NVS Novartis AG

By Brian Blackstone and Max Bernhard 

ZURICH -- A top executive at Swiss drugmaker Novartis AG is stepping down as the global fallout widens from the recent disclosure of payments to a company owned by U.S. President Donald Trump's longtime personal lawyer.

Novartis said Wednesday that general counsel Felix Ehrat, 61 years old, is retiring from the company in connection with $1.2 million in payments it made over the course of a year to Michael Cohen's shell company, Essential Consultants LLC.

It was the second high-profile ouster in less than a week in relation to payments to the company. AT&T Inc., which paid Mr. Cohen's company $600,000 last year, said Friday that hiring him as a political consultant was a "big mistake" and ousted its top Washington executive, Bob Quinn.

Novartis has said the payments, made in $100,000 monthly installments under a contract that ended in February, were aimed at gaining insight into U.S. health-care policy. Novartis Chief Executive Vasant Narasimhan last week called the agreement a mistake and denied any involvement himself.

The company said Wednesday that Mr. Narasimhan's predecessor, Joseph Jimenez, signed off on the arrangement.

Mr. Jimenez, who stepped down in January, didn't immediately respond to a request for comment.

Last week's disclosure is an embarrassment for Novartis, having spent shareholder money on Mr. Cohen, who appears to have produced little help.

"Although the contract was legally in order, it was an error," Mr. Ehrat said in a statement released by Novartis on Wednesday. "As a co-signatory with our former CEO, I take personal responsibility to bring the public debate on this matter to an end."

Novartis, one of the world's biggest drug companies by sales, said last week that its aim was to gain better understanding of Trump administration policy-making, especially regarding matters like the status of the Affordable Care Act. But it realized from its first meeting in March 2017 that it wouldn't be helpful and stopped engaging with Mr. Cohen. The company said it determined it couldn't scrap the contract and continued making the payments.

Essential Consultants is the same firm Mr. Cohen used to pay $130,000 to a former adult-film actress, who goes by the name Stormy Daniels, in October 2016 to keep her from discussing an alleged sexual encounter with Mr. Trump. Both Mr. Trump and Mr. Cohen deny the encounter took place.

Mr. Ehrat will be replaced at Novartis by Shannon Thyme Klinger, who currently holds the position of chief ethics, risk and compliance officer. She will be appointed effective June 1, Novartis said.

--Donato Paolo Mancini contributed to this article.

Write to Brian Blackstone at brian.blackstone@wsj.com and Max Bernhard at Max.Bernhard@dowjones.com

(END) Dow Jones Newswires

May 16, 2018 05:40 ET (09:40 GMT)

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