GAB is pleased to welcome back Frederick Davis, a lawyer in the Paris and New York offices of Debevoise & Plimpton and a Lecturer at Columbia Law School, who contributes the following guest post:
Much has been written about the long-awaited decision in US v. Hoskins, on this blog (see here and here) and elsewhere. In Hoskins, a US federal appeals court held that the U.S. cannot charge a foreign national acting abroad (and who therefore couldn’t be charged directly with violating the anti-bribery provisions of the Foreign Corrupt Practices Act (FCPA)) by alleging vicarious liability under either the aiding and abetting statute, 18 U.S.C § 2, or the conspiracy statute, 18 U.S.C. § 371. Judge Pooler’s opinion for the court relied on two justifications: First, under the principle established by a Supreme Court cased called Gebardi v. United States and its progeny, Congress clearly indicated an affirmative legislative policy to exclude from complicity or conspiracy liability parties like Mr. Hoskins (foreign nationals acting abroad). Second, the FCPA lacks the requisite affirmative indication of congressional intent, demanded in cases like Morrison v. National Australia Bank, that Congress intended the FCPA to apply extraterritorially to the kind of conduct in question. (Analytically, these two tests are very similar, as they both ask, “What did Congress intend?” The principal difference is the burden of persuasion: The Gebardi line of cases, while not always entirely consistent, seem to indicate that prosecutors can generally invoke complicity or conspiracy liability even of someone who could not be prosecuted as a principal unless there’s a strong showing that this is contrary to congressional intent, while the extraterritoriality analysis, on the other hand, typically puts the burden on the prosecutor to show that a statute was intended to apply extraterritorially in the circumstances raised by a specific indictment.) The court dismissed the conspiracy and complicity charges against Hopkins, but remanded the case on the assumption that Mr. Hoskins might still be directly liable under the FCPA if the government could prove that he was acting as an agent of Alstom’s US subsidiary.
In my view, the court’s decision was clearly correct. But the court could have gone further to address another issue that, while not formally before the court, will need to be addressed on remand: The implications of the OECD Anti-Bribery Convention. The OECD Convention is far more important to the appropriate interpretation of the FCPA than the court acknowledged, provides compelling support for the Hoskins outcome, and should also control the resolution of the issue the appeals court left open for consideration on remand.
The OECD Convention is critical to the FCPA and key to its interpretation. The FCPA was essentially a dead letter for twenty years after its adoption in 1977, and the reason is no secret: as originally written, the FCPA could, at least as a practical matter, only be enforced against US companies and their American personnel. This was not only unfair, but inimical to US interests since it would put US companies at a competitive disadvantage against companies operating under more permissive regimes, many of which allowed tax deductions for overseas bribes. The 1997 OECD Convention changed that by committing all signatories (there are now 43) to enacting and enforcing their own versions of the FCPA, with the goal of creating a level playing field. While enforcement has been uneven, since the Convention came into force there have been literally hundreds of overseas bribery investigations in the US, the UK, Europe, and elsewhere, compared to almost none before the Convention took effect. The US clearly benefits from this arrangement: it now can and does vigorously prosecute overseas bribe-givers, knowing that companies from other countries are subject to essentially the same legal prohibitions.
Judge Pooler’s option in Hoskins notes that the 1998 amendments to the FCPA were clearly designed (in the words of a congressional committee report) to “amend[] the FCPA to conform it to the requirements of and to implement the OECD Convention.” In fact, the OECD Convention is fundamental to FCPA enforcement and interpretation because the Act would be meaningless without it.
What is missing from the Hoskins opinions is a recognition that by joining the OECD Convention, the US agreed to share decision-making authority about whom to prosecute. The basic structure of the Convention is that each country will prosecute companies and individuals subject to its jurisdiction under normal principles of territoriality, and otherwise defer to the countries that clearly have such jurisdiction. This is apparent in two ways:
- First, Article 4 of the Convention (entitled “Jurisdiction”) recites two, but only two, bases for a country’s power to prosecute: (1) when “the offence is committed in whole or in part in its territory” and (2) when the country has established through its own laws “jurisdiction to prosecute its nationals for offences committed abroad.” These principles, which mirror the categories set forth in the FCPA regarding individuals, are universally recognized as appropriate territorial bases for prosecution.
