Hoskins’s actions. The Government has thoroughly demonstrated that API was the business leader of the Tarahan Project, that it exercised authority and leadership over which consultants were hired for that project and according to what terms, and that Mr. Hoskins worked with API on that project. The Government has also demonstrated that Mr. Hoskins could not control API, and that he may have performed tasks upon request by API employees. But it has identified no evidence introduced at trial which, even when drawing inferences favorable to the Government, could entitle a rational finder of fact to conclude beyond a reasonable doubt that there was an understanding between Mr. Hoskins and API that API would be in control of Mr. Hoskins’s actions on the Tarahan Project or that API did control Mr. Hoskins’s actions in a manner consistent with agency relationships. Because Mr. Hoskins cannot be convicted of the FCPA violations charged in Counts One through Seven unless he was an agent of a domestic concern, the Court concludes that the evidence introduced at trial cannot support his conviction on those counts. Thus, Defendant’s motion for acquittal under Rule 29(c) is granted as to Counts One through Seven.”