T AT&T Inc

By Drew FitzGerald 

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 12, 2018).

AT&T Inc. boss Randall Stephenson told employees Friday it was a mistake to hire Trump attorney Michael Cohen and ousted the telecom's giant's top Washington executive after his office paid Mr. Cohen $600,000 last year.

"Our reputation has been damaged," Mr. Stephenson wrote in a memo to staff. "There is no other way to say it -- AT&T hiring Michael Cohen as a political consultant was a big mistake."

Mr. Cohen, President Donald Trump's longtime personal attorney, pursued opportunities with several companies after the election, pitching himself as a consultant with an entree to the highest levels of the new administration.

Mr. Cohen also reached out to Ford Motor Co., but the car maker turned him down, according to people familiar with the matter. Special counsel Robert Mueller's office has since requested information from Ford about the outreach, including emails and records, and has interviewed Ford's head of government affairs, Ziad Ojakli, the people said.

Mr. Mueller's office also contacted AT&T and Novartis AG, which said this week it paid Mr. Cohen $1.2 million in consulting fees; the companies said they cooperated with Mr. Mueller's request for information.

AT&T hired Mr. Cohen shortly after the president's inauguration and agreed to pay $50,000 a month for insights into the new administration, according to other people familiar with the matter. Mr. Cohen first asked the company to pay $150,000 a month, the people said. That would have put his consulting fee at $1.8 million for the year.

The company needed government approval for its $85 billion takeover of Time Warner Inc. and knew little about the new president, who had criticized the deal on the campaign trail. It was searching for people who were familiar with the president's thinking and priorities, but the company discovered after a few meetings in early 2017 that Mr. Cohen didn't have much information to offer and discussions with him dried up after that, the people said.

On Friday, Mr. Stephenson told employees that Senior Executive Vice President Bob Quinn was retiring, but people familiar with the matter said the policy chief was forced to leave. Mr. Quinn, a lawyer who joined the company in 1993 and took over its Washington office in October 2016, didn't respond to requests for comment.

Federal prosecutors in Manhattan are investigating Mr. Cohen to determine whether he violated any laws in his efforts to raise cash and conceal negative information about Mr. Trump during the 2016 presidential campaign, according to people familiar with the matter. A lawyer for Mr. Cohen declined to comment Friday.

Companies often hire consultants to explain the federal bureaucracy to them. Such advisers can legally work for clients without registering as lobbyists as long as they avoid pitching elected officials on specific policies. "It's a whole industry here in Washington built around providing deep information on how the government is likely to address complex issues," said Karl Sandstrom, a senior counsel at law firm Perkins Coie LLP and a former commissioner at the Federal Election Commission.

But he questioned how Mr. Cohen, who has no background in communications or antitrust law, could have helped the company. "Nobody's going to pay you $600,000 to tell you something you could have read in your paper this morning," Mr. Sandstrom said.

On Thursday, Novartis Chief Executive Vasant Narasimhan told employees in an email that hiring Mr. Cohen was a mistake and he was frustrated by the arrangement, which was struck under a previous CEO. The drug company said it realized from its first meeting with Mr. Cohen in March 2017 that he wouldn't be helpful and stopped engaging with him.

AT&T and Novartis paid Mr. Cohen through the same vehicle, Essential Consultants LLC, that Mr. Cohen used in October 2016 to direct $130,000 to the former adult-film actress known professionally as Stormy Daniels to stay silent about an alleged sexual encounter with Mr. Trump in 2006. Mr. Trump has denied the sexual encounter.

AT&T told employees that 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."

It is unclear what AT&T got from Mr. Cohen, a real-estate lawyer who worked at the Trump Organization for nearly a decade. AT&T said Mr. Cohen didn't arrange any meetings for the company with the president and that the contract ended after December 2017.

The Justice Department filed an antitrust lawsuit in November 2017 to block AT&T's proposed purchase of 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.

The arguments focused on how the proposed transaction would affect competition and consumers, though AT&T also has maintained that its merger was targeted for political reasons because Mr. Trump, a Republican, dislikes the coverage he has received from Time Warner's CNN.

The judge prevented the companies from fully exploring that claim, denying their request for access to certain internal government communications. The Justice Department has denied politics played any role in the lawsuit. Department officials were surprised by the AT&T-Cohen revelations, a person familiar with the matter said.

AT&T is no stranger to Washington politics. It has one of the largest lobbying operations in the capital and its political-action committee is one of the country's top corporate contributors. AT&T spent more than $16 million on federal lobbying each of the last two years.

On Friday, Mr. Stephenson told staff the company's general counsel, David McAtee, will take over the company's Washington operations. "David's number one priority," the CEO wrote to employees, "is to ensure every one of the individuals and firms we use in the political arena are people who share our high standards."

--Peter Nicholas and Christina Rogers contributed to this article.

Write to Drew FitzGerald at andrew.fitzgerald@wsj.com

(END) Dow Jones Newswires

May 12, 2018 02:47 ET (06:47 GMT)

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