- Second, and more specifically, in a section 4.3 of the same Article, the Convention mandates that when “more than one [State] Party has jurisdiction over an alleged offence described in this Convention, the Parties involved shall, at the request of one of them, consult with a view to determining the most appropriate jurisdiction for prosecution.” The use of the mandatory “shall,” together with the phrase “the most appropriate jurisdiction for prosecution,” makes it unmistakably clear that countries are not to prosecute companies or individuals simply because, under their own laws, they consider themselves empowered to do so, but should defer to another country if that country’s links to the company or individual make it more the “appropriate” jurisdiction to bring a prosecution.
Appreciation of this aspect of the OECD Convention leads to two conclusions relevant to Hoskins:
- First, as far as one can tell from the various opinions in the case, and in particular from the Third Superseding Indictment against Hoskins, he could have been investigated by authorities in the United Kingdom or France, and “appropriately” prosecuted in either country, because he clearly satisfied both of the jurisdictional requirements noted by the OECD Convention. He lived and worked in the UK; his direct employer was a UK corporation, itself wholly owned (and essentially controlled by) a large French company, Alstom SA; he had a formal assignment to a French subsidiary of Alstom SA; and the US prosecutor admitted that Hoskins committed no relevant acts in the United States, but rather only in the UK (and probably France). Hoskins’ only connections with the US were the fact that a subsidiary of his employer’s parent company (with whom Hoskins apparently had no formal status) was incorporated in the United States, and that he is alleged to have communicated with that subsidiary in furtherance of the bribery scheme. It is inconceivable that the drafters and signers of the OECD Convention would have concluded that that made the US “the most appropriate” jurisdiction to prosecute Hoskins, or that it could argue that use complicity or conspiracy liability to do so. Thus the Hoskins decision is clearly correct, though for an additional reason that the court itself didn’t mention: to have allowed the prosecutor to convict Hoskins on a theory of aiding and abetting or conspiracy would fly in the face of the United States’ obligations under the OECD Treaty
- Second, the OECD Convention should also guide the trial court’s handling, on remand, of the remaining question of whether Hoskins can be prosecuted under the FCPA as an agent of a US company. Both the text and logic of the FCPA on this subject are clear. The FCPA, when first adopted in 1977 and consistently thereafter, is intended to prohibit US companies (and nationals) from bribing foreign officials. When applied to corporations, it made sense to contemplate that in addition to the corporate entities themselves, the individuals through whom they acted should also be prohibited from engaging in foreign bribery on the company’s behalf. The text of the FCPA thus provides that “any officer, director, employee, or agent” of a US firm or US issuer can also be liable for FCPA violations, regardless of their nationality or where they act. We all know what officers, directors and employees are. But what is an “agent” in the FCPA context? The Hoskins court specifically declined to address this question, but in the world of cross-border bribery, the concept of “agents” has a very specific meaning: when working in foreign countries, US firms frequently hire local third parties (often literally called “agents,” sometimes called “consultants”) to advise them, to introduce them to appropriate officials, to lobby—and sometimes to funnel illegal payments to foreign officials. The Hoskins indictment itself refers to two unnamed “consultants.” Subjecting such agents to FCPA liability is uncontroversial. But Hoskins wasn’t that kind of “agent;” and while exactly the conduct subsumed under the “agent” rubric of the FCPA was alleged in the Hoskins indictment, it was only alleged against the unidentified “consultants” – but not Hoskins. Rather, he appears to have been a mid-level executive of one of many Alstom subsidiaries involved in this case (no fewer than five are specifically identified) who is alleged to have to have participated from Europe in a number of telephone and email communications with others working for “Alstom,” and to have attended a meeting in Indonesia. Indeed, it’s not clear that Hoskins was at any point acting on behalf of Alstom US at all; the indictment itself notes that the various subsidiaries “were often referred to by Alstom employees as ‘Alstom’ without distinction” — a habit repeated by the indictment itself. Even assuming that Hoskins was in some loose sense acting in coordination with Alstom US along with the parent and the several other subsidiaries, that might satisfy the elements of aiding-and-abetting or conspiracy – that is, the theories the Court rejected – but does not satisfy the more specific and rigorous question of whether he was an agent of his employer’s sister subsidiary. On remand, it will be important for the trial judge to be vigilant in evaluating the prosecutor’s proof of that specific alleged relationship; proof of looser coordination would simply allow the aiding and abetting and conspiracy theories in by the back door.
