Circuit Upholds District Judge’s Dismissal of FCPA Convictions of Alstom Official | The Volkov Legal Group


The Second Circuit Court of Appeals upheld the district judge’s post-conviction dismissal of FCPA charges against Lawrence Hoskins, a former Alston executive, for his involvement in a bribery scheme to secure an energy contract of $118 million in Indonesia.

The Hoskins FCPA case had a long and winding journey through the court system, and the Second Circuit decision, which was made by a 2-to-1 majority, ended in a fractured court ruling that raised more questions than she provided answers. The majority decision seemed to reflect a predetermined decision looking for legal and factual arguments to support the resolution. Indeed, the dissent presented a compelling and more defensible position.

Here’s a “quick” look at the events leading up to the recent decision. The US subsidiary of Alstom, Inc. has hired two consultants to bribe Indonesian officials to secure a $118 million power contract. Hoskins, who worked for the British subsidiary of Alstom, selected the consultants and authorized their payment.

Initially, Alstom was charged in US federal court in Connecticut. Hoskins is not a US citizen, was not employed by Alstom’s US subsidiary, and never entered the United States while working on the program. The United States argued that Hoskins was a co-conspirator or accomplice in the US subsidiary’s violation of the FCPA. In an initial appeal, the Second Circuit rejected the US theory of liability ruling that Hoskins, as an accomplice or co-conspirator, could not be held liable for a crime he was incapable of committing as a principal.

After the initial Second Circuit decision, DOJ prosecutors therefore tried against Hoskins on the theory that Hoskins acted as an “agent” of a “domestic company,” in this case, the U.S. subsidiary of Alstom. The jury found Hoskins guilty of eleven counts, seven of which were FCPA violations and four were money laundering counts. In finding the defendant guilty, the jury rejected defense arguments that Hoskins was not an “agent” of a “domestic company” under FCPA law.

The trial judge dismissed the FCPA convictions against Hoskins, finding there was insufficient evidence for a reasonable juror to conclude that Hoskins acted as an agent for a domestic business. The judge sentenced Hoskins to 15 months in prison.

In a split decision (2 to 1), the Second Circuit upheld the trial judge’s ruling that there was insufficient evidence to support the jury’s guilty verdicts on all seven FCPA counts. The question boiled down to whether there was sufficient evidence that Hoskins had acted as an agent for Alstom’s US subsidiary.

In reaching its decision, the majority held that under well-established common law principles applicable to principal-agent relationships, Alstom’s US subsidiary did not have sufficient authority over Hoskins and its activities to support the finding that Hoskins was an agent of Alstom’s US subsidiary.

Hoskins was employed by another subsidiary of Alstom, which provided global support to all Alstom subsidiaries worldwide. The court cited the absence of any evidence that any of the main players in the conspiracy “actually controlled” Hoskins’ actions. Further, the Court noted that the co-conspirators in the United States lacked the ability to fire Hoskins, set or change his compensation, and therefore lacked the fundamental element of a principal- agency – the ability to hire and fire an agent working on behalf of a principal.

The dissent, however, challenged the majority’s reasoning. First, the dissent noted that Hoskins had the authority to hire and fire the specific consultants used to pay bribes to Indonesian officials and to negotiate the terms of their compensation. Hoskins’ authority to set these terms was specifically within the authority and control of Alstom’s US subsidiary, suggesting that there was in fact an “agency” relationship between Alstom’s US subsidiary Alstom and Hoskins.

Second, the dissent noted that Alstom’s U.S. subsidiary partially revoked Hoskins’ authority over hiring consultants when it ordered him not to hire a specific consultant being considered for the bribery scheme.

And finally, the dissent noted that Hoskin’s organization was responsible for supporting all other international sectors, including the US subsidiary, when asked to do so. In this affair, the American subsidiary of Alstom asked Hoskins to help it recruit and pay the consultants.

While the jury found sufficient evidence of a principal-agency argument and dismissed the defense claims, the district court and appellate majority appeared destined to overturn the FCPA convictions.


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