The US Can (Probably) Charge Bribe-Taking Foreign Officials as Conspirators or Accomplices in FCPA Cases

Given everything else that’s happening related to corruption right now (much of it awful), perhaps it’s a mistake for me to be spending so much time thinking about fairly narrow doctrinal issues related to applications of the U.S. Foreign Corrupt Practices Act (FCPA). But my reflections on the recent court of appeals decision in US v. Hoskins (which held that a foreign national could not be charged as an accomplice or co-conspirator in an FCPA violation based on conduct occurring abroad) have gotten me thinking about—and questioning—what I had assumed was a well-settled and straightforward conclusion that the foreign official who takes a bribe from a person or entity covered by the FCPA cannot be charged with aiding and abetting, or conspiring to commit, that FCPA violation.

That conclusion—that bribe-taking foreign officials may not be charged as accomplices or co-conspirators in FCPA cases—was announced by a US court of appeals in 1991 in a case called United States v. Castle. In Castle, according to the allegations (which for present purposes I’ll assume to be true), two private US businessmen paid a $50,000 bribe to two Canadian government officials in order to win a contract to provide public buses to the provincial government. The US government charged the American citizens with violating the FCPA—which, if the facts are as alleged, they clearly did. The Canadian officials cannot directly violate the FCPA, which by its terms prohibits only covered entities from giving (or promising or offering) bribes to foreign public officials; the FCPA does not criminalize the act of taking a bribe. But in the Castle case, the US government tried to get around this problem by charging the Canadian officials with conspiracy to violate the FCPA, pursuant to the federal conspiracy statute, codified at 18 U.S.C. § 371. That section makes it a separate crime (“conspiracy”) for “two or more persons [to] conspire … to commit any [federal] offense,” as long as “one or more of such persons do any act to effect the object of the conspiracy.” According to the U.S. government’s theory of the case, once the Canadian officials agreed with the US businessmen to accept money in exchange for a public contract, they had all conspired to commit a federal crime, and once the US businessmen took action in furtherance of this conspiracy (by paying the money), all the parties, including the Canadian officials, were liable as co-conspirators. The US district judge rejected that theory, and the court of appeals affirmed, simply endorsing and reprinting (with one minor correction) the district judge’s ruling.

Since Castle, so far as I can tell, this principle that the US government can’t prosecute bribe-taking foreign officials as conspirators in an FCPA violation (or, similarly, as accomplices to an FCPA violation under another statute, 18 U.S.C. § 2(a)), seems to have become generally accepted, largely unchallenged by the US government, and treated as clearly correct as matter of legal doctrine. And it matters a great deal as a policy matter: If the Castle ruling had gone the other way, than the FCPA—complemented by the general conspiracy and complicity statutes—would give the US government a very powerful tool, for better or worse, to prosecute bribe-taking foreign government officials, at least those with sufficient ties to the US to establish personal jurisdiction (an important qualification I’ll return to later). I’d always assumed, without much reflection, that Castle was rightly decided. But after some digging into the case law, prompted largely by the more recent decision in Hoskins, and re-reading the Castle opinion, I think that Castle’s broad holding is doctrinally incorrect. If certain other conditions hold, a bribe-taking foreign official can be guilty as an accomplice to or co-conspirator in an FCPA violation, even though the foreign official could not directly violate the FCPA.

The starting point here is the well-established principle under US law that, as a general matter, a party may be guilty of conspiracy (under § 371) or complicity (under § 2(a)) even if that party did not commit all, or even any, of the elements of the underlying federal crime. Indeed, a party can be guilty of a conspiracy to commit a crime, or complicity in a federal crime, even if that party cannot, as a matter of law, commit the underlying crime (because the party is not a member of the specific class of individuals to whom the criminal statute applies). If that principle applied in cases like Castle, then there would be no question that the bribe-taking foreign officials were co-conspirators and/or accomplices.