Looking ahead, the Hoskins decision is only a partial step toward aligning U.S. FCPA jurisprudence with the requirements of the OECD Convention. Both Judge Pooler for the Court and Judge Lynch in his concurrence note that the drafters of the FCPA were sensitive to issues of “sovereignty;” both quote the famous statement in Morrison that the presumption of territoriality is designed in part to avoid a perception that the United States attempts to “rule the world” by implementing its statutes extraterritorially. But they did not appear to fully recognize that the sovereignty interests in multi-national criminal includes not only care in indicting foreigners, but also respect for decisions of foreign prosecutors. In return for the “level playing field” of consistent laws and of enforcement obligations, the U.S., in signing onto the Convention—most particularly Article 4.3—agreed to defer to prosecutorial decisions in countries that have a more “appropriate” relationship with the crime, even if U.S. prosecutors disagree with how those other countries exercise their prosecutorial discretion. This of course raises difficult policy questions, especially when there’s a case to be made that the other jurisdictions are not adequately enforcing their own laws (see, for example, here, here and here). But that concern does not apper to be relevant here: the UK’s Serious Fraud Office has actively pursued Alstom in matters unrelated to the Indonesia project, and several Alstom officers have been tried or face trial in London on criminal charges under the UK Bribery Act.
GAB | The Global Anticorruption Blog 
“The FCPA was essentially a dead letter for twenty years after its adoption in 1977.”
Tell that to approximate 40 business organizations charged with FCPA violations between 1978 and 2003.
More importantly, tell that to approximate 80 individuals charged with FCPA violations between 1978 and 2003. Their real lives, real careers, real reputations, and real pocketbooks were changed because of the supposedly “dead letter” FCPA.
Facts matter.
http://fcpaprofessor.com/fallacy-fcpa-dormat-decades/
Just as an example, take a list at the SEC’s official list of enforcement actions before and after 1997 and see if you detect a trend.
2009
UTStarcom Inc. – 12/31/09
Bobby Benton – 12/11/09
AGCO Corp. – 9/30/09
Oscar Meza – 8/28/09
Nature’s Sunshine – 7/31/09
Helmerich & Payne Inc. – 7/30/09
Avery Dennison Corp. – 7/28/09 [Administrative Proceeding]
United Industrial Corp. (UIC) – 5/29/09
Thomas Wurzel (UIC) – 5/29/09
Novo Nordisk A/S – 5/11/09
ITT Corp. – 2/11/09
KBR and Halliburton – 2/11/09
2008
Fiat – 12/22/08
Siemens AG – 12/15/08
Albert Jackson Stanley (KBR) – 9/3/08
Con-way Inc. – 8/27/08 [Administrative Proceeding]
Ali Hozhabri (ABB) – 8/6/08
Faro Technologies Inc. – 6/5/08
Willbros Group Inc. – 5/14/08
AB Volvo – 3/20/08
Flowserve – 2/21/08
Westinghouse Air Brake Technologies Corporation – 2/14/08 [Administrative Proceeding]
2007
Lucent Technologies – 12/21/07
Akzo Nobel N.V. – 12/20/07
Robert W. Philip (Schnitzer Steel) – 12/13/07
Chevron Corp. – 11/14/07
Ingersoll-Rand Company – 10/31/07
York International – 10/1/07
Monty Fu (Syncor) – 9/28/07
Gioacchino De Cherico & Immucor Inc. – 9/27/07 [Administrative Proceeding]
Bristow Group – 9/26/07
Chandramowli Srinivasan (Electronic Data Systems) – 9/25/07
Electronic Data Systems – 9/25/07
Textron Inc. – 8/23/07
Delta & Pine Land Co. and Turk Deltapine, Inc. – 7/25/07 [Administrative Proceeding]
Si Chan Wooh (Schnitzer Steel) – 6/29/07
