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Top lawyer leaving Novartis over Cohen payments

17 May, 2018, 09:14 | Author: Joanna Little
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Novartis General Counsel Felix Ehrat will leave the company over his role in a $1.2 million contract the Swiss drugmaker struck with the lawyer for U.S. President Donald Trump, saying on Wednesday that it was legal but still an error.

Ehrat is to resign from the Basel-based pharma after revelations the firm paid $1.2 million to a company controlled by the USA president's personal lawyer Michael Cohen.

Mr. Ehrat said: "Although the contract was legally in order, it was an error".

After a much-publicized series of scandals and legal actions in Japan, Novartis has fielded bribery and kickback allegations in multiple countries-twice, in China's case-and paid at least two related fines: A $50 million penatly to South Korean authorities a year ago in a doctor kickbacks case and $25 million to the US government to settle charges of illegal doctor payments in China.

On May 9, Novartis said it signed a one-year contract for $100,000 a month with the firm in February 2017, seeking advice on the new administration's public health policy. Novartis should have done more due diligence, he said.

"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", Jimenez told Bloomberg in an interview published Wednesday.

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Novartis said in a statement at the time that the company concluded after a meeting with Cohen that he was "unable to provide the services that Novartis had anticipated related to U.S. healthcare policy matters and the decision was taken not to engage further".

Jimenez told Bloomberg that Cohen had "oversold his abilities" in being able to explain the then-new Trump administration's position on healthcare issues. "Let me be absolutely clear: I never want Novartis to achieve our financial performance or objectives because we compromised on ethical standards or our values". At one point he recommended that the company should build a manufacturing site in the US but Novartis never acted on any of his advice, the ex-CEO added.

Ehrat's retirement echoes that last week of of AT&T's top lobbyist, Bob Quinn, who had responsibility for that company's hiring of Cohen and his Essential Consultants vehicle. Jimenez left the company in September.

Ehrat's resignation coincides with a "Meet Novartis Management" investor day being held at the company's headquarters in Basel today, where the company would rather discuss its business and pipeline, but will undoubtedly face further questions about its corporate governance.

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".

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