Business & Lobbying

Clients’ Cohen ties become PR liability

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Companies that formed relationships with Michael Cohen at the outset of the new administration are facing public relations headaches in response to the emerging federal investigations against him.

Cohen was paid more than $2 million to provide consulting, access and insight into the Trump White House for blue-chip clients such as AT&T and Novartis, and reportedly attempted to sign up many more.

{mosads}Now the corporations that hired him are expressing regret for hiring Cohen, a decision that has thrust them into the maelstrom of special counsel Robert Mueller’s investigation.

“Our company has been in the headlines for all the wrong reasons these last few days and our reputation has been damaged,” wrote Randall Stephenson, AT&T’s chief executive. “There is no other way to say it — AT&T hiring Michael Cohen as a political consultant was a big mistake.”

Along with the missive from the CEO came an announcement that the top AT&T lobbyist who had signed off on the $600,000 Cohen contract, Bob Quinn, 57, was retiring.

Large corporations are generally risk averse and stay away from actions that could prove to be controversial, but were apparently sold on the possibility of getting Cohen’s insights and advice about how to deal with the unconventional new president.

“In an attempt to navigate the new landscape of Washington, D.C., they may have fallen victim to someone promising what they could not deliver,” said one lawyer who specializes in ethics law. He asked to speak anonymously because it’s unclear whether Cohen had any other clients that could cause other conflicts in the legal world.

“Maybe more problematic,” the person said, “is if he could have actually delivered.”

Novartis said it engaged Cohen in a $1.2 million consulting contract that they continued to pay, even after realizing he would be unable to perform the health-care consulting for which they had hired him.

“Many of you have seen media reports regarding the Novartis relationship with Essential Consultants in the U.S. and many of you will feel disappointed and frustrated,” wrote Vasant Narasimhan, who became CEO at Novartis in February after working there for more than a decade.

Novartis and AT&T, among other companies, paid Cohen for his work through Essential Consultants LLC, a shell corporation formed in October 2016 that paid an adult-film actress who allegedly had an affair with Trump. (Trump denies the affair.)

Federal authorities are investigating Cohen’s business dealings, with the LLC likely part of that.

While there appears to be nothing improper about Cohen’s consulting relationships, companies clearly see their association with him as a liability.

“We made a mistake entering into this engagement and as a consequence are being criticized by a world that expects more from us,” read the note from Narasimhan, which was obtained by StatNews.

Cohen, who served as an executive vice president and special counsel at the Trump Organization, reportedly told prospective clients that he would be leaving the president’s company to advise a small group. Some of those companies pitched on his services, including Uber and Ford, took a pass, according to The Wall Street Journal.

“This is a situation where Michael Cohen is, theoretically, being paid by companies, to reveal information that Michael Cohen learned during the course of his legal representation of the president, which poses unusual and troubling ethics problems,” said Joshua Ian Rosenstein, a partner at Sandler Reiff Lamb Rosenstein & Birkenstock.

It’s still unclear whether Cohen actually followed through on his pay-to-play promises, but a story in The Wall Street Journal on Sunday quoted a Cohen associate who said that he expressed frustration with the president last year, grumbling that Trump was “not calling him and not helping him,” the person reportedly said.

“I certainly think that access for money has been around since the formation of the government by George Washington. I don’t think there’s anything wrong with touting the access, but it’s just the unseemly use of access in this case,” said Ivan Adler, a K Street headhunter.

“It does prove, however, the value that companies place on access to these administrations and the workings of government,” he adds.

Cohen’s work for AT&T came at the same time the company was seeking to merge with Time Warner, a move the Justice Department ultimately blocked. Trump had been vocal about his opposition to the deal.

Cohen also worked for Korea Aerospace Industries, landed consulting deals with other entities and formed a “strategic partnership” with a K Street shop where he would refer clients to the law and lobbying firm.

“Touting access and insight is a staple of counseling clients across Washington and the globe. Using your relationship as the president’s personal attorney to do so is an entirely different matter — and can far too quickly result in roles conflated, privileges ignored and lines blurred and eventually crossed,” said Scott Mulhauser, the former chief of staff at the U.S. Embassy in Beijing to then-Ambassador Max Baucus.

“As we’ve seen with the Cohen fall-out, the optics and dollars here just aren’t worth it for a company that will have to explain this hiring — and lack of results — to its board, its shareholders or the American public,” he added.

While much of Cohen’s consulting work appears to fall within the law, there are still questions about whether any of his work involved direct advocacy or fell within lobbying laws.

Public Citizen, a left-leaning government watchdog group, filed a complaint with the Justice Department and officials on Capitol Hill, asking them to look into whether his arrangements violated domestic or foreign lobbying laws.

If the work Cohen did for Novartis, which is based in Switzerland, was paid for by the parent company — rather than its U.S. subsidiary — even simple consulting would trigger a filing requirement under the Foreign Agents Registration Act.

Novartis said in a statement last week that it engaged in a contract with Cohen to “advise the company as to how the Trump administration might approach certain US healthcare policy matters, including the Affordable Care Act.”

However, the Foreign Agents Registration Act has a lower threshold for registering than domestic lobbying laws, and covers consulting and public relations services, in addition to lobbying. Therefore, if Novartis AG — and not its U.S. subsidiary — either held the contract or paid for it, that could require Cohen to register with the Justice Department.

“We do not have that information,” a Novartis spokesman told The Hill when asked whether the parent company had paid Cohen.

Tags Max Baucus Robert Mueller

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