Baker Hughes Inc. and Roy Fearnley – 4/26/07
Charles Michael Martin (Monsanto) – 3/6/07
Dow Chemical Co. – 2/13/07 [Administrative Proceeding]
El Paso Corp. – 2/7/07
2006
Schnitzer Steel – 10/16/06
Statoil – 10/13/06 [Administrative Proceeding]
Jim Bob Brown (Willbros Group) – 9/14/06
Steven J. Ott and Roger Michael Young (ITXC Corp.) – Charges (9/6/06) and Settlement (4/18/08)
David Pillor (GE InVision) – 8/15/06
Samson, Munro, Campbell, Whelan (ABB) – 7/5/06
Oil States International – 4/27/06
Tyco International – 4/17/06
2005
Yaw Osei Amoako (ITXC Corp.) – Charges (9/1/05) and Settlement (4/18/08)
Diagnostic Products Corp. – 5/20/05
Titan Corporation – 3/1/05
GE InVision Inc. – 2/14/05 [Administrative Proceeding]
Monsanto Company – 1/6/05 [Administrative Proceeding]
2004
Schering-Plough Corp. – 6/9/04 [Administrative Proceeding]
ABB Ltd. – 6/6/04
BJ Services Co. – 3/10/04
2003
Joshua C. Cantor (American Bank Note Holographics) – 4/10/03
2002
Syncor International – 12/10/02
Douglas Murphy, David Kay, Lawrence Theriot – 7/30/02
BellSouth Corporation – 1/15/02
2001
Chiquita Brands International – 10/3/01 [Administrative Proceeding]
Baker Hughes Incorporated – 9/12/01
KPMG Siddharta Siddharta & Harsono and partner Sonny Harsono – 9/11/01
Eric L. Mattson & James Harris (Baker Hughes) – 9/11/01
American Bank Note Holographics Inc. – 7/18/01
2000
IBM – 12/21/00
1997
Triton Energy Corporation, Philip Keever, and Richard McAdoo – 2/27/97 [McAdoo settlement – 6/26/97]
1996
Montedison, S.p.A. – Charges (11/21/96) and Settlement (3/30/01)
1986
Ashland Oil Inc. and Orin E. Atkins (86-cv-1904)(D.D.C. 7/8/86)
1981
Sam P. Wallace Co. Inc., Robert Buckner and Alfonso Rodriguez (81-cv-1915)(D.D.C. 8/13/81)
1980
Tesoro Petroleum Corp. (80-cv-2961) (D.D.C. 11/20/80)
1979
International Systems & Controls Corporation (79-cv-1760) (D.D.C. 7/9/79)
1978
Katy Industries, Inc., Wallace Carroll and Melvan Jacobs (78-cv-03476)(N.D. Ill. 8/30/78)
Page Airways, Inc., James Wilmot, Gerald Wilmot, Douglas Juston, Ross Chapin, James Lawler, and T. Richard Olney (78-cv-0656) (D.D.C. 4/11/78)
The SEC has only a relatively small piece of the FCPA enforcement pie. I am not disputing that FCPA enforcement has increased in the new era, it surely has for the many practical (and perhaps provocative reasons) highlighted in the below post.
http://fcpaprofessor.com/upwardtrend/
See also Chapter 6 of the book “The FCPA in a New Era” titled “Reasons for the Increase in FCPA Enforcement.”
I was merely responding to the author’s suggestion that the FCPA was a “dead letter” for its first nearly twenty years.
I’m not sure why y’all are fighting about this when it’s not really the main issue in Fred’s post. I think we can agree (can’t we?) that enforcement of the FCPA for its first three decades or so was (1) not zero, but (2) pretty small, with only one or two cases per year for most of that period. So “dead letter” is clearly an exaggeration, and maybe we should be more cautious with our language, but it’s not wrong to point out that FCPA enforcement dramatically ramped up starting around the late 90s.
In any case, the real issue here concerns the legal ramifications of the OECD Convention for this issue presented in Hoskins, does it not?
The gentle admonition of your comment is that enough has been said on the “dead letter” issue, which is perhaps wise. But in part as an intellectual exercise, but also because the history is significant, I tried overnight to see if I could manage to be contrite about using the phrase, and came up short.