The Castle court rejected that conclusion on the authority of a 1932 Supreme Court case called Gebardi v. United States, which dealt with a statute called the Mann Act. The Mann Act made it a federal crime to transport a woman or girl across state lines for prostitution or other immoral purposes. In Gebardi, an unmarried man and woman made plans to cross state lines for purposes of engaging in sexual relations (illegal at the time because they were not married). The man, who apparently made all the arrangements and purchased the train tickets, was charged with violating the Mann Act, and his conviction was not at issue. The government, though, had also charged the woman with conspiracy to violate the Mann Act. The Supreme Court held that this was improper, even in though the woman was a (consensual) party to the offense, and would therefore seem to fall within the scope of the conspiracy statute. The Court reasoned that finding any woman who consented to a Mann Act violation to be a co-conspirator would contravene Congress’s evident purpose in criminalizing the transportation of the woman, but not criminalizing the woman’s conduct. The Court’s reasoning seems to be that Congress must have thought that a woman—even one who “consents” in the sense of agreeing or acquiescing to her transportation—is more like a victim than a co-conspirator, and should not be punished. As the Court put it, “we perceive in the failure of the Mann Act to condemn the woman’s participation in those transportations which are effected with her mere consent, evidence of an affirmative legislative policy to leave her acquiescence unpunished.”

The Castle court thought that Gebardi barred the conclusion that bribe-taking foreign officials were co-conspirators in FCPA violations. As the court reasoned, “Congress intended in both the FCPA and the Mann Act to deter and punish certain activities which necessarily involved the agreement of at least two people, but Congress chose in both statutes to punish only one party to the agreement.” Furthermore, the Castle court noted, the fact that the FCPA criminalizes only bribe-giving, and conspicuously fails to criminalize bribe-taking, is in notable contrast to other federal anti-bribery statutes that address bribery of federal public officials (e.g. here, here, and here), as those other statutes prohibit both bribe-giving and bribe-taking.

That analysis, which I used to find persuasive, is deeply flawed, at least as a doctrinal matter. (I’ll put aside for the moment whether it’s good policy.) It’s true that Gebardi held that, notwithstanding the broad language of the conspiracy statute, when Congress chooses to punish only one party to a crime that typically involves the consent or acquiescence of another party, the passive or acquiescing party, whom it appears Congress considered more of a victim, should not be punished as an accomplice or co-conspirator simply by reason of his or her consent. However, the Gebardi Court was careful to distinguish that situation from the alternative scenario (discussed in an earlier Supreme Court case called United States v. Holte), that a woman who was “the active or moving spirit in conceiving or carrying out [her] transportation” could violate the Mann Act directly, and presumably could also be charged as a conspirator. Moreover, precisely that distinction—between a party who passively consents to a criminal scheme and one who is the “active or moving spirit”—has been deployed in the context of an important federal anti-bribery statute that explicitly criminalizes only one side of a bribe transaction: the Hobbs Act, codified at 18 U.S.C. § 1951, which prohibits “extortion,” defined in part as “obtaining of property from another, with his consent, … under color of official right.” That somewhat convoluted language has been interpreted by the Supreme Court as the “rough equivalent of what we would now describe as ‘taking a bribe.’” (Because more specific federal statutes deal with bribery of federal officials, the Hobbs Act is used principally against state and local officials.)

The Hobbs Act, then, is like the FCPA in that it only explicitly criminalizes one side of a bribe transaction: While the FCPA criminalizes paying a bribe but not taking a bribe, the Hobbs Act criminalizes taking a bribe but does not (explicitly) criminalize paying a bribe. But can the private party who pays a bribe to a public official be guilty of conspiracy (with the public official) to violate the Hobbs Act? The question has arisen repeatedly, and the Supreme Court and multiple courts of appeal have given a consistent answer: Yes, but only if the bribe-payer is more actively involved in suggesting or encouraging the bribe transaction—not if the bribe-payer is, as the Supreme Court put it in its 2016 decision in Ocasio v. United States, “merely complying with an official demand.” As Ocasio explained, “Holte and Gebardi make perfectly clear that a person may be convicted of conspiring to commit a substantive offense that he or she cannot personally commit. They also show that when that person’s consent or acquiescence is inherent in the underlying substantive offense, something more than bare consent or acquiescence may be needed to prove that the person was a conspirator.” In so holding, Ocasio was not breaking any new ground: A long string of court of appeals opinions has held that a bribe payer may be guilty of conspiracy to violate the Hobbs Act (or as an accomplice to such violation)—even though the relevant provision of the Hobbs Act applies directly only to the bribe-taking public official—as long as the bribe-payer “exhibits conduct more active than mere acquiescence.” (See also here, here, and here.) A similar logic has been applied in the context of other anticorruption statutes that, like the Hobbs Act, only explicitly criminalize one side of an unlawful transaction.

