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ZURICH (Reuters) – Novartis (NOVN.S) General Counsel Felix Ehrat will leave the Swiss drugmaker over his role in a $1.2 million contract it struck with the lawyer for U.S. President Donald Trump, saying on Wednesday the pact was legal but an error.
The $100,000-per-month contract with Trump attorney Michael Cohen’s Essential Consultants, the same firm used to pay porn star Stormy Daniels $130,000 to hush up an alleged affair with Trump, has distracted Novartis’s efforts to improve its image after a series of bribery scandals.
Trump has denied the affair. Novartis ended the contract this year.
U.S. lawmakers have demanded Novartis as well as AT&T (T.N), which also made payments to Cohen’s firm, provide details about their contracts. Ron Wyden, top Democrat on the Senate Finance Committee, has called the transactions part of a “pay-to-play scheme” and initiated an investigation.
In a company statement ahead of an investor day on Wednesday, Ehrat acknowledged he signed the contract along with former Novartis Chief Executive Joe Jimenez, who stepped down on Feb. 1 and was replaced by Vas Narasimhan.
“Although the contract was legally in order, it was an error,” Ehrat said. “As a co-signatory with our former CEO, I take personal responsibility to bring the public debate on this matter to an end.”
Novartis has sought to distance Narasimhan from the contract, saying he had nothing to do with it.
“We also have made mistakes recently and the world rightly expects more from a leading healthcare company,” Narasimhan said in a separate release for the investor day. “Our new executive team and I have a deep commitment to ensure we always operate with the highest integrity and sound judgment and will work hard to rebuild lasting trust with society.”
Since 2015, Novartis has paid out hundreds of millions in settlements and fines as a result of kickback allegations in South Korea, the United States and China and faces an investigation of alleged bribery in Greece. A trial for another bribery case has been scheduled for 2019 in the United States.
Novartis shareholders have urged Narasimhan and other executives to exert more “moral influence” over perceived ethical shortcomings that Jimenez in 2016 blamed on a “results-oriented” sales culture and some bad actors. [reut.rs/2Ipdn83]
Narasimhan elevated Chief Ethics Officer Shannon Klinger to the executive committee this year as he made cultural change a priority.
Klinger will replace Ehrat as general counsel, Novartis said on Wednesday.
Reporting by John Miller; Editing by Michael Shields
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