he top lawyer at Novartis is stepping down as part of the fallout from the scandal over payments made by the drug maker to President Trump’s personal attorney. Felix Ehrat, 61, who was general counsel and a member of the Novartis executive committee since 2011, is retiring and will be succeeded by the chief risk and compliance officer, according to a statement released in conjunction with an investor meeting.
His departure follows the disclosure last week that Novartis paid $1.2 million in monthly installments to Michael Cohen’s Essential Consultants for access to the new Trump administration, as part of a one-year contract signed in February 2017. Cohen approached former Novartis chief executive Joe Jimenez, who authorized the deal, even though Cohen is not a registered lobbyist or an expert in health care matters.
In a statement, Ehrat said that, “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.”
The episode has prompted harsh criticism for engaging in a “pay-to-play” arrangement. The new Novartis chief executive, Vasant Narasimhan, a former R&D chief who succeeded Jimenez this past February, called the contract a “mistake,” and quickly distanced himself by insisting he was not involved in retaining Cohen. He was also approached by Cohen, but allowed the one-year deal to lapse.
Nonetheless, the drug maker has been under pressure to respond as questions swirled about the lapse in corporate judgment that allowed the deal with Cohen to proceed. A company spokesman told us Tuesday that Novartis would “take appropriate steps to ensure that something like this does not happen again.”
Novartis agreed to retain Cohen for help with access to the new White House over health care matters, although the company’s government affairs team realized shortly after the contract was signed that Cohen was unlikely to deliver. But as we reported previously, the drug maker continued making payments — in $100,000 monthly installments — to avoid angering Trump
For his part, Jimenez regrets rushing into the contract with Cohen, but said that uncertainty in early 2017 about the incoming Trump administration prompted the drug maker to sign a deal quickly, Reuters reported. “There should have been more due diligence,” Jimenez said in his first interview since the news broke. “There was scarcity of asset, right? I mean, there were very few people who knew the people that were being placed in a lot of jobs.” He added it was a mistake not to end payments to Cohen immediately after determining that he would be of little help.
By forcing Ehrat to retire, Narasimhan is hoping to put the matter behind the company as quickly as possible. Over the past week, he has written an email to employees and held a conference call with managers to reassure them that the company took the matter seriously and planned to work hard to regain trust. But the possibility of further fallout still exists.
Several U.S. lawmakers have opened probes into the payments. And earlier this week, the Swiss attorney general publicly acknowledged that he is eyeing the $1.2 million deal that Novartis made with Cohen, although he is not conducting any criminal probe at this time. One legal expert noted that Novartis may face some risk under Swiss law if it can be determined the payments were made to influence a U.S. government decision or if the payments were not properly recorded.