The Castle opinion is flatly inconsistent with this aspect of the doctrine. A fair application of Gebardi and Holte, as well as the line of Hobbs Act cases culminating in Ocasio, would allow the government to charge a foreign official who receives a bribe proscribed by the FCPA with conspiracy and/or complicity in an FCPA violation, but only if the government can prove that the government official did something more then merely consent to receive the bribe. If there is “conduct more active than mere acquiescence,” and certainly if the government official is the “active or moving spirit” behind the bribe transaction, then under binding Supreme Court authority, as well as the persuasive authority of a lengthy line of opinions on the Hobbs Act and similar statutes, a bribe-taking public official can be guilty of conspiracy to violate the FCPA and/ or with aiding and abetting such a violation, even though it is incontrovertible that such a government official cannot directly violate the FCPA. Of course, the Castle court can’t be faulted for failing to anticipate subsequent cases, like the Supreme Court’s decision in Ocasio, though it’s fair to criticize Castle both for misreading Gebardi itself and for neglecting the prior line of clearly analogous appellate opinions concerning the Hobbs Act. At the very least, Castle’s doctrinal underpinnings have been eroded to the point where there’s a strong argument to be made that it’s no longer good law. (For a commentary reaching a similar conclusion about how Ocasio may undermine Castle‘s reasoning, see here. My take is largely similar, though I don’t think Ocasio actually broke much new ground; rather, that case seems to have endorsed a longstanding view that most courts had already endorsed, but that Castle ignored or implicitly rejected.)

Now, there are two important qualifications to the above conclusion.

  • First, even if the above analysis is correct, it doesn’t mean that the US will be able charge all foreign officials who actively solicit bribes in FCPA cases as accomplices or co-conspirators. Some officials, particularly heads of state, may be protected by foreign sovereign immunity doctrines. And even for those who aren’t, the U.S. would still have to establish personal jurisdiction over the defendant, consistent with the Due Process Clause of the US Constitution. This will typically entail establishing that the foreign government official has sufficient “systemic and continuous” contacts with the US to establish general jurisdiction, or that the FCPA violation in question arose from the defendant foreign official’s conduct within US territory (say, the payment or agreement to make a payment was concluded in US territory).
  • Second, even if the Castle court’s analysis is flawed, it’s possible that its holding might be justified on other grounds. This may bring us back to Hoskins, which relied in part on the reasoning of cases like Gebardi, but emphasized in particular the alleged affirmative legislative policy under the FCPA to limit extraterritorial complicity or conspiracy liability. I explained in my last post why I don’t think Hoskins’ analysis is correct on this point, but someone who finds Hoskins persuasive with respect to the limits on extraterritorial applications of complicity and conspiracy liability in FCPA cases might endorse the outcome in Castle even if they find my critique of Castle’s reasoning persuasive. That said, it’s perhaps worth pointing out that the Castle rule and the Hoskins rule don’t always lead to the same conclusion. Consider a foreign public official who takes a bribe from a US firm while in US territory. The Hoskins holding would not (by itself) bar a charge against the official for conspiracy to violate the FCPA, since such a charge would not be extraterritorial, but the Castle rule would bar such a charge. Similarly, a non-US co-conspirator whose relevant acts are all abroad but who is not the bribe-taking official (for example, someone like Mr. Hoskins), would be protected by the Hoskins rule but unaffected by the Castle rule.

I’m not sure, as a policy matter, whether it would be a good idea for the US government to be able to charge bribe-taking foreign officials (over whom the US can properly assert personal jurisdiction) with conspiracy or complicity in FCPA violations. That seems to me a hard question, and one that merits further thought. But as a legal matter, the idea that such officials cannot be charged as FCPA accomplices or conspirators—a view that many people (me included, until very recently) take to be both settled and settled correctly—is almost certainly wrong, in the sense of being inconsistent with the relevant case law. At the appropriate time, perhaps the US government should revisit this question and consider testing the issue by bringing charges in an appropriate case.

