NOVARTIS: Mi "amigo" Joe (Jimenez) no dijo todo...(II) )

Novartis chose 

to continue to pay Mr. Cohen 

the full $1.2 million 

rather than invoke 

the contract clauses 

that would have allowed them 

to terminate payment 

based on his 

inadequate performance. 

Introduction: 
On May 8, 2018, press reports revealed that a shell company managed and controlled by Michael D. Cohen, former personal attorney to President Donald J. Trump and former executive vice president of the Trump Organization, had received payments totaling more than $4 million in the months following President Trump’s election in 2016.1 Mr. Cohen established the shell company, Essential Consultants LLC, in October 2016.

The allegations regarding Mr. Cohen were first disseminated via a memo released by Michael Avenatti, an attorney representing Stephanie Clifford, a pornographic film actress known as “Stormy Daniels.” Mr. Avenatti has said his client was paid $130,000 by Essential Consultants LLC shortly before the 2016 election to stay quiet about an alleged affair with Mr. Trump. According to the memo, “from October 2016 through January 2018,” Mr. Cohen engaged in “suspicious financial transactions totaling $4,425,033.46.”
Among them were payments from private equity firm Columbus Nova, an investment company with ties to sanctioned Russian oligarch Viktor Vekselberg; telecommunications company AT&T; Korea Aerospace Industries; and the Swiss pharmaceutical company Novartis.

Mr. Avenatti’s memo was widely reported, and press reports independently confirmed the information detailed in the memo.  On May 9, 2018, Novartis confirmed it made payments to Mr. Cohen totaling $1.2 million over the 12-month period ending in February 2018. Similarly,AT&T, Korea Aerospace, and Columbus Nova have all confirmed the payments to Mr. Cohen.

In response to the reports of these unusual payments to Mr. Cohen, several Senators began investigations into the payments made by Novartis to Mr. Cohen. Sen. Ron Wyden, in his capacity as Ranking Member of the Senate Committee on Finance, and Sen. Patty Murray, in her capacity as Ranking Member of the Committee on Health, Education, Labor, and Pensions, each wrote letters to Novartis on May 11, 2018. 
 The Senate Committee on Finance has jurisdiction over federal health programs under the Social Security Act, including Medicare and Medicaid, and participation in these programs account for a substantial portion of Novartis’s U.S. sales.
 The Senate Committee on Health, Education, Labor, and Pensions has jurisdiction over most of the agencies, institutes, and programs of the Department of Health and Human Services (HHS), including the Food and Drug Administration (FDA) and its approval and oversight of pharmaceuticals manufactured by Novartis. Sen. Elizabeth Warren and Sen. Richard Blumenthal wrote jointly in their capacity as United States Senators on May 14, 2018. 
Novartis provided the Senators with documents reflecting the company’s communication with Mr. Cohen, but declined to provide other documents requested by the Senators, including any documents reflecting internal communications regarding Mr. Cohen and his role with the company. A similar letter was sent to AT&T, which did not provide all of the requested information. While AT&T made a number of assertions about their relationship with Mr. Cohen and why he was hired, the company failed to provide any of the requested documents.  

Findings:

• 1. Novartis’s relationship with Michael Cohen was longer and more detailed than previously disclosed by the company. 
• 
  2. Novartis explicitly sought to hire Michael Cohen to provide the company “access to key policymakers” in the Trump administration. Novartis provided Mr. Cohen with drug pricing recommendations for “discussion with ... Trump administration” officials. Mr. Cohen represented that he would provide additional confidential information to Novartis. 
• 
  3. Documents reveal new details of ties between Michael Cohen and Columbus Nova – the private equity firm tied to sanctioned Russian billionaire Viktor Vekselberg – including an effort by Mr. Cohen to encourage Novartis to invest in a pharmaceutical company closely linked to Columbus Nova. 
• 
  4. Michael Cohen represented himself as Counsel to President Trump and the Trump Organization while arranging the agreement with Novartis and after it was signed. 
• 
  5. Novartis chose to continue to pay Michael Cohen even though the agreement gave Novartis the opportunity to terminate him for lack of “satisfactory performance.”

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