This is in part because of personal history: I was a federal prosecutor in 1977 when the FCPA was adopted, and have distinct recollections of conversations in the halls of Justice that no one thought it was a high priority to enforce an act against US players when, in many instances, their competitors would get a tax deduction for the same conduct.
And the statistics are striking. This link https://www.justice.gov/criminal-fraud/chronological-list takes you to an official chronological list by the DOJ of its enforcement under the FCPA and “related enforcement.” It shows that in the period 1977 to 1997, in most years there was no FCPA criminal enforcement at all. Even the cases cited are a bit exaggerated: several of them involved overseas bribery, but charged under the RICO, wire/mail fraud or money laundering statutes, but not the FCPA. The total number of individuals convicted under the FCPA bribery provisions during those 20 years was, as reported in this compendium, 14. All worked out slap-on-the-wrist deals; at least as reported, in the entire 20th century no person spent so much as a single night in jail under an FCPA sentence. And a case could be made that the DOJ was losing interest in the FCPA: in the years between 1990 and 1998, FCPA criminal outcomes of any sort occurred only in one year.
In the spirit of diplomatic courtesy perhaps I should say that the pre-OECD Convention FCPA was a “dying letter,” rather than one already dead. I genuinely believe that it was rescued by the OECD Convention (and other multilateral efforts to create a level playing field), absent which we would barely be aware of its existence today, and certainly would not spend much time writing blog posts about it.
Your numbers are curious because the numbers in the below post are straight from the DOJ’s and SEC’s website and other source (i.e. the DOJ’s website and SEC’s website lack some early enforcement actions).
http://fcpaprofessor.com/fallacy-fcpa-dormat-decades/
Yes, of course there was much less FCPA enforcement from 1977 to circa 2004 for the practical (and perhaps provocative reasons) highlighted in the following:
http://fcpaprofessor.com/upwardtrend/
See also Chapter 6 of the book “The FCPA in a New Era” titled “Reasons for the Increase in FCPA Enforcement.”
As to your statement, in the entire 20th century no person spent so much as a single night in jail under an FCPA sentence, I am guessing Richard Liedo would disagree with you.
While Mr. Liebo was convicted of an FCPA (as well as false statement) charge and sentenced to a prison term, the execution of the sentence was suspended. See the judgement here. https://www.justice.gov/sites/default/files/criminal-fraud/legacy/2012/06/22/1992-01-31-liebor-judgment.pdf
Thanks for your thoughtful post on this challenging issue, and for raising another angle on the case. You’re right that while the OECD Convention was mentioned in Hoskins, the idea that the Convention _required_ the legal outcome in that case was not discussed.
It’s certainly a provocative idea, but, respectfully, I don’t think I agree, for two reasons:
The first is that I think you’re over-reading Article 4.3. That article says “When more than one Party has jurisdiction over an alleged offence described in this Convention, the Parties involved shall, at the request of one of them, consult with a view to determining the most appropriate jurisdiction for prosecution.” You’re right that the provision contains a mandatory “shall,” but that “shall” applies to the obligation to _consult_. You assert that this language “makes it unmistakably clear that countries are not to prosecute companies or individuals simply because, under their own laws, they consider themselves empowered to do so, but should defer to another country if that country’s links to the company or individual make it more the ‘appropriate’ jurisdiction to bring a prosecution.” Respectfully, that’s not at all what Article 4.3 says, let alone what it says with unmistakable clarity. The US in a case like Hoskins would have an obligation to consult with the UK and France to determine which was the most appropriate jurisdiction to bring the prosecution. Is there an allegation that the US failed to engage in such consultations, despite a request from one of those other countries? If so, then that might be a violation of the OECD Convention, but the decision to bring the case in the US (after appropriate consultation) would not be. In fact, though it’s a closer question, it’s not clear that the obligation to consult necessarily entails an obligation to agree with the other countries as to where jurisdiction is most appropriate. Suppose the UK requested a consultation, the US acquiesced, and they couldn’t agree — it would seem to me that the US would have discharged its obligation under the literal text of 4.3 (as long as it was consulting in good faith). But the bigger point here, again, is that 4.3 does not require a legal ruling that the US cannot have jurisdiction over a foreign national acting outside US territory. At most it would require the US, in such a case, to consult with other countries about where jurisdiction would be proper if, but only if, those other countries make a request to do so.
