May 16, 2018 / 1:00 PM / 4 months ago

UPDATE 1-Novartis ex-CEO says regrets hiring, not firing Trump lawyer

(Adds comments by ex-CEO, background)

By John Miller

ZURICH, May 16 (Reuters) - Ex-Novartis Chief Executive Joe Jimenez regrets rushing into a $100,000-per-month consulting contract with U.S. President Donald Trump's personal lawyer but said post-election uncertainty over the administration's healthcare ideas put pressure on the Swiss drugmaker to sign a deal quickly. "There should have been more due diligence," Jimenez said in an interview with Reuters on Wednesday.

"There was scarcity of asset, right? I mean, there were very few people who knew the people that were being placed in a lot of jobs."

Novartis was looking for help understanding the Trump administration's thinking and was referred to Cohen by a third party, Jimenez said, declining to name this person.

Jimenez said he also made a mistake in not seeking to end payments to Michael Cohen immediately after Novartis quickly determined that he would be of little help.

Cohen was eventually paid $1.2 million by Novartis for the one-year deal that prompted the drugmaker's top lawyer to resign on Wednesday.

Novartis General Counsel Felix Ehrat quit, saying the contract with Cohen was legal but ill-advised.

Jimenez, whose pay topped $11.3 million in 2017, remains on the Swiss company's payroll after stepping down as CEO on Feb. 1 to make way for successor Vas Narasimhan. He said his formal ties to Novartis would end soon when a notice period expires.

Novartis and AT&T, which also made a payment to Cohen's firm Essential Consultants, were both contacted by the office of U.S. Special Counsel Robert Mueller about the situation in late 2017, part of his investigation into alleged Russian meddling into the presidential election a year earlier.

Jimenez said he was personally interviewed by Mueller's team over Novartis's payments.

He said the Cohen episode had nothing to do with his departure from the company.

"Absolutely not," Jimenez told Reuters, adding he had informed the Novartis board in early 2017 that he was likely to leave. "We had no idea this was going to turn into this kind of a situation."

At an investor event at Novartis headquarters in Basel on Wednesday, Narasimhan apologised again over what he said was the drugmaker's latest ethical blunder and pledged the company would do better.

Since 2015, Novartis has paid hundreds of millions in settlements and fines as a result of kickback allegations in South Korea, the United States and China and faces an investigation of alleged bribery in Greece.

A trial for another U.S. kickbacks case is scheduled for 2019. Novartis disputes the allegations.

Jimenez, who said he spoke with Cohen on the phone but never met him, said his real mistake was to continue payments after Novartis concluded Trump's attorney could not deliver useful insights that he had promised.

OVERSOLD

"After my team spent some time with him, it was then clear he had oversold his abilities," he said. "We wanted to terminate the contract at that point, but in the end we decided there would be almost-certain litigation."

"This was the mistake," Jimenez said. "We should have just ended our relationship at that point, regardless of what it was going to cost us."

After the one meeting in New York with Novartis staff, Cohen occasionally contacted Novartis, at one stage suggesting it build a new U.S. factory. "We didn't act on any of his recommendations," Jimenez said.

The Novartis payments were first mentioned last week by Michael Avenatti, the lawyer for pornographic actress Stormy Daniels, who says she had a one-time sexual encounter with Trump in 2006 and was paid $130,000 by Cohen in October 2016. Trump denies having sex with Daniels, whose real name is Stephanie Clifford. (Editing by Michael Shields)

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