December 9, 2019

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Conviction of Foreign Employee Reinforces Broad Geographic Reach of FCPA

Last week, a jury found a former executive of a French multinational company guilty of violating the Foreign Corrupt Practices Act, money laundering, and conspiracy in connection with alleged bribery in Indonesia. The case is a significant test of the geographic reach of the FCPA because the defendant was a foreign national who was employed by a foreign corporation and never entered U.S. territory during the course of his employment, but he was convicted on the theory that his actions were taken as an agent for his employer’s U.S. subsidiary.

The U.S. Department of Justice alleged that the defendant arranged for the payment of bribes to Indonesian government officials (including a member of the Indonesian parliament and executives of a state-owned electricity company) in order to secure contracts to build power plants in Indonesia. The defendant disguised the bribes by characterizing them as consulting fees paid to third-party consultants. The contracts were awarded to a U.S. subsidiary of the defendant’s employer.

At an earlier stage of the case, the District Court held that the defendant could not be liable for conspiring or aiding and abetting an FCPA violation because he was not a U.S. national, was not present in U.S., and was not employed by a U.S. company. The Second Circuit affirmed this ruling, but also held that the defendant could be convicted of a principal violation of the FCPA if he were acting as an agent of a U.S. company.

At trial, the government presented evidence that the defendant was acting as an agent for the U.S. subsidiary in arranging for the bribes to the Indonesian officials. The jury was instructed to consider whether the U.S. subsidiary indicated that the defendant was acting on its behalf, whether the defendant accepted such an undertaking, and whether there was an understanding that the U.S. subsidiary was in control of the defendant’s acts or services.  The government presented evidence that the U.S. subsidiary approved and controlled the payments arranged by the defendant and that the defendant took direction from the U.S. subsidiary. The jury convicted the defendant after one day of deliberations.

This case pushes the limits of the geographic reach of the FCPA. For foreign manufacturers with a U.S. presence, this case is a warning shot that the government may use the slenderest domestic connection to prosecute foreign affiliates and their personnel. For U.S. companies with an overseas presence, the case serves as confirmation that creative corporate formalities may not shield domestic assets or personnel from criminal liability for FCPA violations.

Copyright © 2019 Robinson & Cole LLP. All rights reserved.

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Edward J. Heath Partner Government Enforcement and White-Collar Defense  Litigation  Internal Investigations and Corporate Compliance  Business Litigation and Dispute Resolution
Partner

Edward Heath is the chair of the firm's Business Litigation Group and leads its Government Enforcement and Corporate Compliance Teams.  In 2019, Benchmark named Ed as a Local Litigation Star for Commercial Litigation.

Resolution of Business Disputes

For the last 20 years, Ed has helped businesses across the globe resolve their disputes. An experienced trial lawyer, he has pursued or defended numerous nine- and eight-figure cases, which includes obtaining a full defense jury verdict following a multi-month trial for an institutional client facing $100...

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Kevin Daly Complex Commercial Litigation Attorney
Counsel

Kevin P. Daly focuses his practice on complex commercial litigation and trade compliance issues. He is a member of Robinson+Cole's Business Litigation Group and Manufacturing Industry Team.

Litigation

Kevin represents a variety of clients, including manufacturers, insurance companies, and other businesses, in complex litigation. He has represented clients in class actions (including insurance class actions, consumer class actions, and class actions related to the Telephone Consumer Protection Act), and product liability actions. He represents businesses in a range of commercial disputes, such as claims for breach of contract and unfair trade practices. Kevin has achieved successes for his clients, including successfully defending a manufacturer in an attachment action which sought to seize property of a third party which had been in the client’s possession.

Trade Compliance / Regulation

Kevin represents clients in connection with a diverse array of trade compliance matters.  He advises clients on a variety of trade regulations, including Export Administration Regulations (EAR), International Traffic in Arms Regulations (ITAR), and U.S. import regulations.  He also assists clients in developing facility and technology control plans to ensure that access to controlled technical data is managed consistent with applicable trade regulations. Additionally, he advises clients regarding Foreign Corrupt Practices Act (FCPA) compliance and risk assessment and the development of anti-corruption policies and training. Kevin also has experience defending False Claims Act litigation on behalf of companies with financial relationships with the U.S. government. He has experience conducting internal compliance reviews to identify and remedy potential trade compliance violations and strengthen compliance policies and procedures.

Pro Bono

Throughout his career, Kevin has maintained a robust pro bono practice focusing on criminal defense, criminal post-conviction, and civil and human rights matters. He also helped coordinate a pro bono legal clinic on behalf of homeless clients in Massachusetts.

Prior to joining Robinson+Cole, Kevin worked for a large global law firm. He represented clients in the pharmaceutical sector in matters alleging violations of the False Claims Act, unfair trade practices, consumer protection statutes, and common law. In addition, he represented financial services clients in the arbitration and litigation of complex commercial disputes.

While in law school, Kevin was a clinical student for the Southern Center for Human Rights and an intern for the ACLU of North Carolina. After graduating from law school, he served as a law clerk for Justice Judith A. Cowin of the Massachusetts Supreme Judicial Court.

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