Second, even if the OECD Convention does mandate that in a case like this the US defer to a prosecution in another country, it doesn’t follow from that the Hoskins holding on the meaning of the statute is required by the Convention. Rather, it might require that US prosecutors no bring certain cases, if another jurisdiction would be more appropriate. But the Hoskins holding sweeps much more broadly, barring jurisdiction even when no other OECD Convention member would have jurisdiction, or even where the other OECD Convention members affirmatively agree that, for whatever reason, the US is a more suitable place to prosecute the case.
Finally, I really don’t see how you can say with a straight face that Hoskins is an easy case! The outcome may well have been right, but come on, the doctrine on this point is really complicated: https://globalanticorruptionblog.com/2018/09/11/was-u-s-v-hoskins-correctly-decided-probably-not/
The question whether Hoskins was easy or close may depend on perspective.
From the perspective of US law enforcement, it is certainly true that the DOJ has long viewed its powers to assert vicarious liability under the aiding/abetting and conspiracy statutes as important weapons in their arsenal, and in very large part the courts have backed them up. For this among other reasons, if Hoskins depended only on the Gebardi line of cases, it would be a close case: Judge Pooler did a pretty good job showing that people like Hoskins – non-Americans who committed no relevant act on US soil – were not just missing from the categories the FCPA specifically targets, but were specifically identified during legislative discussion as a category where prosecution would raise difficult issues relating to the sovereign interests of our trading partners. But the Gebardi precedent is not seamless, and her conclusion based on it is not a slam dunk.
But the analysis under Morrison and its evolving progeny is different. Under it, the prosecutor has the burden of making an affirmative showing that the legislators intended Hoskins’s conduct to be subject to US prosecution, and I just do not see it. Indeed, the history compiled by Judge Pooler on the Gebardi point shows the opposite.
In this context, the entire architecture, as well as Article 4, of the OECD Convention is critical. The Convention is based on a clear division of labor: countries were encouraged (indeed, obligated) to prosecute companies and individuals falling within the only two jurisdictional bases mentioned in the Convention (citizenship and territory). Recognizing that in some instances a person or company could trigger more than one country’s jurisdiction on one or both of those bases, it also mandated that in that instance the relevant countries should consult to determine “the” (not “a”) “most appropriate jurisdiction for prosecution.” The problem with Hoskins is that he failed both these tests: he did not meet either of the two bases for jurisdiction that Convention recognizes, and it would be simply laughable to assert that the US was a more “appropriate jurisdiction for prosecution” than the countries where he lived, was employed, worked – and is alleged to have committed his crimes. It is surely true that Article 4.3 does not create enforceable rights, but it is also true that its unmistakable allocation of “jurisdiction” did not remotely suggest that the US should prosecute him. Given the critical importance of the OECD Convention to today’s FCPA via the 1998 amendments, this is important.
Perhaps the most useful way to look at this is to ask: What is the US interest in prosecuting Hoskins? To begin, this is not a situation like off-shore cartels, money laundering, tax evasion, or terrorism activity that target the US: the focus of Hoskins and his alleged cohorts was on subverting democracy in Indonesia, not the US. Alstom’s US subsidiary is alleged to have been involved in this activity. But Hoskins had no apparent role in its operations; and these days, corporate organizational charts show innumerable subsidiaries all around the world (the Hoskins indictment mentions five as being involved). So while prosecuting the US subsidiary might make sense, as to Hoskins it is hard to say that its role, by itself, is a compelling US interest. In its various guidelines (and implicitly in the jurisdictional allegations of its indictments) the DOJ often relies on the use of US dollars, and recourse to the US post office and wire services as the basis for prosecution. To me those are “jurisdictional hooks,” they do not reflect a real interest; the Post Office and the telecommunication services, as well as the currency, will all survive if Hoskins and his colleagues wire dollars to Indonesia.
