Lawyer Earned Millions Selling Links to Trump
Posted May 9, 2018 8:47 p.m. EDT
Updated May 9, 2018 8:48 p.m. EDT
As President Donald Trump took office in early 2017, two corporate behemoths — Swiss drugmaker Novartis and telecommunications company AT&T — were eager to establish ties to an administration that did not operate in the traditional circles of power.
They ended up hiring an unorthodox consultant who promised insights into Trump’s thinking: Michael D. Cohen, the president’s personal lawyer and longtime fixer.
But in the first meeting with Cohen after he signed as a consultant, Novartis said on Wednesday, the company realized that he would not be able to deliver. Nevertheless, the giant drug company paid him $1.2 million for a one-year contract that ended in February of this year.
Similar payments were made by AT&T, which paid a total of about $600,000 to Cohen’s firm for a yearlong contract, according to a person familiar with the agreement. An aircraft manufacturer, Korea Aerospace Industries, also had a contract with Cohen’s company.
The companies’ payments were revealed Tuesday after Michael Avenatti, the lawyer for Stephanie Clifford, a pornographic film actress who has said she had an affair with Trump, released some financial details of a company started by Cohen. Clifford was paid $130,000 by the company, Essential Consultants LLC, to keep quiet about the alleged affair with Trump.
Novartis said Wednesday that it had spoken about the payments to lawyers for the special counsel, Robert Mueller, who is examining Russian interference in the 2016 presidential election. Novartis said that it had cooperated fully, and considered its role in the matter closed.
AT&T said it was approached by investigators for Mueller late last year, shortly before its contract with Cohen expired. The company said it, too, had cooperated fully and also considered the matter closed.
The companies’ arrangements with Cohen show how corporate executives reached outside usual channels to establish ties to a new administration that seemed to play with a new set of rules. Both companies have said they had been seeking insight and advice on how to approach the administration on matters related to their businesses.
Trump’s arrival in office came at a particularly perilous time for both Novartis and AT&T.
Trump had threatened to eliminate President Barack Obama’s health care program, which could disrupt the pharmaceutical industry, and had also frequently raised the issue of high drug prices during his campaign. And AT&T had announced an $85.4 billion bid for Time Warner in 2016, and would need the approval of the Justice Department. The department sued to block the deal last year. But many questions about their relationships with Cohen — and the services he provided — remain unanswered. A onetime personal-injury lawyer and a veteran of the New York City taxi business, Cohen has no background in the health care or telecommunications industries.
The Treasury Department’s inspector general said on Wednesday that it was investigating whether financial records related to Cohen had been “improperly disseminated.” A spokesman for the inspector general suggested that the inquiry would be complete later this month.
Stephen Ryan, a lawyer representing Cohen, declined to comment.
Federal prosecutors in Manhattan are investigating Cohen for possible bank fraud and election-law violations, among other matters, according to people briefed on the investigation.
In court papers filed on Wednesday, Cohen’s lawyers denied some of the claims in Avenatti’s report. But they openly acknowledged that Cohen had received payments from AT&T and Novartis, and that federal authorities had seized records related to the transactions when they raided Cohen’s office, apartment and hotel room last month.
Cohen reached out to Novartis executives in early 2017, presenting himself as knowledgeable about the president’s thinking on health care and other areas of concern to the company, according to a person briefed on the talks. The person would speak only under the condition of anonymity because the contract was private.
Novartis said that after it determined that Cohen could not provide the services he offered, the company wanted to terminate his contract. But the drug giant learned it could do so only for cause, so it allowed the contract to expire.
Joe Jimenez, the chief executive at Novartis at the time the deal was signed with Cohen, left the company in January 2017. His replacement, Vasant Narasimhan, took over the next month, and the company has said he had no role in the arrangement. Narasimhan dined with Trump along with other European business leaders at this year’s World Economic Forum, but Novartis said his presence at the dinner had nothing to do with the payments to Cohen.
Jimenez did not respond to requests for comment.
Like Novartis, AT&T was also scrambling to adjust to the new White House at the start of Trump’s term. Inside the company’s Washington office, which had close ties to traditional Republican circles, staff members were concerned that they lacked connections to the Trump administration. In addition, one of its top executives in Washington had been a vocal opponent of Trump during the campaign.
Cohen provided advice on how AT&T should approach the administration about its $85.4 billion merger and regulatory issues before the Federal Communications Commission, according to the person familiar with the agreement.
AT&T said Cohen was one of several consultants it retained at the start of Trump’s term to help it better understand the president’s thinking. “Companies often hire consultants for these purposes, especially at the beginning of a new presidential administration, and we have done so in previous administrations, as well,” the company said Wednesday in a note to employees.
Companies do commonly hire consultants with ties to politicians for strategic advice. In the Trump administration, several former campaign and transition officials set up consulting firms — some that do not fall under the lobbying disclosure laws — to advise clients on the president’s possible thinking on mergers, regulations and legislation related to taxes and trade. In June 2016, AT&T’s former head of lobbying and government affairs, James Cicconi, publicly endorsed Hillary Clinton. A longtime Republican insider, Cicconi had led AT&T’s Washington office for many years and retired a few months after backing Clinton and just before the announcement of AT&T’s bid for Time Warner.
Trump had criticized the proposed merger during the campaign. But inside AT&T, few expected him to win the election, and there was little planning in place for his potential victory, according to three people familiar with discussions at the company.
After the election, AT&T poured money into efforts related to the new administration. It donated $2 million to the inauguration festivities and an additional $80,000 for telecom equipment used during the event.
The company first engaged with Cohen around the time that Trump took office, looking for people who could provide some sense of the president’s thinking, the company said in its letter to employees.
The circumstances around Cohen’s dealings with Korea Aerospace are less clear. Representatives for the company could not be reached for comment Wednesday. Reuters said an unnamed spokesman for Korea Aerospace had said the company retained Cohen for “legal consulting concerning accounting standards on production costs,” and that the contract ended with the payment of $150,000 to Essential Consultants last November. Korea Aerospace said it had not been contacted by Mueller’s office.
Korea Aerospace, which has been a partner with American defense contractor Lockheed Martin in bidding for a U.S. Air Force contract, was mired in scandal last year. According to South Korean press reports, the company’s former chief executive was charged with accounting fraud in September and a senior officer in charge of its overseas operations committed suicide.