ZURICHZURICH (Reuters) - Novartis (NOVN.S) confirmed it had a $1.2 million contract with the firm of Michael Cohen, U.S. President Donald Trump's personal lawyer, adding it soon realized it had made a mistake but had not been able to stop payments until the deal ended.
The drugmaker, which has not been accused of any illegal activity, made monthly payments of $100,000 to Cohen's Essential Consultants between February 2017 and January 2018.
The Swiss company said on Wednesday it had been approached in November last year by the U.S. Special Counsel Robert Mueller's office who wanted to know about the payments, while probing potential meddling in the 2016 U.S. election.
"Novartis cooperated fully with the special counsel's office and provided all the information requested. Novartis considers this matter closed," it said.
The contract was approved in early 2017 under the former Novartis chief executive Joe Jimenez and was part of its efforts to learn more about how the new Trump administration might approach certain U.S. healthcare policy matters.
Jimenez did not respond to requests for comment.
"In hindsight, this must be seen as a mistake," senior Novartis spokesman Michael Willi said of the contract.
An initial meeting under the agreement in March 2017 had in fact prompted Novartis to conclude Cohen, now the subject of a criminal investigation, would not be able to deliver the anticipated services, Novartis said.
"The decision was taken not to engage further," it said in one of several statements issued on Wednesday.
But the contract could only be terminated for cause, Novartis said, so payments continued to be made until the contract expired in February 2018.
The company was caught flat footed this week when Michael Avenatti, an attorney for porn star Stormy Daniels, named Novartis among those that had made payments to Cohen's firm until January 2018.
Novartis spent Wednesday seeking to shield its new CEO, saying the deal with Cohen was struck long before Vas Narasimhan was promoted to replace Jimenez on Feb. 1.
It said Narasimhan, a Harvard-trained doctor who has vowed to burnish Novartis's reputation as a maker of innovative drugs and leave years of allegations of wrongdoing behind, "had no involvement whatsoever" in the Cohen contract.
While Narasimhan was among business leaders who dined with Trump in Davos at the World Economic Forum in January, Novartis said that had nothing to do with its contract with Cohen.
"This agreement was also in no way related to the group dinner Dr. Narasimhan had at the World Economic Forum in Davos with President Trump and 15 Europe based industry leaders."
Jimenez also met the president after he took office at a Jan. 31, 2017 meeting in the White House. At the time, Jimenez was the incoming chairman-elect of the powerful Pharmaceutical Research and Manufacturers of America (PhRMA) industry lobby.
In U.S. television interviews with ABC and MSNBC, Avenatti declined to say where he had received the information about the payments to Cohen from.
Avenatti, who also alleged payments were made separately by AT&T (T.N) and Korea Aerospace Industries Ltd (047810.KS), raised questions about the Novartis contract, saying it was unclear what healthcare expertise Cohen could provide to a global drug firm.
Daniels maintains Cohen paid her $130,000 via Essential Consultants to hush up a 2006 sexual encounter with Trump.
The president denies any affair with Daniels, whose real name is Stephanie Clifford. Russia denies election interference allegations, while Trump also has denied any collusion.
(Additional reporting by Michael Shields in Zurich and Susan Heavey in Washington; Editing by Keith Weir and Alexander Smith)