I believe that the real interest of the DOJ in prosecuting this kind of case is different: they believe, not without historical reason, that they must be not only vigilant but aggressive in asserting FCPA jurisdiction because other signatories of the OECD Convention have not lived up to their obligations to keep the playing field level. As I have noted in a longer article on this subject, “the fact that the U.S. prosecutors have attempted to fill this gap is neither surprising nor, in itself, wrong.” (You can find my article here: https://nsuworks.nova.edu/ilsajournal/vol23/iss2/3/ ) But particularly going forward there are three problems with this posture. First, it is simply inconsistent with a fair reading of the Convention, which does not recognize the US (or anybody else) as a backstop with worldwide powers to fill in for others. Second, it is increasingly less descriptive of the actual situation: the British SFO has in fact been active enforcing the UK Bribery Act – including against Alstom officers – and cannot be presumed to have dropped the ball with respect to Hoskins.
And most importantly, I discern a trend among US judges to give second thoughts to prosecutorial empowerment against activity outside the US that does not directly affect our interests. Although they were not FCPA cases at all, the Second Circuit’s decisions in the Microsoft/Ireland case and in US v. Allen are instructive. In Microsoft the Circuit held that the DOJ could not get access to data stored abroad without consulting its overseas partners and using treaties; while four judges dissented from the denial of en banc on the ground that this would imperil US enforcement efforts, they did not prevail. And while the Supreme Court took the case, it was mooted by the CLOUD Act which, somewhat like the OECD Convention, is based in significant part on the function of multinational agreements rather than prosecutorial self-help. In Allen the court entirely threw out the case against two British subjects who had committed relevant acts only in London. While the basis for the ruling was a very specific problem with the prosecution (the fruits of compelled self-incrimination in London were used in the US), the opinion (and, very emphatically, comments by the judges at oral argument) indicate that the Court did not see the need for US prosecution so devoid of US interests when the local prosecutors in London had decided not to prosecute. (I uploaded the transcript of the argument, which is fascinating, to a Google Drive, you can access it here: https://drive.google.com/open?id=1F_Ej1xZG7B5NHzJ-3g95JCHBjIkiDjkk )
Thanks! I’m really enjoying this exchange. Even though we (still) disagree, I’m finding the back-and-forth helpful in clarifying the issues and refining my own views, so I hope you won’t mind if I continue the exchange for at least one more cycle (and you should feel free to do likewise, though also under to obligation).
Since there are really two issues here, I’ll address them separately, in two separate comment boxes.
On whether Hoskins is an “easy case”: Glad we’re in agreement that if it were just the question of whether the “affirmative legislative policy” exception applies it would indeed be hard. (I’d go further and say that if that were the only question, the government probably should have won, but I won’t bother going further into that here, since I talk about it in my post linked above.) You say, though, that the presumption against extraterritoriality announced in cases like Morrison makes the answer clear. I respectfully disagree. If the only issue concerned whether the complicity and conspiracy statutes authorized the extraterritorial prosecution of a defendant, when the underlying crime is explicitly extraterritorial, then I think the doctrine is actually quite clear in the other direction: If the underlying crime is extraterritorial, then complicity and conspiracy liability are extraterritorial. Here the underlying FCPA liability as to the US parties is clearly extraterritorial, so one might think that anyone who abets or conspires with those parties can also be charged extraterritorially. If Hoskins were a US national (but hadn’t directly violated the FCPA), I don’t think there’d be any serious question that he could be charged with abetting an FCPA violation even if all the relevant conduct took place abroad. Nothing in Morrison (so far as I can tell) seems to alter that settled feature of the doctrine, though if there’s some particular passage in Morrison that you think I’m missing, please let me know.
Now, this doesn’t mean that Hoskins was wrong. As I said in my earlier post, I think it probably was, but that’s extremely tentative. There may be something about the _intersection_ of the affirmative legislative policy exception and the presumption against extraterritoriality is enough to justify the 2nd Circuit’s reading of the statutes. But it’s hard–it requires some extrapolation of current doctrine, not a simple application of either Gebardi or Morrison but rather some combination of them. That’s all I want to claim for now on this issue.
