NVS Novartis AG

By Max Bernhard 

Novartis AG said Wednesday its general counsel is retiring from the company in connection with its $1.2 million payments to a company owned by Michael Cohen, U.S. President Donald Trump's longtime personal lawyer, as the Swiss drugmaker battles to contain the fallout from the arrangement.

Novartis made the payments of $100,000 a month to Mr. Cohen's company, Essential Consultants, for insight into health-care policy in a one-year contract that ended in February. Novartis Chief Executive Vasant Narasimhan last week called the agreement a mistake and denied any involvement himself.

"Although the contract was legally in order, it was an error," general counsel Felix Ehrat, who is a co-signatory of the agreement, said in a statement Wednesday.

Novartis, one of the world's biggest drug companies by sales, said last week that its aim was to gain better understanding of Trump administration policy-making, especially regarding matters like the status of the Affordable Care Act. But it realized from its first meeting in March 2017 that it wouldn't be helpful and stopped engaging with Mr. Cohen. The company said it determined it couldn't scrap the contract and continued making the payments.

The disclosure is an embarrassment for the company, having spent shareholder money on Mr. Cohen, who appears to have produced little help.

Novartis's move comes less than a week after AT&T Inc., which paid Mr. Cohen's company $600,000 last year for similar insight, said that hiring Mr. Cohen as a political consultant was a "big mistake," and ousted its top Washington executive. The telecom giant said it made the payments in return for insight into the administration at a time when it needed government approval for an $85 billion takeover of Time Warner Inc.--a deal whose outcome is now in the hands of a federal judge.

Essential Consultants is the same firm Mr. Cohen used to pay $130,000 to a former adult-film actress, who goes by the name Stormy Daniels, in October 2016 to keep her from discussing an alleged sexual encounter with Mr. Trump. Both Mr. Trump and Mr. Cohen deny the encounter took place.

Mr. Ehrat will be replaced at Novartis by Shannon Thyme Klinger, who currently holds the position of chief ethics, risk and compliance officer. She will be appointed effective June 1, Novartis said.

Novartis said Wednesday it hasn't been contacted by Swiss prosecutors about this matter.

Donato Paolo Mancini contributed to this article.

Write to Max Bernhard at Max.Bernhard@dowjones.com

(END) Dow Jones Newswires

May 16, 2018 03:08 ET (07:08 GMT)

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