Novartis’ general counsel Felix Ehrat is to step down following revelations that the company paid $1.2 million to Donald Trump’s personal lawyer in return for insights into the president’s health policy ideas.
Ehrat said that he is stepping down to take “personal responsibility” for the matter, and pointed out that the agreement had been co-signed by former CEO Joe Jimenez.
The move comes after Novartis was dragged into the scandal surrounding the actions of Trump’s personal lawyer, Michael Cohen, and whether the president attempted to cover up an alleged affair with the former porn star Stormy Daniels in 2006.
Daniels’ attorney, Michael Avenatti, told NBC last week that Novartis was among several firms that paid large sums of money to a company controlled by Cohen.
Novartis confirmed this by saying it had entered into a one-year agreement with Cohen’s firm Essential Consultants in February 2017, shortly after Trump took office.
In the end Novartis only met Cohen once, before deciding that the arrangements would not provide any useful information, but the Swiss firm continued to make monthly payments of $100,000 over the course of a one-year period.
Novartis has said that Ehrat will retire as general counsel in the aftermath of the scandal, and will be replaced by Shannon Thyme Klinger, currently chief ethics, risk, and compliance officer, effective June 1.
Ehrat said: “Although the contract was legally in order, it was an error. As a co-signatory with our former CEO I take personal responsibility to bring the public debate on this matter to an end.”
Jimenez breaks silence
In an interview with Bloomberg, Jimenez, who retired in February, has given his side of the story, outlining how the deal with Cohen quickly turned sour.
Jimenez said Cohen told his team he had left Trump’s organisation and had stopped working for the president before pitching for business with Novartis.
He told Bloomberg: “Michael Cohen was somebody who was introduced to us, and he was unknown to us, but he was said to be somebody who could help.”
“After my team met with him individually, it was clear that he oversold his abilities.”
Jimenez said the contract with Cohen was negotiated with Novartis’ legal team after an introduction from an unidentified “third party”, and that he had not met the lawyer in person.
Jimenez said he wanted to terminate the deal but decided that doing so would have been costlier than letting the agreement expire because of “almost certain litigation”.
“That was a mistake,” said Jimenez who admitted the firm should have “parted ways” with Cohen as soon as it became apparent he could not help.
Jimenez said Cohen had not offered lobbying services, but had advised at one point that Novartis should build a manufacturing site in the US.
Novartis had not acted on the advice and Cohen had never provided any access to anyone in the administration, said Jimenez.
Bloomberg separately reported that Novartis’ new CEO Vas Narasimhan held a conference call with 5,000 managers to pass on the urgent message that the company needs to regain public trust and rethink the way it does business with consulting firms, lobbyists, and other groups.
Novartis is completing a review to determine next steps after an internal investigation conducted by outside advisers, which found it didn’t do anything illegal.