Now, on the OECD Convention issue. I feel like you’re shifting the terms of the debate here. In your original post, you seemed to be claiming that Article 4.3 clearly required the 2nd Circuit’s conclusion that the US can’t prosecute foreign nationals are accomplices or co-conspirators in FCPA violations if their conduct took place outside US territory. That position is untenable for the reasons i laid out in my original comment. You no longer seem to be defending the claim that Article 4.3 requires the statutes to be read as the 2nd Circuit read them, but instead making the different claim that the “entire architecture” of the OECD Convention indicates that the US is not the “appropriate jurisdiction” for prosecuting Hoskins. That may or may not be correct, but it does not directly bear on whether the 2nd Circuit’s legal ruling was right, and indeed should probably have been irrelevant to the issue before that court (which perhaps explains why they didn’t mention and why Hoskins’ lawyers, to the best of my knowledge, didn’t argue it).
For what it’s worth, though, I’m not sure I buy your alternative claim about the OECD. You say that it is “simply laughable” that the US would have been the appropriate jurisdiction for prosecuting Hoskins, because he didn’t live, work, or act in the US. I’m certainly open to the idea that prosecuting elsewhere would have been more appropriate (I simply don’t know enough about the background of the case), but it’s far from laughable. After all, the US was prosecuting Hoskins for abetting and conspiring in an FCPA violation with a strong US connection, in that it was a US firm (albeit a subsidiary of a French firm) and its executives that were ultimately responsible for paying the bribes. It often makes sense for one office or jurisdiction to handle a cluster of closely related cases, rather than splitting up the litigation into pieces. Consider, as a loose analogy, the concept of supplemental jurisdiction in US federal courts: Sometimes it makes sense for the federal court to hear state law claims, over which the federal court wouldn’t have independent jurisdiction, if those claims arise out of the so-called “common nucleus of operative fact” that also produce federal law claims clearly within the federal court’s jurisdiction.
Also, you seem to suggest that the US didn’t have any real interest in prosecuting Hoskins, because he was a foreigner working for a foreign company. But if the facts as alleged are true, he helped US actors violate US law. The idea that foreign bribes paid by US actors don’t implicate US interests, though still persistent, is wrong. There shouldn’t be any need to recite here all the reasons why the US government has a significant interest in preventing its nationals (or those who avail themselves of its territory or financial markets) of paying bribes. Once we accept that the US had a legitimate interest in prosecuting the US firm and US executives who paid the bribes in Indonesia, then the US interest in prosecuting Hoskins seems to me quite clear. it’s the same interest that the US has in prosecuting the foreign nationals who arrange illegal drug shipments into or out of the US, or the foreign banks that assist in the laundering of dirty money through the US financial system.
Now, a more modest version of your argument might be that, even though the US does have a legitimate interest in prosecuting Hoskins, the UK (or France) is the more appropriate venue for prosecution, notwithstanding the fact that the US will go after other parties involved in the same overall scheme. Well, maybe. But maybe not. A question I have here, to which you may know the answer, is what the SFO (or the UK authorities more generally) thought about this. Did the US prosecute Hoskins over the UK’s objections? With UK support (explicit or tacit)? With no view expressed by the UK one way or the other? If you happen to know, it would help me in how I evaluate whether the DOJ acted appropriately.
Interesting angle of the analysis. Are there any public records about there being a request from one of the countries to consult regarding the jurisdiction and this request being denied? I have to admit that while I have read the OECD Convention multiple times, I have never thought of this particular article extensively – I would be also really interested in the history of such requests / consultations being carried out and their outcomes.
Not that I know of, but given how closely the US works with UK prosecutors in FCPA matters, I’d be surprised if the US decided to bring this case without consulting with the SFO, and shocked if they decided to do so if the UK insisted that it wanted to prosecute the case itself. But I don’t have any direct knowledge. If someone else out there does, please share!
I haven’t found anything online. I think that in practice what happens is when US is investigating, there is some sort of cooperation with the foreign government (either informing them about the investigation or cooperating on evidence collection or something between these lines). If there are major objections raised, the cases are dealt with ad hoc. In other words, it seems that the “consultation” is not a separate process, but rather part of the usual process. Unless of course we are overlooking something.