Lawyer Michael Cohen sold links to Trump to companies

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As U.S. President Donald Trump took office in early 2017, two corporate behemoths – Swiss drug maker 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 Mr. Trump’s thinking: Michael Cohen, the President’s personal lawyer and long-time fixer.

But in the first meeting with Mr. 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 US$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 US$600,000 to Mr. Cohen’s firm for a year-long contract, according to a person familiar with the agreement. An aircraft manufacturer, Korea Aerospace Industries, also had a contract with Mr. Cohen’s company.

The companies’ payments were revealed on Tuesday after Michael Avenatti, the lawyer for Stephanie Clifford, a pornographic film actress who has said she had an affair with Mr. Trump, released some financial details of a company started by Mr. Cohen. Ms. Clifford was paid US$130,000 by the company, Essential Consultants LLC, to keep quiet about the alleged affair with Mr. Trump.

Novartis said on 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 co-operated fully, and considered its role in the matter closed.

AT&T said it was approached by investigators for Mr. Mueller late last year, shortly before its contract with Mr. Cohen expired. The company said it, too, had co-operated fully and also considered the matter closed.

The companies’ arrangements with Mr. 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.

Mr. Trump’s arrival in office came at a particularly perilous time for both Novartis and AT&T.

Mr. 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. Meanwhile,AT&T had announced an US$85.4-billion bid for Time Warner in 2016 and would need the approval of the U.S. Justice Department. The department sued to block the deal last year.

But many questions about their relationships with Mr. Cohen – and the services he provided – remain unanswered. A one-time personal-injury lawyer and a veteran of the New York taxi business, Mr. 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 Mr. 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 Mr. Cohen, declined to comment.

Federal prosecutors in Manhattan are investigating Mr. 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, Mr. Cohen’s lawyers denied some of the claims in Mr. 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 Mr. Cohen’s office, apartment and hotel room last month.

Mr. 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 after it determined that Mr. 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 Mr. 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. Mr. Narasimhan dined with Mr. 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 Mr. Cohen.

Mr. Jimenez did not respond to requests for comment.

As with Novartis, AT&T was also scrambling to adjust to the new White House at the start of Mr. 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 Mr. Trump during the campaign.

Mr. Cohen provided advice on how AT&T should approach the administration about its US$85.4-billion merger and regulatory issues before the U.S. Federal Communications Commission, according to the person familiar with the agreement.

AT&T said Mr. Cohen was one of several consultants it retained at the start of Mr. 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 on 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 long-time Republican insider, Mr. Cicconi had led AT&T’s Washington office for many years and retired a few months after backing Ms. Clinton and just before the announcement of AT&T’s bid for Time Warner.

Mr. 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 US$2-million to the inauguration festivities and an additional US$80,000 for telecom equipment used during the event.

The company first engaged with Mr. Cohen around the time that Mr. 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 Mr. Cohen’s dealings with Korea Aerospace are less clear. Representatives for the company could not be reached for comment on Wednesday.

Reuters said an unnamed spokesman for Korea Aerospace had said the company retained Mr. 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 Mr. Mueller’s office.

Korea Aerospace, which has been a partner with American defence 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.