6 thoughts on “The US Can (Probably) Charge Bribe-Taking Foreign Officials as Conspirators or Accomplices in FCPA Cases

  1. Pingback: The US Can (Probably) Charge Bribe-Taking Foreign Officials as Conspirators or Accomplices in FCPA Cases – Matthews' Blog

  2. Pingback: This Week in FCPA-Episode 121, the Go Blue edition - Compliance ReportCompliance Report

  3. While it’s clear that this is a purely legal analysis, I find the policy side of this question extremely interesting. I have to admit that I was rather settled in my thinking about this question too, up until now – somehow the Castle precedent in my head was set as an unquestionable rule (thank you for shaking it up!). I probably like the idea that the FCPA could be applied to foreign officials – mostly because I have seen many investigations related to the FCPA charges in foreign countries fall flat even after the foreign national prosecutors receive memos from the US prosecutors about actual convictions in US related to foreign officials. I would be very interested to hear your thoughts on the practical policy implications of what you are suggesting in this post (and the one from 11th Sept). Would expanding the FCPA application to foreign officials taking a bribe mean that the US needs to sign separate legal cooperation agreements with foreign countries so that the US Prosecution could actually reach the foreign officials? If not, I find it hard to imagine how the foreign countries would just agree to extradite their foreign officials to US based on charges as sensitive as corruption (it is even harder to imagine given that those foreign countries may have very high levels of corruption, resulting in their corrupt foreign officials being part of, say, the state capture).
    Obviously, there are instances where countries develop interesting jurisdiction doctrines expanding their reach. My favorite very illustrative example for a long time has been the unconventionally broad approach of Spain in applying universal jurisdiction – but even their courage has been growing week in this matter due to (probably mostly) diplomatic and political pressures. This makes me wonder, therefore, whether the US itself would go so far as to be willing to fight such diplomatic fights with foreign countries. It reminds me of one particular statement by the US former Secretary of Defense (I understand that it is not fair to compare potential war crimes investigations to corruption investigations, but this offers a good glimpse into how US itself perceives extraterritorial investigations, so maybe I will be excused for the uncanny indirect comparison). In 2003, when Belgian courts began an enquiry into possible U.S. crimes during the Iraq War, this caused the US officials to intervene with Belgian authorities. According to an article by D. Bosco (“Off the Clock – Is a Spanish attempt to hold China accountable for abuses in Tibet the end of the global policeman?”, Feb. 15, 2014, Foreign Policy), “The then U.S. Secretary of Defense Donald Rumsfeld warned that universal jurisdiction laws posed a direct threat to U.S. interests. “It is only a matter of time before there is an attempted prosecution of a U.S. official,” he wrote in a memo to other Bush administration officials. He warned Belgium that NATO might have to move its headquarters from Brussels unless the law was changed. Soon after, Belgium agreed.” While there were some changes in the rhetoric of the US politicians when addressing the issue in the past years, I did not notice a complete overturn of this…
    Summarizing my very long question (sorry for being so detailed – this really raised many interesting questions for me and it shows), would you see this actually happening in practices US in cases of FCPA application for foreign officials? What path would see to be legally feasible for this?

    • Great questions, to which I don’t (yet) have any good answers. As you rightly note, I limited myself in the post to a legal analysis, partly so as not to bite off more than I can chew in one post, but partly because I’m myself genuinely unsure whether it would be a good idea, as a matter of policy, for the US to charge bribe-taking foreign officials as abetters and/or co-conspirators in FCPA cases.

      One thing worth re-emphasizing is that, as I mentioned in the post, there are separate limitations on the ability of US prosecutors to bring such charges, including Due Process limits on personal jurisdiction over foreign defendants and head-of-state immunity doctrine. In addition, you’re correct that in many cases the U.S. wouldn’t be able to convince the foreign jurisdiction to extradite. Still, it’s quite possible that in some cases all of these barriers could be overcome — as they were in Castle itself. You could imagine a lower-level (though still senior) foreign official (or ex-official), with substantial assets in the US who travels here frequently, being charged and tried in the US. After all, the US does (I believe) bring criminal charges against foreign nationals for extraterritorial conduct with some frequency, especially in the context of money laundering and drug trafficking.

