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United States: Enhanced Enforcement Policy regarding Anti-Corruption and Bribery Law on Non-US Citizens and Companies

Enhanced Enforcement Policy regarding Anti-Corruption and Bribery Law on Non-US Citizens and Companies

Last November, a Connecticut jury convicted Mr. Hoskins on six counts of bribing a foreign public official under the Foreign Corrupt Practices Act (FCPA), and on three counts of money laundering.

 

This is an important red flag for any person or company conducting activity in the United States. Hoskins’ conviction is precedential, relying on a novel legal theory expanding the jurisdiction of the FCPA to crimes committed by persons or companies with no connection to the United States.

 

Until now, American federal courts exercised FCPA jurisdiction only over American citizens, persons or companies, or companies whose stock is traded on an American exchange or which are covered by SEC reporting requirements (and their employees or officers); or who committed the offense within the United States.

 

Hoskins, a UK citizen serving as a senior vice president in the Asian unit of Alstom France, and as an officer of British Alstom, met none of those criteria. Hoskins was not an employee of any of Alstom’s American subsidiaries and none of his acts were carried out on United States soil, rather- in France.

 

Hoskins was convicted of assisting two employees of Alstom’s American subsidiaries in advancing a bribe payment for Indonesian officials because he was responsible for approving the candidate that served as the local Indonesian consultant in order to secure contracts for Alstom America, and for approving payments to him.  Although one of the payments was from an American bank account to an Indonesian account, all actions were performed in France.

 

Although the Court dismissed the prosecution’s argument that the FCPA had extraterritorial application based on aiding and abetting or conspiracy theories, it held that if the prosecution could prove that Hoskins was an agent of Alstom’s American subsidiaries when he committed the acts, prosecution under the FCPA could proceed.

 

The prosecution succeeded persuading the jury to find that Hoskins acted as an agent of the American subsidiary even though he was an employee of foreign entities.

 

Hoskins argued that as an officer of the foreign subsidiaries only, the explicit language of the law precluded finding that his actions were performed for Alstom’s American subsidiaries.

 

The court rejected Hoskins’ arguments, holding that the FCPA permits prosecution of a person serving only as an agent, because agency may be inferred from the words and actions of those involved in the matter, even when limited to a particular task.

 

Therefore, Israeli companies must understand that employees of an Israeli company who has subsidiaries in the United States, or even just American business partners, may find themselves liable for FCPA violations and exposed to federal criminal charges, even if they are not officers or employers of an American company, have never set foot in the United States and despite not being an American citizen or a US Person. It is sufficient, for example, that they had operated out of Israel to arrange for payments which the subsidiary or the business partner promised to make to any public official in a third country in order to unlawfully advance some business opportunity.

 

In conclusion, any person or company performing on behalf of or for an American person or company, may be subject to the jurisdiction of federal courts under the FCPA, even if they themselves are not employees, partners or officers of an American person or company.

 

This reality requires many companies to prepare accordingly, study the relevant law and case law and design compliance and internal enforcement programs which make clear to employees, officers and agents, what is permitted and what is prohibited and where problematic exposures may arise in the course of their work or agency.

 

Source: barlaw.co.il

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