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Novartis general counsel to exit over Trump lawyer deal dust-up

Felix Ehrat, group general counsel at Novartis AG, is stepping down after details emerged on the $1.2 million contract the company struck with President Donald Trump's lawyer Michael Cohen.

The Swiss drugmaker said Ehrat would retire June 1 "in the context of discussions surrounding Novartis' former agreement" with Cohen and a shell company he formed, Essential Consultants.

"Although the contract was legally in order, it was an error," Ehrat said in a May 16 statement. "As a co-signatory with our former CEO, I take personal responsibility to bring the public debate on this matter to an end."

In an email to Novartis employees last week, CEO Vas Narasimhan called the deal with Cohen a "mistake."

Narasimhan reiterated that sentiment in a separate May 16 statement, adding that "the world rightly expects more from a leading healthcare company."

The drugmaker said it contracted with Cohen for $1.2 million last year to gain insight into "certain U.S. healthcare policy matters, including the Affordable Care Act."

But the biopharmaceutical manufacturer said that after an initial meeting with Cohen in March 2017, it determined Trump's lawyer and Essential Consultants would be "unable to provide the services" Novartis had anticipated. The company, however, kept paying Cohen $100,000 per month for the remainder of the year, as it was bound by the contract until it expired in February.

Those payments, however, caught the attention of lawyers from the office of U.S. special counsel Robert Mueller, which is investigating whether there was any coordination between Trump's 2016 presidential campaign and Russian interference into the election.

Cohen, whose New York office was raided last month by the FBI, is under federal criminal investigation for potential bank fraud, wire fraud and violations of campaign finance law.

The ranking members of two Senate committees — Sens. Ron Wyden, D-Ore., from the Finance Committee, and Patty Murray, D-Wash., of the Health, Education, Labor and Pensions panel — have opened probes on the Novartis-Cohen deal and demanded documents and information from the drugmaker.

The deal came to light after Los Angeles lawyer Michael Avenatti — who is representing actress Stormy Daniels in a lawsuit against Trump — revealed documents May 8 showing the U.S. president's personal attorney had offered insight into the new administration in exchange for the cash.

Novartis has declined to answer S&P Global Market Intelligence's questions about when Narasimhan became aware of the Cohen agreement and why the company did not report the year-long arrangement and the $1.2 million payments last year to investors.

Novartis said Shannon Thyme Klinger, who is currently serving as chief ethics, risk and compliance officer, will be appointed group general counsel June 1.