      But you’re absolutely right to point out how politically sensitive it would be for the US to bring criminal charges against a foreign government official for accepting bribes from a US company (or a US issuer), especially if the bribe transaction took place entirely on foreign soil. Even if the US could legally do it, it might not be wise. At the same time, though, the foreign official might be a genuinely bad actor, and the conduct might have adverse effects on US parties, and perhaps might have even taken place (partly) in the US–and the foreign jurisdiction might have no interest in prosecuting or lack the capacity to do so. If so, then there’s quite a good case to be made for the US to bring charges, if we presume (as I argued in the original post) that Castle is wrongly decided. This is just a long-winded way of saying what I said above: I’m not sure.

      I do think that if the US government decides to take up this theory at some point (bringing a case outside the 5th Circuit, in the hopes of getting a different outcome and generating a circuit split, which might then prompt the Supreme Court to take up the issue), it should choose the case very carefully. What you really want is a situation where the evidence indicates that the foreign official was really the bad actor, essentially extorting the US firm to pay up to do business, ideally involving meetings that took place in US territory. You want a case where the court’s anticipated reaction is not, “What is this case, which has little to do with the US, doing in my court?” but rather, “Well, of course this bad guy was engaged in outrageous wrongdoing with an obvious US connection, and his active role in the plot makes this looks much more like the Hobbes Act cases than like Gebardi!”

      • Ruta and Professor Stephenson, many thanks for your comments to this interesting piece. I’ll caveat all of what I have to say with the following: My knowledge of the FCPA, the Mann Act, and Gebardi is limited to what I learned last year in Professor Wu’s “Law & the International Economy” course.

        Anyway, I wanted to pick up on the open policy question that isn’t resolved in the piece. (N.B. From a doctrinal standpoint, I am convinced by Professor Stephenson’s legal analysis that a bribe-taker could be charged conspiratorially with an FCPA violation.) Foreign sovereign immunity and jurisdictional requirements aside, one policy benefit that I could envision resulting from a COA or SCOTUS decision overturning Castle is that the government would have leverage with the bribe-taker to convince them to testify against the bribe-giver. In other words, in a scenario in which the bad actor the government really wants to ensure a conviction against an American bribe-giver, being able to offer immunity to the bribe-taker (i.e., a foreign official) in exchange for testimony could make FCPA cases easier to make (which would, theoretically, propel deterrence efforts).

      • I understand I have asked you to take the additional and even more uncertain intellectual step with my question and I thank you for taking your time to do that.

        I was also thinking about what you call the really “bad actor” and what role it could play in such cases – I agree that there would be a difference where such a public official would actively extort bribes from US companies. I also really agree that such cases could be relatively simpler where as you put it “the conduct might have adverse effects on US parties, and perhaps might have even taken place (partly) in the US–and the foreign jurisdiction might have no interest in prosecuting or lack the capacity to do so”.

        Meanwhile, though, while the FCPA enforcement does not reach the foreign officials, I wonder if the US would be willing to do more in cooperating with foreign jurisdictions. I am always bitterly reminded of the most recent FCPA case in Lithuania. In 2012, Data Systems & Solutions LLC (DS&S) paid an $8.82 million criminal penalty in a case where the DS&S was accused of paying bribes to officials employed by the Ignalina Nuclear Power Plant, a state-owned nuclear power plant in Lithuania, to secure contracts to perform services for the plant (https://www.justice.gov/opa/pr/data-systems-solutions-llc-resolves-foreign-corrupt-practices-act-violations-and-agrees-pay). When the Lithuanian journalists found out about this and contacted our local law enforcement agencies to inquire whether those Lithuanian officials will be indicted too, there seemed to have been a total confusion on behalf of the law enforcement agencies. In the end, they concluded that the bribes were paid in 1999-2004, therefore the Lithuanian side of the investigation was dismissed due to statutes of limitation with the public officials experiencing exactly zero responsibility for that… This prompted me to think that Lithuanian law enforcement agencies had no clue that the investigation was being carried out in the US before the results were made public. I understand that in some cases such secrecy might be predetermined by the fact that tipping off foreign countries might hinder the investigation itself (where there is a reason to believe that such tips may leak). Meanwhile, I wonder if in other cases the US could actually timely inform the foreign law enforcement agencies so that they could timely begin an investigation on their own behalf and ensure that there is at least a chance that the “foreign officials” are investigated and indicted by their home country. Again, it might be that it is already happening, but is simply confidential (and the unfortunate example of Lithuania was an exception).

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