T AT&T Inc

By Drew FitzGerald and Jonathan D. Rockoff 

This article is being republished as part of our daily reproduction of WSJ.com articles that also appeared in the U.S. print edition of The Wall Street Journal (May 10, 2018).

Two companies made sizable bets they could gain access to the Trump administration through President Donald Trump's personal lawyer -- and now appear to have little to show for it but bad publicity.

Swiss drugmaker Novartis AG and U.S. telecommunications giant AT&T Inc. paid a combined $1.8 million for policy insights and guidance to the private company used by Trump lawyer Michael Cohen.

The amounts Novartis and AT&T paid to Mr. Cohen -- $1.2 million and $600,000, respectively -- were more than previously known. Both said they have cooperated with special counsel Robert Mueller's office.

The companies paid Mr. Cohen through the same vehicle he used in October 2016 to direct $130,000 to the adult-film actress known professionally as Stormy Daniels to stay silent about an alleged sexual encounter with Mr. Trump in 2006. Messrs. Trump and Cohen deny the encounter.

The public admissions by Novartis and AT&T are an embarrassment for them. Both spent shareholder money on Mr. Cohen, who appears to have produced little help. Yet if evidence later surfaces that he materially assisted them, the companies will face further scrutiny.

Companies routinely pay Washington advisers for strategic advice on policy issues. The practice is more complicated in this case because Mr. Cohen was operating as both strategic adviser and personal lawyer to Mr. Trump.

Mr. Cohen declined to comment.

Federal investigators are examining the money Mr. Cohen received and spent through his private company before and after the 2016 election to assess whether he violated any laws. Federal agents raided his office, home and hotel room, gathering documents and client communications he had with clients.

Novartis -- one of the world's largest drug companies by sales -- paid Mr. Cohen's shell company, Essential Consultants LLC, $100,000 a month for the 12 months ended in February, a Novartis spokeswoman said.

The payments were stipulated by a one-year agreement with Essential Consultants that Novartis pursued in the belief that Mr. Cohen could advise "how the Trump administration might approach U.S. health-care policy matters," such as the Affordable Care Act.

Novartis first met with Mr. Cohen in March 2017. Afterward, Novartis determined Essential Consultants wouldn't be able to provide the health-care counsel the company had anticipated and opted "not to engage further," the spokeswoman said. "As the contract unfortunately could only be terminated for cause, p"Payments continued to be made until the contract expired by its own terms in February 2018," the spokeswoman said.

Novartis said it entered into the agreement with Essential Consultants before Vas Narasimhan, who joined the company in 2005, became chief executive. "He was in no way involved with this agreement," the spokeswoman said.

Dr. Narasimhan had dinner with Mr. Trump and 15 other leaders of European companies at the World Economic Forum in Davos, Switzerland, in January. The dinner was "in no way related" to Novartis's agreement with Essential Consultants, the company spokeswoman said.

Novartis says on its website that it lobbies policy makers around the world, including Washington. The company says it aims to have a "constructive dialogue" to present its perspective and provide "data and insights" that could be helpful in making decisions.

Novartis said it was contacted by Mr. Mueller's office and "provided all the information requested," adding: "Novartis considers this matter closed."

AT&T said it made payments to Mr. Cohen's company in 2017 for "insights" into the administration at a time when it needed government approval for an $85 billion takeover of Time Warner Inc.

In a statement, AT&T said Essential Consultants was one of several firms it engaged in early 2017 to "provide insights into understanding the new administration." AT&T added: "They did no legal or lobbying work for us, and the contract ended in December 2017."

The Justice Department filed an antitrust lawsuit in November 2017 to block AT&T's proposed merger with Time Warner. The two sides have spent the past two months battling in federal court. The deal's outcome is now in the hands of a federal judge, who is expected to rule on June 12.

In a memo to employees Wednesday, AT&T said Mr. Cohen didn't perform legal or lobbying work for the company, adding "it was not until the following month in January 2018 that the media first reported, and AT&T first became aware of, the current controversy surrounding Cohen."

The Wall Street Journal first reported on the payment to Ms. Clifford and on Mr. Cohen's use of Essential Consultants in January 2018.

It isn't clear whether Mr. Cohen provided any useful advice. The Republican-led Federal Communications Commission has sided with big telecom companies on issues including a December 2017 vote to repeal Obama-era net-neutrality rules, though the Justice Department sued to block the AT&T-Time Warner deal.

The FCC also has given up some of its authority on internet privacy and argued the Federal Trade Commission should play a more active role on that issue, a move AT&T has endorsed.

AT&T Chief Executive Randall Stephenson never enjoyed a friendly relationship with President Trump, though the two sat together at a June 2017 White House technology summit.

The wireless company suffered a setback in November when President Trump's antitrust enforcers at the Justice Department sued to stop its $85 billion takeover of media Time Warner Inc. AT&T executives had spent much of the past year confident that they could clear the deal with few, if any, concessions to the government.

AT&T said it was contacted in late 2017 by Mr. Mueller's office regarding Mr. Cohen. The company said it cooperated and provided all requested information to Mr. Mueller's team. "We have received no additional questions from the Special Counsel's office and consider the matter closed," a spokesman said Wednesday.

Write to Drew FitzGerald at andrew.fitzgerald@wsj.com and Jonathan D. Rockoff at Jonathan.Rockoff@wsj.com

(END) Dow Jones Newswires

May 10, 2018 02:47 ET (06:47 GMT)

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