Novartis’ Top Attorney Falls on $1.2 Million Sword, Resigns from the Company

The first Novartis executive has fallen in the wake of the $1.2 million payment to President Donald Trump’s attorney for consulting work. The company’s top attorney has resigned from his position, taking full responsibility for the payments that have raised plenty of questions about influence peddling.

This morning Swiss-pharma giant Novartis announced Felix R. Ehrat, the Group General Counsel of Novartis, has retired from the company. The company said his decision was due to the “context of discussions surrounding Novartis' former agreement with Essential Consultants, owned by Michael Cohen (Trump’s attorney).” Calling the payments to Cohen an error, Ehrat said he takes “personal responsibility” for the deal in order to “bring the public debate on this matter to an end." Ehrat though, stressed that the deal with Cohen was legally in order.

With Ehrat falling on the proverbial sword in the matter, Novartis’ board of directors and chief executive officer praised him for his tenure at the company. Vas Narasimhan, who took over as CEO of Novartis earlier this year, said Ehrat played a “key role in the Executive Committee with his proven expertise.”

“Furthermore, he was a dedicated representative of the company's interests in important national organizations such as economiesuisse, SwissHoldings and Avenir Suisse. The Novartis leadership owes him considerable thanks for his many contributions and wishes him all the best in his future endeavors,” Narasimhan said in a statement.

While Ehrat may be taking responsibility for the payments, the matter is hardly closed. Novartis has been dogged by kickback schemes in multiple countries, including here in the United States. That specter has been hanging over the company in the wake of the news of the $1.2 million payment.

Washington lawmakers have reached out to the company demanding answers to why Cohen was chosen as a possible consultant, which his firm was listed as a real estate company. Also, lawmakers have pointed out that the funds provided to Cohen are about half of what the company spent on its lobbying efforts in Washington last year – about $2.5 million, according to federal records. Lawmakers, led by Oregon Sen. Ron Wyden, have called for an investigation into the payments and is demanding to know what the company received for its payments – tangible or intangible.

Novartis entered into a deal with Cohen in February 2017 for one-year of consulting work at $100,000 per month. The company said it believed Cohen, a longtime associate of Trump, could advise the company on how the Trump administration could approach healthcare policy matters, including the Affordable Care Act. However, Novartis said after the first meeting with Cohen it determined that the Trump attorney would be “unable to provide the services that Novartis had anticipated related to U.S. healthcare policy matters.” The company said it was still obliged to pay him the $100,000 per month due to the terms of the contract.

Novartis’ former CEO Joe Jimenez has yet to be heard from since the news of the payments broke. Jimenez was CEO when the deal with Cohen was struck and there are numerous reports that company executives have been laying the blame for the public relations nightmare at the feet of the former CEO.

The company said Shannon Thyme Klinger, who is currently Chief Ethics, Risk and Compliance Officer, will be appointed Group General Counsel on June 1.